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Profitable growth in H121

Claranova 7 April 2021 Update
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Claranova

Profitable growth in H121

H121 results

Software & comp services

7 April 2021

Price

€8.36

Market cap

€330m

$1.19:€

Net cash (€m) at end H121

46.7

Shares in issue

39.5m

Free float

91%

Code

CLA

Primary exchange

Euronext Paris

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

31.4

20.6

108.0

Rel (local)

24.1

11.3

47.0

52-week high/low

€8.4

€3.80

Business description

Claranova consists of three businesses focused on mobile and internet technologies: PlanetArt (digital photo printing; personalised gifts), Avanquest (consumer-focused software) and myDevices (internet of things/IoT). Its headquarters are in Paris, and it has operations in Europe, the US and Canada.

Next events

Q321 revenue update

11 May

Analyst

Katherine Thompson

+44 (0)20 3077 5730

Claranova is a research client of Edison Investment Research Limited

Claranova made good progress in H121, with organic constant currency revenue growth of 17% y-o-y and EBITDA growth of 106% y-o-y. Recent acquisitions made by PlanetArt are progressing well and the division is seeing growing demand in its target markets. Avanquest has completed most of the shift to subscription licensing, positively affecting margins. We have revised our forecasts to reflect stronger growth and profitability for PlanetArt.

Year end

Revenue (€m)

EBITDA*
(€m)

PBT**
(€m)

Diluted EPS**
(€)

DPS
(€)

P/E
(x)

06/19

262.3

16.0

12.0

0.25

0.0

33.9

06/20

409.1

17.4

11.3

0.20

0.0

41.7

06/21e

479.2

40.0

29.2

0.46

0.0

18.3

06/22e

564.1

45.0

35.4

0.53

0.0

15.8

Note: *Pre-IFRS 16. **PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

PlanetArt drives doubling of EBITDA in H121

Claranova reported H121 revenue of €277.8m, up 25% y-o-y (constant currency), or 17% on an organic, constant currency basis. H121 EBITDA (pre-IFRS 16) of €23.1m was up 106% y-o-y and net income after minority interest (MI) increased 587% y-o-y. Cash generation was strong, with net cash increasing 70% y-o-y. The group EBITDA margin was 3.5pp higher y-o-y at 8.3%, with a 2.9pp increase for PlanetArt to 8.3% and a 3.5pp increase for Avanquest to 11.5%.

FY23 growth targets maintained

Management reiterated targets for revenue of €700m and an EBITDA margin of 10% by FY23. We have revised our forecasts up to reflect stronger demand and profitability for PlanetArt, with FY21 EBITDA (pre-IFRS 16) increasing by 18% and FY22 by 13%. Our normalised EPS forecasts are increased by 27% in FY21 and 20% in FY22.

Valuation: Not reflecting growth potential

Reflecting the different business models and minority interests for each division, we continue to use a sum-of-the-parts approach to valuation. Using EV/sales multiples that reflect our views on the growth and profitability of each division and are conservative compared to the peer group averages, we calculate a valuation of €13.8 per share (unchanged since we last wrote). In our view, consistent growth in revenues and margins towards the FY23 targets will be key to reducing the discount to peers. Factors that could provide upside to our estimates include sustained high demand for photo printing, successful adoption of the FreePrints Gifts app in the US/Personal Creations in the UK and returning recent PlanetArt acquisitions to profitability.

Review of H121 results

In February, Claranova reported H121 revenues (see Managing supply and demand for a discussion of the divisional revenue performance). The table below details the full financial results for H121. In February, the company noted that H121 adjusted EBITDA would be nearly twice the level of H120 – in fact, adjusted EBITDA grew 106% y-o-y. Reported EBIT increased 158% y-o-y and net income after minority interest increased 587% y-o-y. Net cash at the end of H121 increased by 70% to €46.7m.

Exhibit 1: H121 results highlights

H120

H121

y-o-y

Revenues

234.3

277.8

18.6%

EBITDA

12.8

24.9

94.7%

Lease payments (IFRS 16)

(1.6)

(1.8)

Adjusted EBITDA

11.2

23.1

106.4%

D&A

(2.3)

(2.5)

Normalised EBIT

10.6

22.5

113.0%

Share-based payments

0.0

0.0

Exceptional items

(3.0)

(3.3)

Acquired amortisation

(0.8)

(1.7)

Reported EBIT

6.8

17.5

157.6%

Net finance cost

(2.3)

(3.5)

Reported PBT

4.5

14.0

214.3%

Tax

(2.9)

(3.5)

Profit after tax

1.5

10.5

583.1%

MI

(0.3)

(2.0)

Net income after MI

1.2

8.5

587.1%

Net cash

27.5

46.7

69.8%

Source: Claranova

Divisional performance

Exhibit 2: Divisional revenue and EBITDA

€m

Revenues

Constant currency (cc)

Organic, cc

H120

H121

y-o-y

y-o-y

y-o-y

PlanetArt

186.2

233.7

26%

32%

16%

Avanquest

45.9

41.9

(9%)

(4%)

(4%)

myDevices

2.2

2.2

(3%)

4%

4%

Total

234.3

277.8

19%

25%

17%

EBITDA

EBITDA margin

H120

H121

H120

H121

PlanetArt

10.1

19.3

5.4%

8.3%

Avanquest

3.7

4.8

8.0%

11.5%

myDevices

(2.6)

(1.0)

Nm

Nm

Total

11.2

23.1

4.8%

8.3%

Source: Claranova. Note: Claranova EBITDA is pre-IFRS 16

The main driver of the increase in profitability was the reduction in marketing expenses in PlanetArt. As previously reported, in the busy Thanksgiving to Christmas season, lockdowns in key markets put significant pressure on delivery networks (both in terms of supply and demand), with couriers and postal services taking longer to deliver. As a result, management decided to reduce active marketing in order not to disappoint customers. Despite this reduction in spend, revenues still grew 16% on an organic, constant currency basis in H121. The company noted that Personal Creations generated double-digit revenue growth and saw improved profitability in H121. The integration of CafePress is ongoing.

In Avanquest, as more than half of revenues (56% vs 42% in H120) are now coming from subscription licences, profitability has started to increase (11.5% vs 8.0% in H120). Management expects to at least maintain this level of profitability in H221. In March, the division acquired a business called PDFescape for an undisclosed amount. PDFescape was already white labelling Soda pdf so will not add materially to revenues. However, it was a very profitable business so should help further boost the profitability of the division.

In myDevices, management decided to reduce costs while customer demand is effectively on hold. It will start to reinvest as lockdown restrictions are lifted and customers are able to physically install IoT devices.

Outlook and changes to forecasts

Management reiterated its outlook for revenue of €700m with an EBITDA margin of 10% by FY23. We have revised our forecasts to reflect H121 profitability and increased our PlanetArt revenue forecasts to reflect continued strong demand. This results in an 18% increase in our FY21 pre-IFRS 16 EBITDA forecast and a 13% increase for FY22. This flows through to normalised diluted EPS forecasts, which we increase by 27% in FY21 and 20% in FY22.

Exhibit 3: Changes to forecasts

€m

FY21e

FY21e

FY22e

FY22e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Revenues

479.3

479.2

(0.0%)

17.1%

549.1

564.1

2.7%

17.7%

EBITDA

34.2

40.0

17.1%

94.2%

40.0

45.0

12.5%

12.5%

EBITDA margin

7.1%

8.3%

1.2%

3.3%

7.3%

8.0%

0.7%

(0.4%)

EBITDA - pre IFRS 16

31.0

36.4

17.6%

108.7%

36.8

41.4

12.5%

13.7%

EBITDA margin - pre IFRS 16

6.5%

7.6%

1.1%

3.3%

6.7%

7.3%

0.6%

(0.3%)

Normalised operating profit

29.3

35.1

20.0%

122.1%

35.1

40.1

14.2%

14.3%

Normalised operating profit margin

6.1%

7.3%

1.2%

3.5%

6.4%

7.1%

0.7%

(0.2%)

Reported operating profit

23.0

26.5

15.4%

239.7%

31.8

36.8

15.7%

38.9%

Reported operating margin

4.8%

5.5%

0.7%

3.6%

5.8%

6.5%

0.7%

1.0%

Normalised PBT

24.5

29.2

18.9%

158.0%

30.4

35.4

16.5%

21.3%

Reported PBT

18.2

20.6

12.9%

523.0%

27.1

32.1

18.5%

56.0%

Normalised net income

14.4

18.3

27.1%

128.5%

17.7

21.1

19.5%

15.5%

Reported net income

9.5

11.4

19.4%

2176.4%

15.1

18.6

22.7%

63.1%

Normalised basic EPS (€)

0.37

0.46

27.1%

127.7%

0.45

0.53

19.5%

15.1%

Normalised diluted EPS (€)

0.36

0.46

27.1%

128.5%

0.44

0.53

19.5%

15.5%

Reported basic EPS (€)

0.24

0.29

19.4%

2168.2%

0.38

0.47

22.7%

62.5%

Net debt/(cash)

(24.0)

(24.3)

1.2%

74.9%

(51.5)

(56.7)

10.1%

133.4%

Divisional revenues

PlanetArt

383.8

383.9

0.0%

22.3%

441.4

456.3

3.4%

18.9%

Avanquest

90.3

90.2

(0.1%)

(0.1%)

101.5

101.4

(0.1%)

12.4%

myDevices

5.2

5.1

(1.9%)

5.2%

6.3

6.3

0.0%

24.8%

Total

479.3

479.2

(0.0%)

17.1%

549.1

564.1

2.7%

17.7%

Divisional EBITDA

PlanetArt

23.5

28.3

20.4%

100.4%

27.0

31.3

15.9%

10.6%

Avanquest

11.3

10.5

(7.1%)

46.6%

13.0

13.3

2.3%

26.7%

myDevices

(3.9)

(2.4)

(37.7%)

(37.5%)

(3.2)

(3.2)

0.0%

33.3%

Total EBITDA - pre IFRS 16

31.0

36.4

17.6%

108.7%

36.8

41.4

12.5%

13.7%

Source: Edison Investment Research

Valuation

In Exhibit 4, we show how the Claranova divisions compare to peers in terms of financial and valuation metrics. The personalised e-commerce peer group now includes Moonpig, recently listed on the London Stock Exchange. In Exhibit 5, we show our sum-of-parts valuation, which values each division separately and takes into account the minority interests in each division. We adjust the EV/sales multiples we use to reflect growth and profitability versus peers. We note the Claranova EBITDA forecasts are pre-IFRS so include lease payments, depressing EBITDA margins compared to peers. However, this effect is removed at the EBIT level.

Exhibit 4: Peer financial and valuation metrics

Quoted

Market

Rev growth (%)

EBITDA* margin (%)

EBIT margin (%)

EV/ Revs

EV/ EBITDA

P/E

ccy

cap (m)

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

Claranova

EUR

330

17.1

17.7

8.3

8.0

5.5

6.5

0.7

0.6

7.9

7.0

18.3

15.8

Personalised e-commerce

PlanetArt

22.3

18.9

7.4

6.9

CEWE Stiftung

EUR

893

3.1

4.1

17.7

17.9

10.5

10.8

1.1

1.1

6.4

6.1

17.5

15.6

Cimpress

USD

2604

-0.4

8.4

14.8

15.6

6.6

8.1

1.6

1.5

11.0

9.6

N/A

34.8

Moonpig

GBp

1448

101.2

-26.6

22.9

23.1

18.2

16.6

4.3

5.8

18.6

25.2

24.4

46.6

1-800 Flowers

USD

1790

35.0

3.4

9.7

10.0

7.3

7.2

0.8

0.8

8.3

7.7

17.1

16.2

Average

34.7

-2.7

16.3

16.7

10.7

10.7

2.0

2.3

11.0

12.1

19.7

28.3

Software publisher/reseller

Avanquest

-0.1

12.4

11.6

13.1

Avast

GBp

4692

6.8

6.7

55.5

55.7

49.7

52.7

7.5

7.1

13.6

12.7

17.0

15.9

Foxit

CNY

10805

82.8

35.9

33.3

33.9

N/A

N/A

12.1

8.9

36.2

26.2

56.5

40.8

IAC

USD

19201

16.8

17.1

5.3

8.5

-3.9

0.2

4.8

4.1

89.3

48.0

N/A

N/A

Kape Technologies

GBp

639

61.8

23.2

37.2

36.9

32.0

31.8

4.4

3.6

11.8

9.7

15.3

12.4

Nitro Software

AUD

526

19.1

22.1

-28.6

-25.1

-34.2

-27.7

7.5

6.1

N/A

N/A

N/A

N/A

Average

37.5

21.0

20.6

22.0

10.9

14.2

7.2

5.9

37.7

24.1

29.6

23.0

Average excluding Foxit

26.1

17.3

17.4

19.0

10.9

14.2

6.0

5.2

38.3

23.4

16.1

14.1

IoT

myDevices

5.2

24.8

-47.5

-50.8

Calamp Corp

USD

380

-8.4

-1.0

8.3

12.2

3.1

6.3

1.4

1.4

17.0

11.7

88.0

25.1

Digi International

USD

630

8.5

8.4

15.8

16.4

4.4

8.7

2.1

1.9

13.1

11.6

58.1

30.5

Sierra Wireless

CAD

677

5.2

9.2

0.8

5.1

-3.2

1.4

0.8

0.7

105.3

14.3

N/A

N/A

Telit Comms

GBp

280

11.5

N/A

11.7

N/A

6.0

N/A

0.9

N/A

7.3

N/A

19.2

N/A

Average

4.2

5.5

9.1

11.2

2.6

5.5

1.3

1.4

35.7

12.6

55.1

27.8

French software

Axway Software

EUR

574

5.8

6.8

12.6

13.6

9.4

10.7

2.0

1.9

16.0

13.9

24.3

20.5

Cegedim

EUR

336

2.3

3.9

21.3

21.5

8.1

8.5

1.1

1.1

5.4

5.1

15.6

13.7

ESI Group

EUR

286

38.3

6.8

11.1

12.2

5.7

7.0

2.3

2.2

20.9

17.9

57.4

42.9

Esker

EUR

1160

9.5

16.4

19.9

20.7

12.3

12.5

9.3

8.0

46.9

38.6

94.3

79.9

Lectra

EUR

916

20.5

33.3

21.4

19.3

15.5

14.3

2.8

2.1

13.3

11.0

38.6

26.1

Linedata Services

EUR

228

2.5

2.5

27.5

28.0

17.6

18.1

1.8

1.8

6.7

6.4

12.2

11.5

Prodware

EUR

47

2.4

3.0

28.2

28.5

11.0

11.6

0.9

0.9

3.1

3.0

3.7

3.4

Average

11.6

10.4

20.3

20.5

11.4

11.8

2.9

2.6

16.0

13.7

35.2

28.3

Source: Edison Investment Research, Refinitiv (as at 1 April). *Claranova EBITDA is pre-IFRS 16 so includes lease expenses.

Exhibit 5: Sum-of-parts valuation

FY21e

FY22e

EV based on FY21e sales multiple (€m)

Minority interest

Value to shareholders (€m)

EV/Sales multiple (x)

PlanetArt

1.3

1.1

499.1

7.7%

460.5

Avanquest

2.0

1.8

180.5

64.1%

64.8

myDevices

4.0

3.2

20.2

38.1%

12.5

Implied EV/EBITDA multiple

699.7

537.8

PlanetArt

17.6

15.9

Avanquest

17.2

13.6

myDevices

N/A

N/A

€m

Upside/(downside)

Net cash at end FY20

13.9

Equity value (€m)

544.7

Cost of acquisitions

(7.0)

Per share value (€)

13.79

65%

Adjusted net cash

6.9

No. shares (m)

39.5

Source: Edison Investment Research

Exhibit 6: Financial summary

€'m

2015

2016

2017

2018

2019

2020

2021e

2022e

30-June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

93.1

117.4

130.2

161.5

262.3

409.1

479.2

564.1

EBITDA

 

 

(6.8)

(9.2)

(5.0)

3.9

16.0

20.6

40.0

45.0

Normalised operating profit

 

 

(11.4)

(16.0)

(5.8)

3.4

15.5

15.8

35.1

40.1

Amortisation of acquired intangibles

0.0

0.0

0.0

0.0

(1.5)

(2.4)

(3.3)

(3.3)

Exceptionals

15.6

(10.0)

0.4

(2.4)

(2.9)

(5.6)

(5.3)

0.0

Share-based payments

(0.0)

(0.1)

(4.8)

(7.1)

0.3

0.0

0.0

0.0

Reported operating profit

4.2

(26.1)

(10.1)

(6.1)

11.4

7.8

26.5

36.8

Net Interest

1.1

(1.7)

(0.9)

(0.3)

(3.5)

(4.5)

(5.9)

(4.7)

Joint ventures & associates (post tax)

0.0

(0.0)

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

(45.6)

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

(10.3)

(17.7)

(6.6)

3.1

12.0

11.3

29.2

35.4

Profit Before Tax (reported)

 

 

5.3

(27.8)

(11.0)

(6.4)

(37.7)

3.3

20.6

32.1

Reported tax

(0.6)

(0.8)

(0.4)

(1.8)

(3.7)

(2.1)

(5.0)

(7.4)

Profit After Tax (norm)

(10.9)

(18.5)

(7.0)

2.4

9.2

8.7

22.4

27.2

Profit After Tax (reported)

4.7

(28.6)

(11.4)

(8.2)

(41.4)

1.2

15.5

24.7

Minority interests

(8.1)

0.0

0.3

0.2

0.6

(0.7)

(4.2)

(6.1)

Discontinued operations

(3.2)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

(18.9)

(18.5)

(6.7)

2.6

9.8

8.0

18.3

21.1

Net income (reported)

(6.5)

(28.6)

(11.0)

(7.9)

(40.8)

0.5

11.4

18.6

Basic ave. number of shares outstanding (m)

6

38

38

39

39

39

39

39

EPS - basic normalised (€)

 

 

(3.27)

(0.49)

(0.18)

0.07

0.25

0.20

0.46

0.53

EPS - diluted normalised (€)

 

 

(3.27)

(0.49)

(0.18)

0.06

0.25

0.20

0.46

0.53

EPS - basic reported (€)

 

 

(1.13)

(0.76)

(0.29)

(0.20)

(1.04)

0.01

0.29

0.47

Dividend (€)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

#DIV/0!

26.1

10.9

24.0

62.4

56.0

17.1

17.7

EBITDA Margin (%)

-7.3

-7.9

-3.8

2.4

6.1

5.0

8.3

8.0

Normalised Operating Margin

-12.3

-13.7

-4.4

2.1

5.9

3.9

7.3

7.1

BALANCE SHEET

Fixed Assets

 

 

15.7

3.0

2.0

1.3

75.1

93.7

97.1

93.5

Intangible Assets

12.0

1.5

0.9

0.5

69.9

70.5

74.1

70.7

Tangible Assets

0.6

0.5

0.3

0.2

1.4

15.7

15.5

15.3

Investments & other

3.1

1.1

0.7

0.6

3.8

7.5

7.5

7.5

Current Assets

 

 

48.0

25.5

28.1

79.1

100.9

116.3

130.9

168.3

Stocks

5.9

5.0

3.7

3.7

4.8

14.4

16.9

19.9

Debtors

4.8

4.7

4.3

4.9

11.6

9.9

11.6

13.6

Cash & cash equivalents

30.5

11.1

17.1

65.7

75.4

82.8

93.2

125.6

Other

6.9

4.7

2.9

4.8

9.1

9.2

9.2

9.2

Current Liabilities

 

 

(32.0)

(25.3)

(28.1)

(37.2)

(60.5)

(74.6)

(77.0)

(86.2)

Creditors

(26.9)

(24.5)

(26.6)

(35.4)

(54.8)

(64.3)

(66.7)

(75.9)

Tax and social security

(0.3)

(0.0)

(0.3)

(1.7)

(3.0)

(1.2)

(1.2)

(1.2)

Short term borrowings

(4.8)

(0.7)

(1.1)

(0.1)

(2.7)

(6.1)

(6.1)

(6.1)

Other

0.0

0.0

0.0

0.0

0.0

(3.0)

(3.0)

(3.0)

Long Term Liabilities

 

 

(2.4)

(1.1)

(0.7)

(29.0)

(52.0)

(73.1)

(73.1)

(73.1)

Long term borrowings

(1.8)

(0.6)

0.0

(28.1)

(49.1)

(62.8)

(62.8)

(62.8)

Other long term liabilities

(0.7)

(0.5)

(0.7)

(0.9)

(2.9)

(10.3)

(10.3)

(10.3)

Net Assets

 

 

29.3

2.1

1.3

14.2

63.6

62.3

77.8

102.5

Minority interests

0.0

0.0

(0.1)

(1.8)

(11.0)

(11.7)

(15.9)

(22.0)

Shareholders' equity

 

 

29.3

2.1

1.2

12.5

52.6

50.6

62.0

80.6

CASH FLOW

Op Cash Flow before WC and tax

(6.8)

(9.2)

(5.0)

3.9

16.0

20.6

40.0

45.0

Working capital

0.4

2.5

6.8

7.9

(4.1)

22.5

(1.7)

4.1

Exceptional & other

(3.8)

(4.3)

(2.2)

(5.7)

(5.2)

(6.3)

(5.3)

0.0

Tax

0.3

(0.3)

(0.0)

(1.2)

(3.8)

(6.8)

(5.0)

(7.4)

Net operating cash flow

 

 

(9.8)

(11.3)

(0.4)

5.0

3.0

30.0

27.9

41.8

Capex

(4.4)

(0.9)

(0.2)

(0.1)

(2.5)

(1.2)

(1.0)

(1.0)

Acquisitions/disposals

10.8

(0.4)

3.6

14.2

(13.3)

(31.9)

(7.0)

0.0

Net interest

(0.9)

(0.1)

(0.0)

(0.3)

0.0

(0.5)

(5.9)

(4.7)

Equity financing

33.2

(5.1)

1.9

2.0

(1.4)

0.0

0.0

0.0

Dividends

0.0

2.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

0.1

0.1

0.1

(0.6)

0.0

0.4

(3.6)

(3.6)

Net Cash Flow

29.0

(15.7)

5.0

20.1

(14.2)

(3.2)

10.4

32.4

Opening net debt/(cash)

 

 

18.0

(23.9)

(9.8)

(16.0)

(37.5)

(23.6)

(13.9)

(24.3)

FX

0.1

(0.1)

(0.6)

0.4

0.3

(0.8)

0.0

0.0

Other non-cash movements

12.6

1.7

1.8

1.1

0.0

(5.7)

0.0

0.0

Closing net debt/(cash)

 

 

(23.9)

(9.8)

(16.0)

(37.5)

(23.6)

(13.9)

(24.3)

(56.7)

Source: Claranova, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Claranova and prepared and issued by Edison, in consideration of a fee payable by Claranova. 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 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

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United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Claranova and prepared and issued by Edison, in consideration of a fee payable by Claranova. 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 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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