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On the path towards decarbonisation

Hellenic Petroleum 2 June 2021 Update
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Hellenic Petroleum

On the path towards decarbonisation

Strategy update

Oil & gas

2 June 2021

Price

€6.31

Market cap

€1,929m

US$1.22/€

Net debt (€m) at 31 March 2021 (excluding lease)

2,244

Shares in issue

305.6m

Free float

19%

Code

ELPE

Primary exchange

ASE

Secondary exchange

LSE

Share price performance

%

1m

3m

12m

Abs

9.2

12.3

(0.2)

Rel (local)

11.2

0.8

(26.5)

52-week high/low

€6.55

€4.14

Business description

Hellenic Petroleum operates three refineries in Greece with a total capacity of 344kbod. It has sizeable marketing (domestic and international) and petrochemicals divisions.

Next events

Q221 results

26 August 2021

Q321 results

11 November 2021

Analyst

Marta Szudzichowska

+44 (0)20 3077 5700

Hellenic Petroleum is a research client of Edison Investment Research Limited

Hellenic Petroleum has presented its updated strategy, which involves accelerating the energy transition aimed at a significant reduction in CO2 emissions and spending up to €2bn on clean-energy projects by 2030 to drastically decarbonise its activities. Q121 results were negatively affected by lower domestic oil demand amid the COVID-19 pandemic-driven lockdown. We expect Hellenic will benefit from an increase in demand for transport fuels as the restrictions are gradually lifted in Q221 and with Greece opening for tourists in May. We have updated our estimates to reflect Q121 results. Our valuation is up 6% to €6.91/share, implying a 10% potential upside, as we move to FY22e peer group multiples.

Year-end

Revenue
(€m)

Adjusted EBITDA* (€m)

Net debt**
(€m)

P/E
(x)

Dividend yield
(%)

12/19

8,857

570

1,544

10.4

7.9

12/20

5,782

333

1,673

N/A

1.6

12/21e

7,087

487

1,630

14.8

3.4

12/22e

7,261

626

1,438

8.5

4.7

Note: *Adjusted numbers account for inventory movements and other one-off items. **Net debt excludes lease liabilities.

Focus on renewable energy sources

Hellenic has introduced an aggressive capital investment plan (€3.5–4bn by 2030) to upgrade its core refining business through energy-efficiency projects, transitioning to cleaner fuels (biofuel) and adopting blue/green hydrogen technologies. It also plans to boost its renewable energy sources (RES) organically and through acquisitions (aiming for 600MW by 2025 and 2GW by 2030), committing half of the proposed spend to clean energy. These investments should support the planned 50% reduction in Hellenic’s carbon footprint by 2030.

Q1 results affected by lower oil demand

The international refining environment remained sluggish in Q121, recording very weak benchmark margins. Fuel demand in Hellenic’s key markets reached historically low levels, affected by travel restrictions. These factors drove Q121 adjusted EBITDA down 53% y-o-y to €60m. We have reduced our FY21 EBITDA forecast by 7%, reflecting a weaker-than-expected Q1, although our refining assumptions are broadly unchanged for H221 and FY22. The negative effect of lower refining profits in FY21 is partially offset by improved petrochemical operations, supported by high polypropylene (PP) margins in H121.

Valuation: Blended valuation of €6.91/share

Our valuation is based on a blend of discounted cash flow (DCF), EV/EBITDA and P/E. Hellenic trades at a premium to European peers (6.7x FY22e EV/EBITDA versus 5.5x and 8.5x FY22e P/E versus 7.9x). Our blended valuation is €6.91/share, up from €6.55/share, as we roll forward our peer valuation to FY22. We believe that Hellenic should benefit from increasing domestic traffic and air travel, supported by progress in COVID-19 vaccinations and the start of the summer season as restrictions are gradually lifted.

Reduction of CO2 emissions by turning towards RES

Hellenic Petroleum operates three refineries in Greece with a total capacity of 344kbd (65% of the Greek refinery output). Two of the refineries (Aspropyrgos and Εlefsina) are complex, integrated and provide significant flexibility of feedstocks and throughput. The third, Thessaloniki, is small and simple, but houses Hellenic’s petrochemicals units. Hellenic also has a sizeable marketing division (domestic and international) and a large storage capacity (41.8mmbbl).

Hellenic has presented an updated strategy, ELPE Vision 2025. It intends to drastically decarbonise its activities, aiming at 50% reduction in CO2 emissions by 2030 (scope 1 and 2) with 30% through improving refining operations, including energy-efficiency projects, the transition to cleaner fuels (biofuels, hydrotreated vegetable oil), renewable forms of energy and the adoption of blue and green hydrogen technologies, and the remaining 20% from RES. Hellenic targets significant expansion of its RES portfolio to 600MW by 2025 and 2GW by 2030, initially via photovoltaic (PV) and onshore wind projects, growing both organically and through acquisitions within and outside Greece. In addition to the Kozani 204 PV project (which should start in Q122), the company has secured 300MW of PV and wind projects at an advanced permitting stage (receiving environmental terms and/or binding connection agreements).

Hellenic plans to spend €3.5–4bn on these initiatives by 2030, with about half on refining activities and the rest on clean-energy projects, making renewables a key growth area, accounting for 75% of growth capex in the medium term. Management expects shareholders to benefit as these investments should provide more stability for the group’s cash flows.

The strategic plan also includes changes in corporate structure and governance, as well as changing the group's name. Management is considering setting up a new holding company and removing ‘petroleum’ from its name to reflect the new structure, which is not focused on oil alone.

We await more details on the projects introduced in the updated strategy, such as specific timeframes and budgets.

In addition, Hellenic plans to increase the capacity of its PP plant in Thessaloniki by 25% to 300,000 metric tonnes. This investment should be completed in 2.5 years (FY24) with a budget of €35m and should deepen the vertical integration with the refining business. We expect the annualised effect on EBITDA of c €6–7m (which may change depending on the PP margin).

Q1 results affected by sluggish refining environment

In Q121 Hellenic reported adjusted EBITDA of €60m, versus €77m in Q420 and €128m in Q120. As can be seen in Exhibit 1, the main reason for weakness was low benchmark refining margins, following the impact of COVID-19 on markets. Higher costs for carbon-emission rights under a European Union emissions trading system also weighed on performance. However, strong margins on PP were a partial offset, allowing the petrochemicals segment to record the best quarter in its history; this strength has continued in Q221 as PP margins remained favourable in April and May. Overall, the refining-environment factors had a combined negative impact of €121m but were partially balanced by €23m from improved performance, supported by launch of the new 98 premium fuel (allowing Hellenic to improve marketing margins).

Exhibit 1: Adjusted EBITDA bridge (Q121 vs Q120)

Source: Hellenic Petroleum

Crude oil prices have rebounded to pre-COVID-19 pandemic levels, averaging US$61/bbl in Q121, which is significantly higher than the Q420 average of US$44/bbl. However, refining margins remained very weak for the fourth quarter in a row, as fuel demand in Hellenic’s key markets remained low, affected by travel restrictions.

Exhibit 2: Benchmark margins ($/bbl) for FCC

Exhibit 3: Benchmark margins ($/bbl) for hydrocracking

Source: Hellenic Petroleum. Note: FCC, fluid catalytic cracking.

Source: Hellenic Petroleum

Exhibit 2: Benchmark margins ($/bbl) for FCC

Source: Hellenic Petroleum. Note: FCC, fluid catalytic cracking.

Exhibit 3: Benchmark margins ($/bbl) for hydrocracking

Source: Hellenic Petroleum

Demand for refinery products in the Greek domestic market was at its lowest level ever in Q121 (even when compared to 2020) as it was still affected by reduced economic activity due to lockdowns in Q121.

Exhibit 4: Domestic market fuel demand (MT 000s)

Exhibit 5: Aviation and bunkers fuel demand (MT 000s)

Source: Hellenic Petroleum

Source: Hellenic Petroleum

Exhibit 4: Domestic market fuel demand (MT 000s)

Source: Hellenic Petroleum

Exhibit 5: Aviation and bunkers fuel demand (MT 000s)

Source: Hellenic Petroleum

The overall macroeconomic environment should start to improve from summer 2021 as progress in coronavirus vaccination programmes increase domestic traffic and air travel. Hellenic should benefit from the resultant tourist inflow with Greece reopened to tourists from mid-May and from pandemic restrictions lifting around the world. These should drive the increase in domestic demand for jet and road fuel in Greece and neighbouring countries.

Financial estimates

We have updated our estimates to reflect Q121 results and will review our forecasts in more detail when information is available on the projects that are part of the updated strategy (capex, financing and timelines).

Key changes to our financial estimates and market expectations include improved performance in petrochemicals in Q221, supported by high margins in PP; the adverse impact of a weaker US dollar versus euro (-1% versus previous forecasts); and updated oil prices forecasts (+3% versus previous forecasts). We expect refining margins to remain under pressure, with improvements starting in the summer tourist season and a gradual recovery of the global economy. As a result, we lowered our refining margin assumption for Q221 and kept it unchanged for H221.

All the above, coupled with the weaker Q121 results, led to a 7% reduction in our FY21 total adjusted EBITDA estimate. Our FY22 estimates remain broadly unchanged.

Exhibit 6: Changes to Edison forecasts

€m

Actual

Edison new

Edison old

Difference

 

FY20

FY21e

FY22e

FY21e

FY22e

FY21e

FY22e

Adjusted EBITDA, refining

187

261

386

307

394

-15%

-2%

Adjusted EBITDA, petrochemicals

61

117

103

107

103

10%

1%

Adjusted EBITDA, marketing

97

118

119

118

119

0%

0%

Adjusted EBITDA, RES

-

-

18

-

18

-

-

Total adjusted EBITDA

333

487

626

525

634

-7%

-1%

Associates

30

20

10

10

10

97%

0%

Adjusted EBIT

85

244

379

287

391

-15%

-3%

Finance costs

(115)

(102)

(85)

(102)

(85)

0%

0%

Adjusted net income

5

130

228

147

237

-11%

-4%

Source: Hellenic Petroleum data, Edison Investment Research

Valuation

We value Hellenic using a blend of DCF, leveraged and unleveraged EV/EBITDA, and P/E multiples, arriving at a valuation of €6.91/share, 10% higher versus our last published estimate (€6.55/share). This increase is mainly driven by the higher peer group based valuation as we now focus on more normalised FY22 multiples, while our DCF valuation is slightly lower on the back of the reduced estimates.

Our peer-based valuation of Hellenic is now based on FY22 multiples instead of FY21. As seen in Exhibit 8, due to near-term market volatility and uncertainty in earnings estimates for FY21, peer multiples exhibit high deviations from the mean. FY22 should see a gradual normalisation in fundamentals and improved visibility, both in terms of market demand and earnings estimates.

Hellenic trades at FY22e multiples of 8.5x P/E and 6.7x EV/EBITDA, compared with the European group averages of 7.9x and 5.5x, respectively. Its EV per complexity-adjusted barrel is higher than European peers’ average at $1,691/bbld. At the same time, it trades at a discount to its US peers on most valuation metrics.

Our DCF valuation is based on cash flows to 2026, using a 7% cost of capital. We incorporate a terminal value, which assumes the unwinding of working capital, and 1% terminal growth. This results in a DCF valuation of €6.80/share versus our previous estimate of €7.00/share. The valuation was adversely affected by the weaker US dollar versus the euro (-€0.10/share), weaker Q121 results, a lower refining margin assumption for Q221 and higher working capital outflow (mainly due to the international oil price recovery and a higher inventory level). This was partially offset by the recovery of inventory losses recorded in 2020 and we expect further recovery in Q2. We have not yet included the effect of the PP plant capacity expansion investment in our model. This €35m investment should be completed by FY24 and we expect it should generate EBITDA of c €6–7m annually.

Exhibit 7: Hellenic valuation

Source: Edison Investment Research, Refinitiv. Note: Priced at 1 June 2021.

Exhibit 8: Peer group valuation

 

Market cap
($m)

EV
($m)

P/E
FY21e
(x)

P/E
FY22e
(x)

EV/EBITDA
FY21e
(x)

EV/EBITDA
FY22e
(x)

FCF yield
FY21e
(%)

FCF yield
FY22e
(%)

P/CF
FY21e
(x)

P/CF
FY22e
(x)

Net debt/
EBITDA FY21e
(x)

Net debt/
EBITDA FY22e
(x)

Div yield
FY21e
(%)

Refining capacity
(kbod)

EV/bod of complexity adjusted capacity
($/kbod)

Edison estimate – Hellenic

1,929*

4,173*

14.8

8.5

8.6

6.7

8.3%

19.3%

4.5

3.5

3.3

2.3

3.4%

344

1,691

Grupa Lotos

2,669

3,640

13.7

8.8

5.7

4.7

-6.6%

8.0%

5.8

4.9

0.8

0.7

1.1%

211

1,555

Hellenic Petroleum (consensus)

2,358

5,411

16.6

8.5

9.4

7.1

10.5%

3.9%

3.8

3.5

4.0

3.0

5.2%

344

1,691

Motor Oil Hellas Corinth Refineries

1,896

3,030

9.8

6.3

6.0

4.8

3.8%

10.2%

3.6

3.7

2.2

1.8

7.1%

186

1,412

Polski Koncern Naftowy Orlen

9,551

13,488

10.0

8.4

5.2

4.6

-3.6%

-0.7%

4.1

4.1

1.4

1.2

1.1%

718

2,041

Saras

853

1,375

-

-

7.5

5.6

19.0%

14.3%

3.7

3.9

3.3

2.5

1.5%

300

392

Turkiye Petrol Rafinerileri

2,911

4,650

17.6

7.6

10.1

6.2

5.6%

8.0%

11.8

6.1

3.3

2.1

0.7%

602

812

Europe average

3,373

5,266

13.5

7.9

7.3

5.5

4.8%

7.3%

5.5

4.4

2.5

1.9

2.8%

394

1,317

CVR Energy

2,171

3,338

-

21.0

11.2

7.8

9.3%

9.8%

10.3

7.0

3.4

2.1

0.0%

185

1,388

HollyFrontier

5,515

8,026

-

10.1

10.0

6.5

-9.8%

9.2%

9.3

5.0

2.2

1.2

2.6%

457

1,405

Marathon Petroleum

40,791

80,534

-

18.7

12.0

10.2

5.8%

9.7%

7.8

5.3

4.7

3.6

3.7%

2,874

2,644

Phillips 66

38,029

54,578

33.5

13.1

13.2

9.4

5.1%

8.4%

10.0

8.1

3.2

2.1

4.1%

2,184

2,272

Valero Energy

33,592

46,928

82.7

14.5

12.3

8.1

4.6%

9.3%

9.7

6.2

3.0

1.7

4.8%

3,100

1,328

Americas average

24,020

38,681

58.1

15.5

11.8

8.4

3.0%

9.3%

9.4

6.3

3.3

2.1

3.0%

1,760

1,807

Total Average

12,758

20,454

26.3

11.7

9.3

6.8

4.0%

8.2%

7.3

5.2

2.9

2.0

2.9%

1,015

1,540

Total Median

2,911

5,411

15.1

8.8

10.0

6.8

5.1%

9.2%

7.8

5.0

3.2

2.1

2.6%

457

1,412

Source: Edison Investment Research, Refinitiv. Note: Priced at 1 June 2021. *FX = US$1.22/€.

Exhibit 9: Financial summary

IFRS, year-end: 31 December

€m

 

2018

2019

2020

2021e

2022e

Income statement

 

 

 

 

 

 

 

Total revenues

 

 

9,769

8,857

5,782

7,087

7,261

Cost of sales

 

 

(8,770)

(8,052)

(5,818)

(6,139)

(6,431)

Gross profit

 

 

999

805

(36)

948

830

SG&A (expenses)

 

 

(475)

(470)

(453)

(431)

(432)

Other income/(expense)

 

 

(10)

6

(13)

(5)

(5)

Exceptionals and adjustments

 

 

(19)

2

(587)

275

15

Reported EBIT

 

 

514

341

(501)

512

394

Finance income/(expense)

 

 

(146)

(151)

(115)

(102)

(85)

Profit (loss) from JVs / associates (post tax)

 

 

(2)

18

30

20

10

Other income (includes exceptionals)

 

 

2

(1)

5

5

0

Reported PBT

 

 

369

207

(582)

436

319

Income tax expense (includes exceptionals)

 

 

(154)

(43)

185

(102)

(80)

Reported net income

 

 

215

164

(397)

333

239

Basic average number of shares, m

 

 

306

306

306

306

306

Basic EPS (€)

 

 

0.7

0.5

(1.3)

1.1

0.8

 

 

 

 

 

 

Adjusted EBITDA

 

 

730

570

333

487

626

Adjusted EBIT

 

 

533

339

85

244

379

Adjusted PBT

 

 

388

205

5

167

304

Adjusted net income

 

 

296

185

5

130

228

Adjusted EPS (€)

 

 

0.97

0.61

0.02

0.43

0.75

DPS (€)

 

 

0.75

0.50

0.10

0.21

0.30

 

 

 

 

 

 

Balance sheet

 

 

 

 

 

Property, plant and equipment

 

 

3,269

3,298

3,380

3,413

3,346

Intangible assets

 

 

106

104

106

105

105

Other non-current assets

 

 

529

744

797

805

813

Total non-current assets

 

 

3,903

4,146

4,283

4,323

4,263

Cash and equivalents

 

 

1,276

1,088

1,203

847

1,039

Inventories

 

 

993

1,013

694

995

1,010

Trade and other receivables

 

 

822

840

582

542

547

Other current assets

 

 

3

6

12

13

13

Total current assets

 

 

3,094

2,947

2,492

2,397

2,609

Non-current loans and borrowings

 

 

1,627

1,610

2,131

1,678

1,678

Non-current lease liabilities

 

 

 

169

171

163

163

Other non-current liabilities

 

 

420

448

294

319

319

Total non-current liabilities

 

 

2,047

2,227

2,597

2,160

2,160

Trade and other payables

 

 

1,349

1,402

1,547

1,571

1,582

Current loans and borrowings

 

 

1,109

1,022

745

799

799

Current lease liabilities

 

 

 

31

30

28

28

Other current liabilities

 

 

97

84

8

10

10

Total current liabilities

 

 

2,555

2,539

2,329

2,409

2,420

Equity attributable to company

 

 

2,331

2,262

1,786

2,090

2,231

Non-controlling interest

 

 

64

65

62

62

62

 

 

 

 

 

 

Cashflow statement

 

 

 

 

 

Profit before tax

 

 

369

207

(582)

436

319

Depreciation and amortisation

 

 

197

231

248

243

247

Other adjustments

 

 

237

172

233

201

75

Movements in working capital

 

 

(296)

26

528

(374)

(9)

Income taxes paid

 

 

(5)

(149)

23

(81)

(80)

Cash from operations (CFO)

 

 

503

486

450

425

552

Capex

 

 

(157)

(241)

(288)

(266)

(180)

Acquisitions & disposals net

 

 

(16)

(5)

(6)

0

0

Other investing activities

 

 

311

29

17

5

5

Cash used in investing activities (CFIA)

 

 

138

(218)

(277)

(261)

(175)

Net proceeds from issue of shares

 

 

(1)

0

0

0

0

Dividends paid in period

 

 

(151)

(155)

(154)

(31)

(98)

Movements in debt

 

 

(97)

(111)

252

(396)

0

Other financing activities

 

 

4

(160)

(144)

(98)

(87)

Cash from financing activities (CFF)

 

 

(244)

(458)

(47)

(525)

(185)

Increase/(decrease) in cash and equivalents

 

 

397

(189)

125

(361)

192

Currency translation differences and other

 

 

5

2

(11)

5

0

Cash and equivalents at end of period

 

 

1,275

1,088

1,203

847

1,039

Net (debt) cash (incl. lease)

 

 

(1,460)

(1,744)

(1,874)

(1,822)

(1,630)

Net (debt) cash (excl. lease)

 

 

(1,460)

(1,544)

(1,673)

(1,630)

(1,438)

Source: Hellenic Petroleum, Edison Investment Research

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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

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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 Hellenic Petroleum and prepared and issued by Edison, in consideration of a fee payable by Hellenic Petroleum. 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 2021 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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