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Record performance delivered in H121

Marshall Motor Holdings 12 August 2021 Update
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Marshall Motor Holdings

Record performance delivered in H121

H121 results

Automotive retail

12 August 2021

Price

250p

Market cap

£196m

Adjusted net cash (£m) at 30 June 2021
(excludes £92.4m lease liabilities)

57.2

Shares in issue

78.2m

Free float

35%

Code

MMH

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

10.6

47.1

104.1

Rel (local)

8.7

40.7

69.2

52-week high/low

250p

120p

Business description

Marshall Motor Holdings is the seventh largest UK motor retailer, operating 116 franchises spread across 22 brands in 29 counties. It is one of six UK dealership groups that represent each of the top five volume and premium brands. The group has a strong presence in eastern and southern England.

Next events

FY21 results

March 2022

Analyst

Andy Chambers

+44 (0)20 3681 2525

Marshall Motor Holdings is a research client of Edison Investment Research Limited

The strong used car market has enabled Marshall Motor Holdings (MMH) to deliver an exceptional H121 performance that should drive record FY21 underlying PBT of not less than £40m as indicated last week. However, the uncertainty surrounding the market outlook continues. Vehicle supply issues are likely to result in lower volumes for both new and used cars in H221 and H122 affecting dealership profitability. We have upgraded FY21 to reflect guidance but our FY22 estimates are unchanged with a more normal level of profit. The resumption of dividends is welcome with an exceptional FY21 payment to reflect the strong current year financial performance.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/19

2,276

22.1

22.9

2.85

10.9

1.1

12/20

2,154

20.9

21.1

0.00

11.9

N/A

12/21e

2,337

40.2

40.3

13.30

6.2

5.3

12/22e

2,247

22.8

22.9

8.55

10.9

3.4

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

Outperformance in an exceptional market

Market conditions were exceptionally favourable during H121, with MMH outperforming both new and used car segments once more. Record underlying PBT of £38.4m (H120 loss £11.8m) was more than double the £15.2m achieved in H119. Against a weak H120, l-f-l new unit sales rose 46.1% (market +39.2%), used unit sales increased by 51.7% (market +31.1%) and aftersales by 34.8%. Second-hand prices also increased at unprecedented rates, especially in Q221, driving H121 used car gross margin up 246bp to a best-ever 8.6% including a £2.8m (45bp) stock provision release. Group gross margin was up 117bp at 11.8%, also a record level with both new and aftersales increasing margins. The balance sheet remains robust with £57.2m of adjusted net cash (excluding lease liabilities) at H121 after continuing to invest £17.2m in both organic and acquired growth, including the addition of two new businesses.

Supply constraints expected to prove disruptive

The supply shortages caused primarily by the global chip shortage are increasing in severity, with production affected at many manufacturers. To date, the availability of stock has helped to offset the shortfall. However, inventory levels of new and used cars are now low, with extended lead times on new cars further reducing vehicle returns from financial agreements, which restricts quality used car availability. While demand remains strong, the inability to complete sales will hurt the top line in both segments and reduce dealership profits in H221, and most probably in H122. Nevertheless, MMH remains well placed to pursue its growths strategy.

Valuation: Dividends a welcome return

The exceptional interim dividend payment of 8.86p provides attractive immediate income and should lead to a FY21 yield of 5.3%. The dividend should be restored to a level with 2.5–3.5x cover in FY22, still a healthy level of yield support. The recent share price rise represents a significant multiple expansion for FY22, although a P/E of 10.9x may not look demanding if growth resumes in FY23.

H121 record driven by used car performance

H121 has seen positive supply and demand dynamics across both new and used cars despite the third national lockdown, which was only lifted in early April. Compared to H120, which saw the UK new car market fall 48.5% below H119, the availability in H121 of click and collect and extended use of remote and online communications allowed a more consistent level of trading during the showroom closures in Q121. However, the shortage of semiconductor chips led to disruption in the supply of new vehicles from manufacturers and increasing demand for quality used cars as an alternative. As stocks had been held in part due to Brexit concerns, these became available in a very positive pricing environment, which saw an unprecedented 14.7% increase in used car values in Q221 as stock levels fell.

MMH outperformed the market in both the retail and fleet new car segments, as well as in the used segment. The favourable market dynamics and tight operational control led to a record level of first-half profitability and very strong cash flows. The key financial highlights are shown in Exhibit 1 below, with comparison provided to H119, which we feel is more meaningful than compared to the heavily pandemic-affected H120.

Exhibit 1: MMH H121 key financials

Six months to 30 June (£m)

H119

H120

H121

% change

vs H120

vs H119

Revenues

1,183.3

895.3

1,334.1

49.0%

12.8%

EBITDA

30.0

4.7

53.8

1049.0%

79.2%

EBIT (underlying)

20.2

(6.4)

42.9

N/M

112.8%

Profit before tax (underlying)

15.2

(11.8)

38.4

N/M

153.7%

EPS (p) - ongoing underlying

15.0

(14.8)

38.8

N/M

158.4%

DPS (p)

2.85

0.00

8.86

N/M

210.9%

NAV per share (p)

257

244

306

+25.4%

+19.1%

Source: Company reports

Although showrooms were closed during Q121, MMH’s H121 like-for-like new car unit sales rose 46.1%, with retail volumes rising 36.0% and fleet by 64.5% (against market increases of 30.6% and 47.3% respectively). Used car like-for-like unit sales were up 51.7% compared to a 31.1% rise in used car transactions, and 1.6% ahead of FY19 levels while the market was 6.6% down. Aftersales like-for-like revenues also rose by 34.6%, as operations remained open throughout the period compared to H120 when only 62 operations remained open for essential servicing during the first lockdown.

Adjusting for portfolio changes, like-for-like group revenues increased by 49.9% to £1,315.3m. On a like-for-like basis, new car revenues rose 47.4% to £604.8m with total new car revenue of £610.5m (H120: £417.4m, H119: £569.1m). Used car like-for-like revenues were £607.3m, up 56.3%, with total revenue for H121 of £618.8m (H120: £395.6m, H119: £509.6m). Total aftersales revenues were £132.2m (H120: £100.3m, H119: £129.5m), a 34.8% like-for-like improvement. Aftersales revenues were just 2.0% above the H119 level, reflecting the continued impact of the pandemic.

Group gross profit margins were a record 11.8% (H120: 10.6%, H119: 11.4%), driven by the strong used car performance but also supported by increases in the new car and aftersales segments. Used car gross profit margins of 8.6% benefited from the sharp Q221 appreciation of used car prices and the release of £2.8m of stock provisions, which reflected trading conditions. New car gross margin increased by 85bp to 6.9% (H120: 6.0%, H119: 7.7%), in part reflecting the improved achievement of manufacturer volume bonuses compared to the depressed levels of the prior year, although these were still well below historical levels. Aftersales business improved H121 gross margin by 171bp to 46.8% (H120: 45.0%, H119: 44.6%).

At the full year, the company changed its presentation of the impact of COVID to be included in underlying costs to reflect the longer than anticipated effects. As a result, interim results for H120 have been restated to the same basis, with £2.8m being transferred from non-underlying to underlying. On the adjusted basis, underlying operating expenses increased by 13% to £114.5m (H120: £101.6m, H119: £114.9m), still below the H119 level despite adding £16.0m from acquired businesses. There was also a further benefit from business rates relief of £4.7m (H120: £2.3m), with a further £2.0m expected in H221. As previously indicated, management is repaying all £4.0m of furlough grants received in H121, and MMH’s enhanced expenditure actions continued to suppress costs. Staff costs will increase in H221 as the company implemented a wage increase backdated to 1 May 2021 to employees who were also paid a thank you bonus in June.

Exhibit 2: MMH gross margin analysis

Year to Dec

2019

2020

2021e

Year-on -year change

(£m)

H119

H219e

FY19

H120

H220

FY20

H121

H221e

FY21e

H121

H221e

FY21e

Revenues

New Car

569.1

510.4

1,079.5

417.4

570.7

988.1

610.5

397.8

1,008.3

46%

(30%)

2%

Used Car

509.6

477.1

986.7

395.6

575.6

971.1

618.8

488.3

1,107.1

56%

(15%)

14%

Aftersales

129.5

128.6

258.1

100.3

140.3

240.6

132.2

134.9

267.1

32%

(4%)

11%

Intra group

(25.0)

(23.2)

(48.2)

(17.9)

(27.5)

(45.4)

(27.3)

(18.6)

(45.9)

52%

(32%)

1%

Total group revenue

1,183.3

1,092.9

2,276.1

895.3

1,259.1

2,154.4

1,334.1

1,002.4

2,336.5

49%

(20%)

8%

Gross profit

New

43.6

36.6

80.1

25.2

39.9

65.1

42.1

23.1

65.2

67%

(42%)

0%

Used

33.5

32.0

65.5

24.3

39.4

63.7

53.2

30.3

83.5

119%

(23%)

31%

Aftersales

57.8

56.8

114.6

45.2

63.4

108.6

61.8

59.8

121.5

37%

(6%)

12%

Retail

134.8

125.3

260.2

94.7

142.7

237.4

157.1

113.1

270.2

66%

(21%)

14%

Internal/Other

0.2

0.4

0.6

0.5

0.3

0.8

0.3

0.3

0.6

(45%)

2%

(27%)

Group gross profit

135.0

125.8

260.8

95.2

143.0

238.2

157.4

113.4

270.8

65%

(21%)

14%

Gross profit margin

 

New

7.7%

7.2%

7.4%

6.0%

7.0%

6.6%

6.9%

5.8%

6.5%

Used

6.6%

6.7%

6.6%

6.1%

6.8%

6.6%

8.6%

6.2%

7.5%

Aftersales

44.6%

44.2%

44.4%

45.0%

45.2%

45.1%

46.8%

44.3%

45.5%

Group

11.4%

11.5%

11.5%

10.6%

11.4%

11.1%

11.8%

11.3%

11.6%

Source: Company reports, Edison Investment Research estimates

The group made an underlying operating profit of £42.9m (H120 restated operating loss of £6.4m, H119 operating profit: £20.2m). Finance costs fell slightly to £4.5m (H119: 5.3m) due to lower stock levels with no drawdown of the revolving credit facility (RCF). Adjusting out exceptional one-off benefits of £11.8m from used car margin levels, the £2.8m stock provision release, rates relief of £4.7m and abnormally low stock levels of £2.0m, management estimates underlying PBT for H121 of £17.2m (reported underlying PBT £38.4m).

The group finished H121 with adjusted net funds (excluding leases) of £57.2m compared to net cash of £28.8m at the start of the year. We expect some of the benefit of the low inventory levels to unwind in H221. Since the half year, the company has by choice reduced its RCF by £10m to £110m, which still expires in January 2023, with covenants returning to the pre-waiver basis earlier than anticipated. Management believes the revised level is more than adequate to support its strategic investment for growth. In H121, the RCF was undrawn and remains so.

MMH remains very well positioned to pursue its growth strategy, identifying the brands where it wishes to strengthen and seeking opportunities to act as a consolidator able to improve returns on investment. The investment levels remained significant in H121, with £9.8m of capex. It included a freehold site in Beckenham bought for £4.7m that will be used to consolidate three local Audi sites, as well as £1.8m for a freehold body shop in Cambridge and completion of refurbishment work at Volvo Derby and Ford Commercial vehicles in King’s Lynn. The freehold property base of £139.6m was up £15.7m on the prior year, largely due to acquisitions and site investments.

The company also acquired three new franchises in H121 through the acquisitions of Jaguar Land Rover (JLR) in Cheltenham and Gloucester (two brands, one site) in May and Nissan Leicester in June. Both are currently loss-making, which management is confident can be improved, but both are strategically enhancing. MMH now has 16 JLR sites (seven Jaguar, nine Land Rover), making it a key brand partner for each of the marques.

Further new opportunities should continue to present themselves as the trend continues to fewer, larger dealership groups as investment requirements increase. MMH remains well positioned to participate in further consolidation.

It should also be noted that MMH is intent on strengthening its position in van markets, which have been far more resilient than cars during the pandemic, driven by package delivery needs.

Management has restarted dividends and is paying an exceptional 8.86p for H121, reflecting the strong trading and cash performance. The FY21 split is expected to be the reverse of normal policy, with half of the interim amount expected to be paid as a final dividend at the year end. Management expects to restore the previous progressive policy from FY22, with the normal one-third interim/two-thirds final split with cover of between 2.5x and 3.5x.

Outlook

Management guidance is for a more difficult H221, with volumes of both new and used car units sold expected to decline as supply shortages worsen. In July 2021, UK new car registrations were the lowest for the month since 1998, primarily attributed to the supply shortages and possible ‘pingdemic’ disruption to purchasing decisions.

It remains hard to assess what the normalised rate of UK vehicle sales would be at present, especially as unemployment rates may worsen as the furlough scheme ends. However, the economic prognosis for the UK has been improving and factors such as disposable income appear to be more supportive. The latest SMMT forecast from July 2021 indicates total FY22 UK new car registrations of 2.1m, a 15.4% increase, but supply-side issues could persist and disrupt that.

Exhibit 3: Marshall Motor Holdings revisions to earnings estimates

Year to December (£m)

2021e

2022e

 

Prior

New

% change

Prior

New

% change

New Car

1,008.3

1,008.3

0.0%

1,059.7

978.1

-7.7%

Used Car

1,078.0

1,107.1

2.7%

1,088.7

1,045.6

-4.0%

Aftersales

256.2

267.1

4.2%

266.5

269.7

1.2%

Intra group

(45.9)

(45.9)

0.0%

(46.5)

(46.5)

0.0%

Group revenues

2,296.6

2,336.5

1.7%

2,368.4

2,246.9

-5.1%

 

 

 

 

 

 

EBITDA

56.0

70.3

25.6%

52.8

52.2

-1.1%

Underlying operating profit

35.7

49.9

39.6%

32.5

32.4

-0.1%

Underlying PBT

26.1

40.2

53.9%

22.8

22.8

0.0%

 

 

 

 

 

 

EPS - underlying (p)

26.2

40.3

53.9%

22.9

22.9

0.0%

DPS (p)

6.0

13.3

121.7%

6.6

8.6

29.5%

Adjusted net debt/(cash)

(22.4)

(36.8)

64.4%

(22.3)

(25.4)

14.2%

Source: Edison Investment Research estimates

Management notes these uncertainties and states that a range of outcomes is possible for the current year and beyond. Current FY21 guidance is for underlying PBT of not less than £40m and our revised estimates now reflect that. We have taken a more cautious view of volumes for FY22. In addition, at some point it should be expected that the used car pricing levels will moderate as supply starts to normalise, although exactly when that will be is difficult to predict. We do not expect the current level of used car margins to be sustained in FY22 as availability of stock improves, and expect used car margins to return to more normal levels next year. FY22 will also face additional cost headwinds, with a full year impact of the wage increases and absence of business rates relief. Nevertheless, we believe profitability will be around pre-pandemic historical levels of £20–25m.

Exhibit 4: Financial summary

£m

2018

2019

2020

2021e

2022e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

2,186.9

2,276.1

2,154.4

2,336.5

2,246.9

Cost of Sales

(1,933.6)

(2,015.3)

(1,916.2)

(2,065.7)

(1,997.5)

Gross Profit

253.2

260.8

238.2

270.8

249.4

EBITDA

 

 

52.3

52.0

53.4

70.3

52.2

Operating Profit (before amort. and except).

 

 

34.3

32.0

31.1

49.9

32.4

Intangible Amortisation

(0.3)

(0.4)

(0.2)

(0.2)

(0.3)

Exceptionals

(6.7)

(2.4)

(0.6)

1.0

0.0

Other

0.0

0.0

0.0

0.0

0.0

Operating Profit

27.3

29.2

30.3

50.7

32.2

Net Interest

(9.6)

(9.9)

(10.2)

(9.7)

(9.6)

Profit Before Tax (norm)

 

 

24.7

22.1

20.9

40.2

22.8

Profit Before Tax (FRS 3)

 

 

17.7

19.2

20.1

41.0

22.5

Tax

(4.7)

(4.1)

(6.4)

(8.9)

(4.9)

Profit After Tax (norm)

20.5

17.9

16.5

31.5

17.9

Profit After Tax (FRS 3)

13.1

15.2

13.7

32.1

17.6

Average Number of Shares Outstanding (m)

77.7

78.2

78.2

78.2

78.2

EPS - normalised (p)

 

 

26.3

22.9

21.1

40.3

22.9

EPS - normalised and fully diluted (p)

 

 

25.5

22.6

20.6

39.4

22.4

EPS - (IFRS) (p)

 

 

16.8

19.4

17.5

41.1

22.5

Dividend per share (p)

8.54

2.85

0.00

13.30

8.55

Gross Margin (%)

11.6

11.5

11.1

11.6

11.1

EBITDA Margin (%)

2.4

2.3

2.5

3.0

2.3

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

1.6

1.4

1.4

2.1

1.4

BALANCE SHEET

Fixed Assets

 

 

262.9

390.2

378.2

392.1

396.7

Intangible Assets

112.2

119.3

119.5

120.6

120.7

Tangible Assets

150.7

162.9

159.8

172.2

176.6

Right of use asset

108.0

98.8

99.3

99.3

Investments

0.0

0.0

0.0

0.0

0.0

Current Assets

 

 

466.3

560.5

464.8

474.9

519.5

Stocks

384.0

470.7

362.9

346.5

404.4

Debtors

71.9

79.2

59.6

79.4

76.4

Cash

1.2

0.1

33.8

39.8

29.8

Other

9.2

10.6

8.5

9.1

8.8

Current Liabilities

 

 

(502.2)

(608.4)

(494.1)

(496.5)

(533.1)

Creditors

(501.5)

(582.8)

(493.4)

(496.5)

(533.1)

Short term borrowings

(0.6)

(25.6)

(0.6)

0.0

0.0

Long Term Liabilities

 

 

(30.8)

(139.9)

(133.0)

(132.6)

(134.0)

Long term borrowings

(5.7)

(5.0)

(4.4)

(3.0)

(4.4)

Lease Liabilities

0.0

(108.1)

(99.3)

(99.7)

(99.7)

Other long term liabilities

(25.2)

(26.8)

(29.3)

(29.9)

(29.9)

Net Assets

 

 

196.3

202.3

215.9

237.9

249.1

CASH FLOW

Operating Cash Flow

 

 

39.2

43.6

87.5

61.4

24.0

Net Interest

(2.1)

(1.0)

(1.0)

(1.7)

(0.4)

Tax

(4.7)

(4.1)

(6.4)

(8.9)

(4.9)

Capex

(23.4)

(19.5)

(11.7)

(16.8)

(15.3)

Acquisitions/disposals

1.6

(27.4)

(0.6)

(10.2)

0.0

Financing

(1.0)

(0.9)

0.0

0.0

0.0

Dividends

(5.0)

(7.2)

0.0

(6.9)

(5.7)

Other

(7.6)

(9.0)

(8.4)

(9.0)

(9.0)

Net Cash Flow

(2.9)

(25.4)

59.4

8.0

(11.4)

Opening adjusted net debt/(cash)

 

 

2.2

5.1

30.6

(28.8)

(36.8)

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 adjusted net debt/(cash)

 

 

5.1

30.6

(28.8)

(36.8)

(25.4)

Net financial liabilities (including lease liabilities)

138.6

70.5

62.9

74.3

Source: Company reports, Edison Investment Research estimates


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

United Kingdom

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

General disclaimer and copyright

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