Participations and fees assisting H119 results

Umweltbank 2 September 2019 Update
Download PDF German PDF Download

UmweltBank

Participations and fees assisting H119 results

H119 results

Banks

2 September 2019

Price

€9.76

Market cap

€299m

Total assets (€bn) as at end-FY18

3.9

Shares in issue

30.6m

Free float

84.4%

Code

UBKX

Primary exchange

Munich

Secondary exchange

Xetra

Share price performance

%

1m

3m

12m

Abs

(1.4)

(10.5)

7.2

Rel (local)

0.3

(10.8)

12.2

52-week high/low

€11.70

€7.82

Business description

UmweltBank is a specialised lender with total assets of €3.9bn. It provides financing for renewable energy projects (solar, wind, hydro and biomass), as well as loans for new construction or the renovation of sustainable residential, community and commercial real estate.

Next events

FY19 results

February 2020

Analyst

Milosz Papst

+44 (0)20 3077 5700

UmweltBank is a research client of Edison Investment Research Limited

UmweltBank (UBK) strengthened its balance sheet in both 2018 and 2019, which enabled it to accelerate its loan book expansion. We are wary of the broader economic slowdown in Germany as well as the challenges faced by the wind energy sector. However, we also believe that UBK’s niche expertise should facilitate market share gains, which could in part help offset the sector and macroeconomic headwinds. In this context, we appreciate UBK’s continued solid growth in customer deposits (up 4.8% ytd in H119) and new lending volumes of €261m, although these were below the record-high of €311m recorded in H118.

Year end

Net interest income (€m)

EPS*
(€)

DPS
(€)

P/BV*
(x)

P/E*
(x)

ROE*
(%)

Yield
(%)

12/17

52.2

0.99

0.32

1.3

9.8

13.7

3.3

12/18

51.2

0.90

0.33

1.2

10.8

11.4

3.4

12/19e

51.7

0.89

0.34

1.1

11.0

10.4

3.5

12/20e

54.7

0.86

0.36

1.0

11.3

9.5

3.7

Note: *Based on net profit before allocation to reserves for general banking risks and tangible book value including reserves for general banking risks.

FY19 guidance maintained despite a stronger H119

UBK reported a 17.1% y-o-y increase in pre-tax profit to €21.6m in H119, primarily due to higher earnings from equity participations in renewable energy projects and stronger commission income from the securities business. However, because of one-off costs associated with the recent share issue and further expenses associated with its ‘3P’ strategy, management reiterated its FY19 guidance of stable pre-tax profit vs FY18. UBK’s cost income ratio (CIR) was 36.2% in H119 (vs 33.5% in H118) due to headcount expansion and new product development.

Solid funding base for business expansion

UBK recently completed a new share issue, raising €23.5m in gross proceeds, which will be used to drive further loan book growth. This follows the successful subordinate issue launched last year and completed in July 2019. As a result, we forecast UBK’s tier 1 ratio at 12.1% at end-2019 (compared with the regulatory requirement of 9.6%) and its total capital ratio at 15.4% (vs the regulatory requirement of 12.0%). This leaves ample headroom on the balance sheet for further business expansion.

Valuation: Upside from long-term growth

Our revised valuation of UBK is €13.2 per share (vs €13.0 previously), representing 32% upside potential. We believe that this upside is associated primarily with UBK’s long-term earnings growth potential once the bank utilises the strengthened funding base to drive loan book expansion. Currently, the bank is trading at a FY19e P/BV ratio of 1.1x (in line with peer average) even though its FY19e ROE (based on our forecasts) is somewhat ahead of peer average at 9.0%.

H119 results review: Bottom line up 23% y-o-y

UBK reported a 17.1% y-o-y increase in pre-tax profit to €21.6m, which is a positive surprise given management’s full year guidance of broadly stable pre-tax profit versus FY18 at c €37m. We estimate that the bank’s interest income remained largely unchanged vs H118, with incremental interest from new loans mostly offset by the additional interest expense associated with the new subordinated debt, some residual interest margin pressure (which we expect to diminish) and potentially also lower prepayment fees (given that last year UBK booked repayment fees on two sizeable loans).

Consequently, one of the key drivers behind the growth in the bottom line was stronger profits from UBK’s participation in renewable energy projects. In our opinion, these were assisted by exceptionally good wind conditions in H119, particularly in February and March (onshore wind energy output in Germany was up by 17.5% y-o-y according to the Federal Association of the Energy and Water Industries, BDEW). UBK holds equity interests in wind parks with a total capacity of 48.5MW (as at end-2018). Moreover, UBK booked commission income was up 64% y-o-y to €2.2m on the back of additional fees from corporate fixed income securities issues (such as the NATURSTROM issue announced earlier this year), in line with our forecast. Based on a discussion with the company, we understand that commission income was also assisted by growing distribution fees due to stronger customer demand for shares and investment funds.

New lending volumes reached a good level of €261m in H119, although this was 16.1% below last year’s (H118) €311m. Given that UBK’s new loans reached €123.4m in Q119 (compared with €106.0m in Q118), this implies new lending volumes in Q219 of c €138m (around 33% below the c €205m in Q218). That said, it is important to note that H118 (and Q218 in particular) was exceptionally strong, with new volumes more than doubling from €154m in H117. Hence, H119 volumes were nearly 70% higher than in H117. Furthermore, it is important to note that UBK’s quarterly lending volumes may be influenced by the funding of a few large projects and thus can be relatively volatile. According to the company, new lending in wind projects remained broadly in line with H118, which in our opinion is encouraging given the continued challenges facing the wind energy sector in Germany (see below). Overall, business volume expressed as total assets plus irrevocable lending commitments and contingent liabilities rose by 4.9% ytd. However, UBK’s loan book (including irrevocable lending commitments) increased by 1.3% ytd, suggesting some larger loan repayments during the period. Importantly, UBK’s customer base expanded by 1.2% y-o-y, with a significant contribution from clients in the ‘under 45’ age group (in line with UBK’s strategy).

UBK’s cost income ratio (CIR) reached 36.2% in H119 compared with 32.7% in FY18. This is broadly in line with our earlier FY19 forecast of 35.9%. Personnel expenses rose by 18.1% y-o-y to €5.3m as the bank continues to expand headcount (184 on average in H119 vs 163 at end-2018) to facilitate further business growth. This compares with our FY19e expectation of 18.6% y-o-y growth. Other administrative expenses in the period rose by 16.5% vs our FY19e forecast of 10.3%, although the difference is largely explained by the higher contributions to the Compensation Scheme of German Private Banks (up 36.8% y-o-y) following continued strong growth in customer deposits (which increased by 4.8% in H119 vs our FY19e growth assumption of 7.0% y-o-y). In conjunction with the lower effective tax rate (29.2% in H119 vs 32.7% in H118), this translated into a 23.1% y-o-y increase in net profit to €15.3m.

Exhibit 1: UBK’s income statement in H119

€’000s

H119

H118

% change y-o-y

Net interest and financial income

30,247

25,925

16.7%

Net commissions and fee expense

2,191

1,336

64.0%

G&A expenses (ex-D&A)

(10,633)

(9,067)

17.3%

Personnel expenses

(5,337)

(4,520)

18.1%

Other administrative expenses

(5,296)

(4,547)

16.5%

thereof, banking tax and deposit insurance

(1,345)

(983)

36.8%

Other operating income (expense)

212

(242)

n.m.

Pre-tax profit

21,593

18,437

17.1%

Income taxes

(6,308)

(6,022)

4.7%

Effective tax rate

29.2%

32.7%

(345bp)

Net income

15,285

12,415

23.1%

Cost Income Ratio (CIR)

36.2%

33.5%

270bp

Source: UmweltBank, Edison Investment Research

Exhibit 2: UBK’s balance sheet in H119

 €m

H119

FY18

% change ytd

New lending volume

261

311

(16.1%)

Business volume

4,322

4,119

4.9%

Loans (incl. commitments)

2,932

2,895

1.3%

Customer deposits

2,441

2,330

4.8%

Total assets

3,894

3,699

5.3%

Equity

339

333

1.8%

Total capital adequacy ratio

13.7%

14.0%

(30 bps)

CET1 ratio

8.9%

9.3%

(40 bps)

Source: UmweltBank, Edison Investment Research

New share issue raises €23.5m of gross proceeds

In line with its earlier intentions, UBK finalised its new share issue in July 2019, with around 2.38m new shares subscribed at a price of €9.90 per share (resulting in an 8% dilution, according to our estimates). As a result, the company raised €23.5m in gross proceeds. Initially, it planned to issue up to 3.5m shares and raise up to €35m of new capital. Hence, UBK raised c 67% of the maximum targeted proceeds. Still, we believe that UBK is now well equipped to expand its loan book in the coming years (see our capital ratios discussion below).The capital increase was structured as a rights offering, with one new share offered per every eight shares held by current shareholders. Shares not subscribed in the rights offering were offered to existing shareholders through a supplementary subscription and to other investors by means of a private placement at the same price of €9.90 per share.

The company will use new funds to strengthen its capital base and enhance business growth. Specifically, the issue will further improve UBK’s Tier 1 ratio, which as at end-June 2019 stood at 8.9% (vs 9.3% at end-2018). By raising the ratio, UBK hopes to allow for a reduction of the 1.5% special buffer added by the German regulator to its capital requirements. When adjusted for the share issue, UBK’s total regulatory capital was €362.3m at end-June 2019.

Lacklustre wind capacity additions in Germany

The roadblocks in new capacity development discussed in detail in our recent outlook note continue to constrain the wind market in Germany. According to Deutsche WindGuard, gross wind capacity additions reached a meagre 287MW in H119 vs c 5.4GW in 2018 (see Exhibit 3). At the same time, interest in new tendered wind capacity remains low, with only 42% of the capacity offered during the recent auction in May being allocated.

As we discussed in our previous note, the roadblocks include extended regulatory requirements, lengthy project approval timelines and a deficit of approved regional plans, as well as resistance from local residents and environmentalists. Initially, the German government was slow to address these issues, but it seems that pressure is increasing to unlock the wind development potential to reach the targets set in the Renewable Energy Act. This is illustrated by the demand for a wind energy summit issued by a group of Social Democratic Party members of the German parliament. Germany’s minister of economy has announced that the summit will be organised following the summer break.

On the contrary, solar development continues at a solid pace, with around 2.0GW of capacity added in H119 compared with 2.95GW in the whole 2018 (see Exhibit 4). The recent solar auction in June suggests further good progress, with allocated capacity of 205MW ahead of the originally offered 150MW. Interestingly, new large photovoltaic (PV) projects in Germany may reach grid parity (ie generate electricity at a cost below market prices) and become independent from government support schemes (such as the EEG) from 2020, according to the advisory institute Enervis.

The German residential market has seen a slight 2.4% y-o-y decline in building permits between January and May 2019, reflecting the cooling of the broader economy. Permits for single family houses rose by 2.3% y-o-y, while multi-family houses saw a 4.1% y-o-y decline.

Exhibit 3: New gross onshore wind capacity in Germany (in MW)

Exhibit 4: New gross solar capacity in Germany
(in MW)

Source: Bundesverband WindEnergie, Deutsche WindGuard

Source: Bundesnetzagentur

Exhibit 3: New gross onshore wind capacity in Germany (in MW)

Source: Bundesverband WindEnergie, Deutsche WindGuard

Exhibit 4: New gross solar capacity in Germany
(in MW)

Source: Bundesnetzagentur

Despite the weak wind sector and somewhat softer overall residential construction market, we believe that UBK’s niche expertise and relatively low size coupled with its strenghtened balance sheet should drive its market share and thus loan book growth. That said, a further deterioration in market conditions (especially in the wind segment) represents a potential downside risk to our investment thesis.

Forecast revisions

Although H119 pre-tax profit growth was visibly ahead of our FY19 assumptions, we keep our full year forecast broadly unchanged (see Exhibit 5). In line with management guidance, we expect improved earnings from participations as well as higher commission income posted in H119 should be largely offset by the one-off costs associated with the new share issue, as well as incremental costs incurred in conjunction with UBK’s strategy. After pencilling in the new share issue, we expect UBK’s Tier 1 ratio to be 12.1% at end-2019 (compared with the regulatory requirement of 9.6%) and its total capital ratio to stand at 15.4% (vs the regulatory requirement of 12.0%). We reduce our loan book growth expectations for FY19 given the modest H119 growth of 1.3% ytd, which we understand is a function of quite high loan repayments in the period. We currently assume loan book growth of 4.3% y-o-y in FY19e (vs 9.4% previously), while keeping our longer-term assumptions broadly unchanged.

We have also factored in the impact of the recent share issue on our forecasts and valuation. We have conservatively not included any incremental earnings which may be fuelled by the fresh equity capital, given that our previous forecasts already implied a certain level of balance sheet headroom. However, given that the share issue was conducted at a price that is ahead of UBK’s tangible book value per share (€8.7 according to our last forecasts for FY19e), this has translated into a minor positive impact on UBK’s valuation, which now stands at €13.2 per share.

Exhibit 5: Forecast revisions

2018

2019e

2020e

€000s

Act.

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Net interest and financial income

51,893

53,888

55,019

2.1%

6.0%

57,092

55,984

-1.9%

1.8%

Net commissions and fee expense

2,605

4,031

4,125

2.3%

58.4%

4,260

4,370

2.6%

5.9%

Pre-tax profit

37,310

37,084

37,809

2.0%

1.3%

40,264

39,319

-2.3%

4.0%

Net income after taxes

25,335

25,403

26,334

3.7%

3.9%

27,581

26,934

-2.3%

2.3%

CET1 ratio (%)

9.3

9.4

10.8

141bp

150bp

9.7

10.8

111bp

2bp

Tier-1 ratio (%)

10.7

10.6

12.1

146bp

138bp

10.7

11.8

114bp

-25bp

TCR (%)

14.0

14.0

15.4

142bp

137bp

14.0

15.0

104bp

-41bp

CIR (%)

32.7

35.9

36.0

10bp

325bp

34.3

34.7

48bp

-122bp

Source: Edison Investment Research

We estimate a return on equity (ROE) for UBK in FY19e of 10.4%, which compares with an average ratio for listed banks from the DACH region at 9.0% (based on Refinitiv consensus). We note that UBK’s FY19e ratio is below our long-term sustainable ROE estimate of c 12.8% due to depressed net interest margin (which we expect to bottom out soon) and higher operating expenses amid the launch of new products. At the same time, UBK’s FY19e P/BV is 1.1x, which is broadly in line with the peer average (see Exhibit 6).

Exhibit 6: UmweltBank’s P/BV and ROE 2019e comparison versus peers

Source: Refinitiv, Edison Investment Research. Note: Ratios for UmweltBank are based on net profit before reserves allocation and book value includes balance sheet value of reserves for general banking risks.


Exhibit 7: Financial summary

Year ending December

2015

2016

2017

2018

2019e

2020e

2021e

2022e

2023e

Income statement

 

 

 

 

 

 

 

 

 

Net interest income

52,838

53,600

52,166

51,234

51,655

54,661

60,027

65,325

71,325

Net financial income

4,023

5,937

2,909

2,544

4,749

3,347

3,139

2,913

3,012

Net interest and financial income

56,861

59,537

55,075

53,778

56,404

58,008

63,167

68,238

74,337

Provisions (-)

443

(2,228)

(355)

(1,460)

(885)

(1,499)

(1,822)

(1,958)

(2,099)

Total administrative expenses

(13,163)

(15,563)

(16,466)

(18,137)

(21,235)

(20,935)

(21,834)

(23,277)

(24,803)

Earnings before administrative costs and taxes

61,340

61,570

56,739

55,447

59,044

60,254

65,233

70,377

76,247

PBT

48,177

46,007

40,273

37,310

37,809

39,319

43,399

47,099

51,444

Net profit after tax

34,087

32,155

27,661

25,335

26,334

26,934

29,728

32,263

35,239

Reported EPS (€)

0.56

0.58

0.60

0.60

0.59

0.60

0.62

0.63

0.67

Adjusted EPS (€)

1.23

1.16

0.99

0.90

0.89

0.86

0.94

1.00

1.08

DPS (€)

0.28

0.34

0.32

0.33

0.34

0.36

0.38

0.40

0.42

Balance sheet

 

 

Cash and balances at Central Banks

33,171

54,591

32,460

31,556

38,436

20,626

29,020

38,825

51,712

Claims on banks

321,602

149,281

122,622

113,100

118,755

124,693

125,940

127,200

128,472

Claims on customers

2,098,150

2,229,817

2,273,561

2,392,770

2,495,173

2,721,873

2,956,447

3,198,904

3,374,381

Bonds and other fixed-interest securities

288,437

747,214

1,023,677

1,125,709

1,215,766

1,179,293

1,120,328

1,064,312

1,085,598

Tangible assets, Goodwill and Intangible assets

759

1,174

1,202

1,487

1,487

1,487

1,487

1,487

1,487

Other assets

15,553

24,165

31,479

34,496

35,496

36,496

37,496

38,496

39,496

Total assets

2,757,672

3,206,242

3,485,001

3,699,119

3,905,114

4,084,469

4,270,719

4,469,224

4,681,146

Liabilities to banks

570,938

860,728

1,011,950

1,005,593

1,005,593

1,005,593

1,005,593

1,005,593

1,005,593

Liabilities to customers

1,938,174

2,055,684

2,157,005

2,330,019

2,493,120

2,656,669

2,819,380

2,992,318

3,176,141

Accruals and deferred expense

1,440

1,220

1,012

825

684

567

470

390

323

Deferred tax liabilities

0

231

148

127

127

127

127

127

127

Other liabilities

157,095

189,952

206,873

243,360

252,684

255,857

266,996

280,213

295,009

Total liabilities

2,667,647

3,107,816

3,376,987

3,579,925

3,752,209

3,918,814

4,092,567

4,278,641

4,477,193

Total shareholders' equity

90,025

98,426

108,013

119,194

152,905

165,656

178,153

190,583

203,953

BVPS

3.3

3.6

3.9

4.2

4.9

5.3

5.6

5.9

6.2

TNAV per share

6.0

6.9

7.6

8.2

8.8

9.4

9.9

10.6

11.2

Ratios

 

 

 

NIM

2.06%

1.87%

1.62%

1.49%

1.47%

1.44%

1.50%

1.55%

1.61%

Costs/Income

22.0%

26.9%

29.4%

32.7%

36.0%

34.7%

33.5%

33.1%

32.5%

ROE

22.2%

18.0%

13.7%

11.4%

10.4%

9.5%

9.7%

9.8%

9.9%

CET1 ratio

8.1%

8.5%

8.9%

9.3%

10.8%

10.8%

10.9%

11.0%

11.3%

Tier 1 ratio

8.7%

9.9%

10.4%

10.7%

12.1%

11.8%

11.8%

11.8%

12.1%

Capital adequacy ratio

11.0%

12.0%

12.4%

14.0%

15.4%

15.0%

14.8%

14.7%

14.9%

Payout ratio (%)

22.7%

29.3%

32.3%

36.8%

40.0%

42.0%

40.7%

40.1%

39.2%

Customer loans/Total assets

76.1%

69.5%

65.2%

64.7%

63.9%

66.6%

69.2%

71.6%

72.1%

Loans/deposits

108.3%

108.5%

105.4%

102.7%

100.1%

102.5%

104.9%

106.9%

106.2%

Source: UmweltBank, Edison Investment Research


General disclaimer and copyright

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

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 UmweltBank and prepared and issued by Edison, in consideration of a fee payable by UmweltBank. 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 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 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

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

Share this with friends and colleagues