On track to reach our FY19 growth forecast

Orège 15 April 2019 Update
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Orège

On track to reach our FY19 growth forecast

FY18 results update

General industrials

15 April 2019

Price

€1.90

Market cap

€35m

Net debt (€m) at 31 December 2018

44.4

Shares in issue

18.6m

Free float

18%

Code

ORÈGE

Primary exchange

Euronext

Share price performance

%

1m

3m

12m

Abs

(14.5)

(29.1)

(47.5)

Rel (local)

(18.0)

(37.9)

(48.8)

52-week high/low

€3.69

€1.88

Business description

Founded in 2006 and listed on Euronext in 2013, Orège is a clean-tech company that has developed an innovative, patented technology (solid, liquid, gas – SLG) to significantly reduce sludge treatment costs and improve environmental sustainability of the treatment process. Its core markets include North America, the UK, Germany and France.

Next events

H1 results

September 2019

Analyst

Dario Carradori

+44 (0)20 3077 5700

Orège is a research client of Edison Investment Research Limited

Orège’s FY18 results showed a significant revenue pick-up (six times restated 2017 revenues), with EBITDA and net income marginally ahead of our forecasts. The ytd ramp-up in orders implies that Orège is on track to reach our FY19 forecast of €6.3m revenues (2.8x FY18 revenues). The current share price is close to our bear case, which skews risk significantly to the upside in our view. Key share price catalysts are the continued ramp-up in orders and successful completion of the capital increase required by the end of 2019.

Year end

Revenue
(€m)

EBITDA
(€m)

EBIT
(€m)

Net income
(€m)

EV/sales
(x)

12/17**

0.7

(10.1)

(11.4)

(13.5)

97.3

12/18

2.3

(7.7)

(8.5)

(10.9)

35.3

12/19e

6.3

(5.9)

(6.7)

(9.8)

12.7

12/20e

11.0

(3.8)

(4.6)

(8.5)

7.3

Note: *Net income is normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **FY17 results have been restated by the company and will be updated once the full accounts are made available.

FY18 results confirm pick-up in orders

In FY18 Orège experienced a strong pick-up in orders, which led to revenue almost six times higher than 2017 (restated), albeit from a low base. Orège reported FY18 EBITDA and net income marginally better than our expectations, with revenue 13% lower than our expectations more than offset by lower operating expenses. Orège made progress on its order book as it stated that at the date of the FY18 results announcement (10 April), the overall value of the order book was €2.5m (vs €2.3m revenues in FY18) and several further contracts are expected to be signed in H119. Assuming the trend of commercial development continues, we believe Orège is well placed to achieve our unchanged FY19 revenue forecast of €6.3m, which implies 178% y-o-y growth.

Long-term growth opportunity

Orège’s proprietary and patented SLG technology reduces sludge treatment costs for utilities by up to 80%, with a strong investment case for its clients (payback periods of less than three years) and large environmental sustainability advantages. We estimate a €439m annual addressable market size for SLG technology (current applications only) in North America, the UK, Germany and France. Growth potential in Asia and Southern Europe could add to this estimate. We forecast revenues increasing from €6.3m in FY19 to our estimated base case revenue potential of €57m in FY23 (bear-bull range of €22–93m). We expect strong margin improvement, leading to positive EBITDA in FY21 and cash flow in FY22.

Valuation: Current share price close to our bear case

Due to the early stage of commercial deployment, we believe investors should assess a range of potential growth outcomes and valuations. Following the recent decline, the current share price is closer to our bear case (€1.64/share), which skews risk significantly to the upside in our view (base case €3.84/share, bull case €9.31/share). Key share price catalysts are the continued ramp-up in orders and completion of the capital increase required by the end of 2019.

On track to reach our FY19 growth forecast

Orège’s FY18 results showed a significant revenue pick-up (six times restated 2017 revenues). EBITDA and net income were marginally ahead of our forecasts as lower revenues were more than compensated by lower operating expenses. We believe the ytd ramp-up in orders puts Orège on track to reach our FY19 forecast of €6.3m revenues (2.8x FY18 revenues). The recent share price decline means the risks to valuation are significantly skewed to the upside, in our view.

FY18 results confirm pick-up

In FY18 Orège experienced a strong pick-up in orders, which led to revenue almost six times higher than 2017 (restated), albeit from a low base. Orège reported FY18 EBITDA and net income marginally better than our expectations, with revenue lower than our expectations more than offset by lower operating expenses. Highlights of the FY18 results are as follows:

Revenues of €2.26m, an almost sixfold increase on restated 2017 revenues of €0.39m. Revenues were 13% below our forecast of €2.59m.

The EBITDA loss was €7.7m, >20% smaller than 2017 and 2% better than our forecast of €7.9m. This was driven by lower operating expenses than we previously expected, more than offsetting the lower revenues.

Net loss was €10.9m, 20% smaller than 2017 and 3% better than our expectations.

Net debt of €44.4m was broadly in line with our forecast (€44.0m).

FY19 ramp-up in orders in line with our forecasts

We continue to believe that a significant ramp-up in orders is one of the key catalysts for the re-rating of the stock. Orège made progress over the last few months as it stated that at the date of the FY18 results announcement (10 April), the overall value of the order book was €2.5m (vs €2.3m revenues in FY18) and several further contracts are expected to be signed in H119. Assuming this trend of commercial development continues, we believe Orège is well placed to achieve our maintained FY19 revenue forecast of €6.3m, which implies 178% y-o-y growth. The order book was boosted by a contract in January 2019 for a six-year lease agreement for three SLG solutions with the City of Orlando, US, for over $1.3m (we estimate a revenue contribution of around $1m for FY19).

Long-term growth: Innovation in environmental sustainability

Orège operates in the global wastewater equipment market ($9.5bn per year market size with 5–6% annual growth, according to Global Water Intelligence). It has developed a proprietary and patented technology (solid, liquid, gas – SLG) that reduces sludge treatment costs for utilities by up to 80%, with a strong investment case for its clients (payback periods of less than three years). In addition to large economic savings, SLG brings important environmental sustainability advantages to the sludge treatment process (lower energy use and lower volumes transported, improved sludge quality, etc). Over the last few years, Orège has developed several successful references for various applications and geographies and is now ready to achieve its full commercial potential, particularly in the UK and North America. Client feedback on the technology strongly supports its effectiveness.

We derived our forecasts for Orège’s top line by applying a range of penetration rate assumptions to the estimated size of the core market opportunities for the flagship product SLG in the key countries for Orège: the UK, North America, Germany and France. Our estimates are based on a forecast of a €439m annual addressable market size for SLG technology (current applications only) in North America, the UK, Germany and France (we provided detailed calculations in our initiation note, Innovation in environmental sustainability, published on 17 October 2018). These estimates do not include significant growth opportunities in Asia (especially following the signing of a partnership for distribution and integration of SLG solutions in Japan with ITCMT, a subsidiary of the Japanese ITOCHU Corporation) and in Southern Europe, which we understand Orège is also targeting.

Exhibit 1: Estimated annual addressable market for SLG (equipment + services, €000s)

Source: Edison Investment Research

We forecast revenues increasing from €6.3m in FY19 to our estimated base case revenue potential of €57m in FY23 (in our initiation note, we identified a bear-bull range of €22–93m revenues). We expect high operational leverage to drive a strong margin improvement, leading to positive EBITDA in FY21 and cash flow in FY22.

Exhibit 2: Scenario analysis: bull-bear-base case revenues and earnings

Source: Edison Investment Research

We expect FY19 to confirm revenue growth trend

We continue to expect a significant revenue ramp-up and have made only small changes to our FY19/20 forecasts, with revenues broadly unchanged and marginally smaller EBITDA and net income losses, reflecting lower operating expenses.

Exhibit 3: Forecast changes

€000s

FY18

FY19e

FY20e

Revenues

New

2,260

6,281

11,007

Old

2,588

6,291

11,042

% change

(13%)

0%

0%

EBITDA

New

(7,749)

(5,943)

(3,802)

Old

(7,888)

(6,086)

(3,940)

% change

(2%)

(2%)

(3%)

EBIT

New

(8,537)

(6,743)

(4,602)

Old

(8,888)

(6,886)

(4,740)

% change

(4%)

(2%)

(3%)

Net income

New

(10,915)

(9,849)

(8,477)

Old

(11,212)

(9,966)

(8,574)

% change

(3%)

(1%)

(1%)

Net debt

New

44,382

55,350

65,219

Old

43,999

54,784

64,160

% change

1%

1%

2%

Source: Orège data, Edison Investment Research. Note: FY18 new = actual.

Importantly, as Orège’s net equity fell below half of its called-up share capital in 2017, there is a requirement for it to proceed with a capital increase by the end of FY19. We believe clarity on the financial structure is the other important catalyst for the stock. Until then, investors have visibility on the short-term sustainability of the activities, as majority shareholder Eren (69% stake) has provided a €7m credit line to cover the financing needs in FY19.

Valuation: Current share price close to our bear case

Due to the risks resulting from the early stage of commercial deployment, we believe investors should assess a large range of potential growth outcomes and valuations. As explained in our initiation note, we used a valuation methodology similar to the one we use for early stages biotech companies: we estimated the addressable market size, assumed penetration rates and used a DCF methodology to take into account the future prospects of the group. We have used a 12.5% WACC, consistent with the rate we use for companies at a similar stage of development. The terminal value is based on median EV/Sales, EV/EBITDA, EV/EBIT values of more mature water/wastewater equipment companies (Exhibit 4).

Exhibit 4: Valuation multiples for more mature water/wastewater equipment companies

Company

EV/sales (x)

EV/EBITDA (x)

EV/EBIT (x)

P/E (x)

FY0

FY1

FY2

FY0

FY1

FY2

FY0

FY1

FY2

FY0

FY1

FY2

Fluence

1.8

1.1

0.7

N/A

90.9

7.9

N/A

-165.3

8.9

15.8

N/A

N/A

Alfa Laval

2.4

2.2

2.1

13.5

11.6

11.0

13.5

14.1

13.2

16.9

18.1

16.9

Mueller Water Products

2.1

1.9

1.8

11.4

9.1

8.4

11.4

12.5

11.0

N/A

N/A

N/A

Xylem

3.2

3.1

2.9

17.8

15.5

14.0

17.8

20.8

18.2

28.2

24.6

21.3

Evoqua Water Technologies

1.8

1.7

1.7

12.6

10.5

9.6

12.6

17.5

15.7

N/A

N/A

N/A

Gorman-Rupp

2.1

2.0

1.9

13.0

N/A

N/A

13.0

N/A

N/A

19.7

20.6

18.9

Franklin Electric

2.0

1.9

1.8

14.8

13.7

12.7

14.8

17.3

16.0

N/A

N/A

N/A

Andritz

0.7

0.7

0.6

9.0

7.1

6.7

9.0

9.8

9.0

18.2

12.6

11.5

Beijing Enterprises Water Group

3.9

3.6

3.3

11.9

11.1

9.8

11.9

11.8

10.4

10.2

8.9

7.8

Watts Water Technologies

1.9

1.9

1.8

12.5

11.8

11.3

12.5

14.4

13.6

22.5

20.7

19.2

Pentair

2.9

2.7

2.6

15.1

13.2

12.4

15.1

14.8

13.9

N/A

N/A

N/A

Itron

1.2

1.2

1.1

18.9

10.7

8.9

18.9

14.9

10.6

N/A

N/A

N/A

Forterra

1.7

1.7

1.6

8.1

7.6

7.3

8.1

9.1

8.7

N/A

N/A

N/A

Median

2.0

1.9

1.8

12.6

11.4

9.7

12.6

14.3

12.1

18.2

19.3

17.9

Source: Refinitiv. Note: Prices as at 10 April 2019.

Our valuation approach returns a base case valuation of €3.84/share (broadly unchanged vs €3.86/share previously). The base case valuation reflects a sustained growth in revenues (+74% FY19–23 CAGR), mostly in the UK and North America. If Orège can establish its technology as industry standard and its products become widely adopted, we believe there is significant upside to the current share price (our valuation would be €9.31/share vs €9.36/share previously). On the contrary, the bear case of €1.64 (unchanged) reflects the impact of potential delays in ramping up the commercial development of the company.

Following a large decline over the last few months, the current share price is now closer to our bear case, which skews risks to the upside in our view. We believe that continued ramp-up in the order book and clarity on the financial structure would represent the most important positive catalysts for the share price.

Key risks to our forecasts and valuations include delays in ramping up commercial development, including risks associated with the requirement to organise public tenders for municipal clients; higher/lower competition and its impact on profit margins; and the potential impact of Brexit and friction on global trade (most of the addressable market is in the UK and North America).

Exhibit 5: Financial summary

Accounts: IFRS, year-end: December, €000s

2016

2017*

2018

2019e

2020e

2021e

2022e

2023e

INCOME STATEMENT

 

 

 

 

 

 

 

 

Total revenues

703

706

2,260

6,281

11,007

19,996

37,236

57,461

Cost of sales

(1,568)

(597)

(600)

(2,358)

(4,464)

(8,367)

(16,188)

(25,579)

Gross profit

(865)

109

1,660

3,923

6,543

11,629

21,047

31,881

SG&A (expenses)

(14,103)

(10,238)

(9,409)

(9,866)

(10,346)

(10,849)

(11,378)

(11,933)

Depreciation and amortisation

(2,241)

(1,242)

(788)

(800)

(800)

(900)

(1,000)

(1,100)

Reported EBIT

(17,209)

(11,371)

(8,537)

(6,743)

(4,602)

(121)

8,669

18,848

Finance income/(expense)

(822)

(1,739)

(2,378)

(3,107)

(3,874)

(4,565)

(4,951)

(4,791)

Other income/(expense)

168

(411)

0

0

0

0

0

0

Exceptionals and adjustments

0

0

0

0

0

0

0

0

Reported PBT

(17,864)

(13,520)

(10,915)

(9,849)

(8,477)

(4,686)

3,719

14,057

Income tax expense (includes exceptionals)

114

0

0

0

0

0

0

0

Reported net income

(17,750)

(13,520)

(10,915)

(9,849)

(8,477)

(4,686)

3,719

14,057

Basic average number of shares, m

18.7

18.7

18.7

18.7

18.7

18.7

18.7

18.7

Basic EPS

(0.95)

(0.72)

(0.59)

(0.53)

(0.45)

(0.25)

0.20

0.75

DPS (€)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Adjusted EBITDA

(14,968)

(10,129)

(7,749)

(5,943)

(3,802)

779

9,669

19,948

Adjusted EBIT

(17,209)

(11,371)

(8,537)

(6,743)

(4,602)

(121)

8,669

18,848

Adjusted PBT

(17,864)

(13,520)

(10,915)

(9,849)

(8,477)

(4,686)

3,719

14,057

Adjusted EPS (€)

(0.95)

(0.72)

(0.59)

(0.53)

(0.45)

(0.25)

0.20

0.75

Adjusted diluted EPS (€)

(0.95)

(0.72)

(0.58)

(0.53)

(0.45)

(0.25)

0.20

0.75

BALANCE SHEET

 

 

 

 

 

 

 

 

Property, plant and equipment

1,455

987

599

599

599

599

599

599

Intangible assets

242

190

190

190

190

190

190

190

Other non-current assets

1,857

2,779

2,779

2,779

2,779

2,779

2,779

2,779

Total non-current assets

3,554

3,956

3,568

3,568

3,568

3,568

3,568

3,568

Cash and equivalents

950

506

506

506

506

506

506

506

Inventories

1,860

1,354

953

2,621

3,474

4,558

6,173

6,827

Trade and other receivables

164

467

2,317

5,152

9,029

11,481

14,965

18,475

Other current assets

1,212

872

872

872

872

872

872

872

Total current assets

4,186

3,200

4,648

9,152

13,881

17,417

22,516

26,681

Non-current loans and borrowings

20,672

33,810

44,991

55,959

65,828

71,333

69,059

57,209

Other non-current liabilities

149

143

143

143

143

143

143

143

Total non-current liabilities

20,821

33,953

45,134

56,102

65,970

71,476

69,202

57,352

Trade and other payables

1,416

1,014

1,019

3,604

6,142

8,058

10,913

12,071

Current loans and borrowings

265

323

323

323

323

323

323

323

Other current liabilities

1,658

1,176

1,165

1,165

1,165

1,165

1,165

1,165

Total current liabilities

3,339

2,513

2,507

5,092

7,630

9,546

12,401

13,559

Equity attributable to company

(16,421)

(29,310)

(39,425)

(48,474)

(56,151)

(60,037)

(55,518)

(40,662)

Non-controlling interest

0

0

0

0

0

0

0

0

CASH FLOW STATEMENT

 

 

 

 

 

 

 

 

Profit for the year

(17,750)

(13,520)

(10,915)

(9,849)

(8,477)

(4,686)

3,719

14,057

Taxation expenses

(114)

0

0

0

0

0

0

0

Profit before tax

(17,864)

(13,520)

(10,915)

(9,849)

(8,477)

(4,686)

3,719

14,057

Net finance expenses

822

1,739

2,378

3,107

3,874

4,565

4,951

4,791

EBIT

(17,041)

(11,781)

(8,537)

(6,743)

(4,602)

(121)

8,669

18,848

Depreciation and amortisation

5,409

1,327

788

800

800

900

1,000

1,100

Share based payments

0

0

0

0

0

0

0

0

Other adjustments

2,243

(692)

800

800

800

800

800

800

Movements in working capital

(791)

(341)

(1,443)

(1,918)

(2,192)

(1,620)

(2,244)

(3,007)

Cash from operations (CFO)

(10,180)

(11,487)

(8,392)

(7,061)

(5,194)

(40)

8,225

17,741

Capex

(2,168)

(870)

(400)

(800)

(800)

(900)

(1,000)

(1,100)

Acquisitions & disposals net

4

3

0

0

0

0

0

0

Other investing activities

0

0

0

0

0

0

0

0

Cash used in investing activities (CFIA)

(2,164)

(867)

(400)

(800)

(800)

(900)

(1,000)

(1,100)

Net proceeds from issue of shares

23

(72)

0

0

0

0

0

0

Movements in debt

12,487

11,480

11,181

10,967

9,869

5,506

(2,274)

(11,850)

Dividends paid

0

0

0

0

0

0

0

0

Other financing activities

(164)

(23)

(2,378)

(3,107)

(3,874)

(4,565)

(4,951)

(4,791)

Cash from financing activities (CFF)

12,346

11,385

8,803

7,861

5,994

940

(7,225)

(16,641)

Currency translation differences and other

(1)

525

(11)

0

0

0

0

0

Increase/(decrease) in cash and equivalents

0

(444)

0

0

0

0

0

0

Cash and equivalents at end of period

950

506

506

506

506

506

506

506

Net (debt)/cash

(19,560)

(33,201)

(44,382)

(55,350)

(65,219)

(70,724)

(68,450)

(56,600)

Movement in net (debt)/cash over period

(19,560)

(13,641)

(11,181)

(10,967)

(9,869)

(5,506)

2,274

11,850

Source: Orège data, Edison Investment Research. Note: *FY17 results have been restated by the company and will be updated once the full accounts are made available.

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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

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 Orège and prepared and issued by Edison, in consideration of a fee payable by Orège. 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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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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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

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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