Pro forma figures; 10.5% EPS accretion in FY20

JPJ Group plc 19 June 2019 Update
Download PDF

JPJ Group plc

Pro forma figures; 10.5% EPS accretion in FY20

Acquisition of Gamesys

Travel & leisure

19 June 2019

Price

750p

Market cap

£557m

Pro forma net debt (£m) at March 2019

524

Shares in issue

74.5m

Free float

95%

Code

JPJ

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

8.5

11.4

(12.1)

Rel (local)

7.6

9.8

(8.9)

52-week high/low

1,036p

590p

Business description

JPJ Group is a leading online gaming operator mainly focused on bingo-led gaming. It has announced the £490m acquisition of Gamesys Group (its platform provider) and completion is expected in Q319. The enlarged group will be renamed Gamesys Group.

Next events

Prospectus

June 2019

Analysts

Victoria Pease

+44 (0)20 3077 5740

Richard Williamson

+44 (0)20 3077 5700

JPJ Group plc is a research client of Edison Investment Research Limited

We are updating our forecasts to reflect JPJ’s £490m proposed acquisition of Gamesys. For FY20, our pro forma adjusted EBITDA is 77% higher than for standalone JPJ and we forecast EPS accretion of 10.5%. The £490m consideration will be split between £250m cash (including £175m of add-on facilities) and £240m in 33.7m new JPJ shares. We forecast net debt/EBITDA of 3.1x at YE19, falling rapidly to 2.0x at YE20. On this basis, we believe the company could start to pay dividends in H220, and would be in a position to consider share buybacks. Assuming the deal completes on these terms, JPJ trades at 7.6x EV/EBITDA and 6.4x P/E for FY20.

Year end

Revenue (£m)

EBITDA
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/17

304.7

108.6

103.9

0.0

7.2

N/A

12/18

319.6

112.7

118.5

0.0

6.3

N/A

12/19e**

518.1

149.9

90.6

0.0

8.3

N/A

12/20e**

563.8

175.4

118.0

30.0

6.4

4.0

Note: *EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Pro forma figures with 33.7m additional shares used in EPS.

Gamesys Group: Entering FTSE 250

JPJ’s proposed acquisition of Gamesys appears to be a neat solution to gain control of the platform, improve operational performance and accelerate international growth. Gamesys brings a number of high-profile brands (Virgin, Heart Bingo, Monopoly, but not the sports brands), ownership of a bingo and a slots studio, as well as a 15-year new content agreement (for an additional c £8.5m annual fee). Integration risk is low given the longstanding relationship between the two companies and the Gamesys CEO will become the CEO for the enlarged group. The business will be renamed Gamesys Group and we expect the company to enter the FTSE 250 on completion, which is anticipated in Q319.

Deleveraging quickly, possible dividends in H220

The £490m acquisition price is to be split between £250m cash (including £175m of add-on debt facilities and existing cash) and £240m of new JPJ shares. Gamesys revenues and adjusted EBITDA in 2018 were £185m and £67m, respectively, and our new pro forma figures assume an 11% revenue CAGR for Gamesys for 2018–21. We also expect that an additional c £10m of point of consumption tax (POCT) will be broadly offset by cost savings and synergies. Altogether, our FY20 adjusted EBITDA is 77% higher than before and we estimate 10.5% EPS accretion. With strong cash generation, we forecast net debt/EBITDA of 3.1x at YE19, falling rapidly to 2.0x at YE20. This is only slightly higher than our previous YE20 forecast of 1.8x, suggesting that the company could pay a dividend in H220.

Valuation: 6.4x FY20 P/E on pro forma figures

Our new pro forma forecasts indicate 10.5% EPS accretion on the back of this deal and, on this basis, JPJ trades at 7.6x EV/EBITDA and 6.4x P/E for FY20. This remains at the lower end of the peer group and, as the company rapidly deleverages, we expect value to shift from debt to equity.

Gamesys: The enlarged group

Deal rationale: Control and international expansion

JPJ’s proposed acquisition of Gamesys appears to be a neat solution to gain control of the platform, improve operational performance and accelerate international growth. As demonstrated in the chart below, key highlights are:

High-profile brands with international growth potential: Gamesys brings a number of high-profile, complementary brands, including Virgin, Heart Bingo and Monopoly (NB not the sports brands), which JPJ will promote in its international markets. At present, Gamesys derives c 95% of its revenues from the UK, with c 5% from the US. This compares to c 50% UK revenues for standalone JPJ. Following the deal, we estimate that c 70% of revenues will be generated in the UK, with notable international markets including Japan, Germany, Sweden, Spain and the US.

Ownership of bingo/slots studio and 15-year new content agreement: as part of the deal JPJ will own a bingo and a slots studio and it has also signed a 15-year new games content agreement, for which JPJ will pay a licensing fee to the residual Gamesys business. On a pro forma basis, the fee amounted to £8.5m in FY18 and we are assuming a similar level going forward.

Greater operational control through proprietary technology: following the acquisition of the Jackpotjoy brand from Gamesys in 2015, JPJ has continued to use Gamesys as a platform provider. The original intention was for JPJ to ‘internalise’ staff from Gamesys from 2019, as well as pay 25% additional platform fees from April 2020. The acquisition of Gamesys therefore avoids the need for both costs. We forecast total synergies of c £5m, which are in addition to the avoidance of increased platform costs (ie higher margins for the JPJ business).

Low integration risk and aligned management team: we believe that integration risk is low given the longstanding relationship between the two companies and the Gamesys CEO (Lee Fenton) will become the CEO for the enlarged group.

Exhibit 1: Transaction highlights

Source: JPJ Group

£490m deal; completion expected in Q319

Completion of the deal is expected in Q319 and the enlarged group will be renamed Gamesys Group. At the current share price, the market cap would become c £820m, with the issuance of an additional 33.7m shares. On this basis, the enlarged group should become a constituent of the FTSE 250.

Key terms of the £490m deal include:

£240m payable in cash on completion.

£10m payable in cash to Gamesys shareholders 30 months after completion. This is outside our forecast period.

The issuance of 33.7m new shares (equivalent to £240m) to shareholders of Gamesys, who will hold 31% of the enlarged group (in addition to the 4.5% already held).

Based on EBITDA of £67m for 2018, the implied EV/EBITDA for the deal is 7.3x. Including the additional £8.5m annual payment to Gamesys for the games licensing agreement, the multiple would be 8.4x, which is in line with JPJ’s standalone current EV/EBITDA multiple. As detailed below, we also note that the increased POCT tax (c £10m) is offset by synergies and the avoidance of increased platform fees.

Pro forma forecasts

JPJ has provided historical pro forma figures for FY18, which we are using as the basis for our future pro forma forecasts. We include the Gamesys figures as if the business were acquired from January 2019 and summarise the key dynamics here:

Revenues – c 11% three-year CAGR for Gamesys: in addition to our existing JPJ revenue forecasts, we are assuming an 11% revenue CAGR for Gamesys in 2018–21. This includes slightly lower growth in FY19, due to well-flagged regulatory hurdles in the UK bingo-led sector. In total, our pro forma revenues are now 63% higher in FY19 and 68% higher in FY20, vs our previous forecasts.

EBITDA – POCT offset by cost savings from FY20 onwards: the UK point of consumption tax (POCT) increased from 15% to 21% in April 2019. As a result, the annual impact on Gamesys EBITDA is c £10m. Offsetting this tax increase, our forecasts include synergies of c £5m, as well as the avoidance of increased platform fees. Including an annual c £8.5m games licensing fee, our EBITDA increases from £95.8m to £149.9m in FY19 and from £99.0m to £175.4m in FY20. Beyond the synergies, we believe there could be upside to our forecasts from margin expansion in Gamesys EBITDA from FY20, as the brands are marketed overseas (where there are less or no gaming taxes).

Interest costs – £30m in FY19: we forecast pro forma interest costs of £30m in FY19m, falling to £22m in FY20, as the company deleverages.

10.5% EPS accretion in FY20: with the additional interest costs, and higher tax and depreciation, our pro forma EPS is 90.6p in FY19, 118.0p in FY20 and 142.8p in FY21. As shown in Exhibit 3 below, this is 10.5% accretive in FY20 and 24.6% accretive in FY21.

Dividend could resume one year later: given the higher debt levels, we do not expect JPJ to pay any dividend in FY19, but the company has reiterated that it remains committed to returning cash to shareholders once net debt/EBITDA falls comfortably below 2.5x. We estimate a ratio of 2.0x at YE20 and have therefore included a small dividend for H220, payable in FY21. This is essentially one year later than our previous forecasts.

Balance sheet – additional £326m goodwill: our pro forma balance sheet is based on the FY18 pro forma figures provided by JPJ. Apart from the £175m increase in long-term debt, the most notable item is that goodwill has increased by £326m.

Net debt to decline rapidly in FY20: our net debt figure for FY19 increases from £224.4m to £464.7m, which is basically related to the acquisition (£240m cash payment and transaction fees), and allows for one quarter of Gamesys cash flow. Our forecast net debt for FY20 is £359.5m, up from £182.6m.

Exhibit 2: Pro forma historical figures for LTM 2018

(£m)

JPJ

Gamesys

Adjustments

Enlarged group

Gaming revenue

319.6

184.6

504.1

Support services*

112.0

(112.0)

0.0

Total revenue

319.6

296.5

(112.0)

504.1

Adjusted EBITDA

112.7

66.7

(8.5)**

170.9

margin

35.3%

36.1%

33.9%

Source: JPJ Holdings. Note: *Support services were payments from JPJ to Gamesys. **Payable by the enlarged group for new games licence agreements

Exhibit 3: Estimate changes

Revenue (£m)

EBITDA (£m)

EPS (p)

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

2019e

318.8

518.1

62.5

95.8

149.9

56.5

100.5

90.6

(9.9)

2020e

336.6

563.8

67.5

99.0

175.4

77.2

106.8

118.0

10.5

2021e

354.5

609.0

71.8

104.1

200.1

92.2

114.6

142.8

24.6

Source: Edison Investment Research

Exhibit 4: Financial summary

£m

2017

2018

2019e*

2020e*

2021e*

December

PROFIT & LOSS

Revenue

 

 

304.7

319.6

518.1

563.8

609.0

Cost of Sales

(147.5)

(158.9)

(282.9)

(298.1)

(313.6)

Gross Profit

157.2

160.7

235.2

265.7

295.3

EBITDA

 

 

108.6

112.7

149.9

175.4

200.1

Operating Profit (before amort. and except.)

 

 

108.2

112.2

138.9

163.9

187.6

Intangible Amortisation

(62.6)

(60.3)

(50.0)

(50.0)

(50.0)

Exceptional and other items

(104.9)

(16.3)

(19.1)

(3.0)

(3.0)

Share based payments

(1.4)

(0.6)

(0.6)

(0.6)

(0.6)

Operating Profit

(60.8)

35.0

69.2

110.3

134.0

Net Interest

(30.0)

(19.5)

(30.0)

(22.0)

(16.0)

Profit Before Tax (norm)

 

 

78.2

92.7

108.9

141.9

171.6

Profit Before Tax (FRS 3)

 

 

(65.8)

18.5

40.7

89.8

119.5

Tax

(0.7)

(0.5)

(10.9)

(14.2)

(17.2)

Profit After Tax (norm)

77.5

92.3

98.0

127.7

154.5

Profit After Tax (FRS 3)

(66.5)

18.1

29.8

75.6

102.4

Average Number of Shares Outstanding (m)

73.9

74.2

108.2

108.2

108.2

EPS - normalised (p)

 

 

103.9

118.5

90.6

118.0

142.8

EPS - (IFRS) (p)

(90.0)

19.5

27.5

69.9

94.6

Dividend per share (p)

0.0

0.0

0.0

30.0

45.0

Gross Margin (%)

51.6

50.3

45.4

47.1

48.5

EBITDA Margin (%)

35.6

35.3

28.9

31.1

32.9

Operating Margin (before GW and except.) (%)

35.5

35.1

26.8

29.1

30.8

BALANCE SHEET

Fixed Assets

 

 

595.9

521.9

801.0

757.5

715.0

Intangible Assets

589.0

514.7

781.0

740.0

700.0

Tangible Assets

1.3

2.2

10.0

7.5

5.0

Other long term assets

5.6

5.0

10.0

10.0

10.0

Current Assets

 

 

93.2

124.0

160.8

172.0

164.3

Stocks

0.0

0.0

0.0

0.0

0.0

Debtors (incl swaps)

26.0

30.5

57.0

62.0

67.0

Cash

59.0

84.4

81.8

87.0

73.3

Player balances

8.2

9.0

22.0

23.0

24.0

Current Liabilities

 

 

(98.5)

(52.3)

(100.0)

(95.0)

(90.0)

Creditors

(46.3)

(47.8)

(100.0)

(95.0)

(90.0)

Short term borrowings

(0.3)

0.0

0.0

0.0

0.0

Contingent consideration

(51.9)

(4.5)

0.0

0.0

0.0

Long Term Liabilities

 

 

(386.7)

(374.5)

(566.5)

(466.5)

(366.5)

Long term borrowings

(369.5)

(371.5)

(546.5)

(446.5)

(346.5)

Contingent consideration

(7.7)

0.0

0.0

0.0

0.0

Other long term liabilities

(9.4)

(3.0)

(20.0)

(20.0)

(20.0)

Net Assets

 

 

204.1

219.1

295.3

368.0

422.8

CASH FLOW

Operating Cash Flow

 

 

102.0

106.8

87.4

159.4

184.1

Net Interest

(30.9)

(19.5)

(25.0)

(22.0)

(16.0)

Tax

(1.0)

(0.8)

(8.0)

(14.2)

(17.2)

Capex

(3.2)

(5.3)

(10.0)

(18.0)

(20.0)

Acquisitions (inc earn-outs)

(94.2)

(55.3)

(462.0)

0.0

0.0

Financing

22.2

(2.3)

240.0

0.0

0.0

Dividends

0.0

0.0

0.0

0.0

(44.6)

Net Cash Flow

(5.2)

23.6

(177.6)

105.2

86.3

Opening net debt/(cash)

 

 

305.6

310.7

287.1

464.6

359.5

HP finance leases initiated

0.0

0.0

0.0

0.0

0.0

Other

0.0

0.0

0.0

0.0

0.0

Closing net debt/(cash)

 

 

310.7

287.1

464.6

359.5

273.1

NPV of outstanding earnouts/ other

 

 

76.6

15.0

0.0

0.0

0.0

Currency swaps

 

 

0.0

0.0

0.0

0.0

0.0

Adjusted net debt

 

 

387.3

302.1

464.7

359.5

273.1

Source: JPJ Holdings accounts, Edison Investment Research. Note: *Pro forma figures with 33.7m additional shares used in EPS.


General disclaimer and copyright

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

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 JPJ Group plc and prepared and issued by Edison, in consideration of a fee payable by JPJ Group plc. 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 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

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