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Strong Q1 drives upgrades

TXT e-solutions 18 May 2021 Update
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TXT e-solutions

Strong Q1 drives upgrades

Q121 results

Software & comp services

18 May 2021

Price

€7.38

Market cap

€87m

$1.20/€

Net cash (€m) at end Q121

10.8

Shares in issue

11.7m

Free float

50.6%

Code

TXT

Primary exchange

Borsa Italiana (STAR)

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

0.4

2.5

(2.3)

Rel (local)

(0.3)

(4.8)

(33.7)

52-week high/low

€8.43

€6.76

Business description

TXT e-solutions provides IT, consulting and R&D services to aerospace, aviation, automotive, banking and finance customers.

Next events

H121 results

5 August 2021

Analyst

Katherine Thompson

+44 (0)20 3077 5730

TXT e-solutions is a research client of Edison Investment Research Limited

TXT e-solutions reported strong revenue and profit growth in Q121, reflecting the benefit of recent acquisitions and good cost control. Since the end of Q1, the company has signed promising contracts in both divisions, including the first contract for TXT Working Capital Solutions. We have revised our forecasts to reflect this performance, resulting in upgrades to our normalised EPS forecasts of 5.5% in FY21 and 6.9% in FY22. With net cash of €10.8m and treasury shares worth at least €9m, management indicated it is considering further M&A while continuing to drive organic growth.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/19

59.1

7.6

0.46

0.00

16.2

N/A

12/20

68.8

7.1

0.47

0.04

15.7

0.5

12/21e

86.7

8.7

0.53

0.06

13.8

0.8

12/22e

92.4

10.0

0.61

0.08

12.0

1.1

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

Profitability improved in Q121

TXT reported 32% y-o-y revenue growth for Q121, or 1% growth on an organic basis. The Aerospace & Aviation (A&A) division grew revenue 4% y-o-y (all organic) despite weakness in the civil aviation sector. The Fintech division grew revenue 83%; excluding recent acquisitions, revenue declined 4%. Group EBITDA increased 38% y-o-y (15% organic) with the margin expanding by 0.5% to 12.6% and net income increasing by 391% y-o-y. In addition to pandemic-related cost savings, the company has benefited from cost synergies across the group. TXT closed the quarter with net cash of €10.8m after paying €14.3m for the stake in Banca del Fucino and €0.9m for the Assiopay minority interest.

Promising contract wins in Q221; estimates raised

So far in Q2, the A&A division has signed partnership agreements to supply Pacelab FPO software to Airbus subsidiary NAVBLUE and its WEAVR extended reality platform to a corporate and a university. In the Fintech division, contracts were signed for TXT Working Capital Solutions’ Polaris software and Cheleo’s non-performing loan (NPL) software. Based on Q1 results and recent contract signings, we have increased our revenue and EPS forecasts for FY21 and FY22. Our normalised EPS forecast increases by 5.5% in FY21 and 6.9% in FY22.

Valuation: At a discount

TXT continues to trade at a discount to its peer group on all measures, despite the deployment of a large proportion of the company’s cash balance into fintech acquisitions, and revenue growth and profitability above the group average. Evidence of improving demand in the A&A division and growing revenues from the earlier stage fintech businesses should help to reduce this discount.

Review of Q21 results

Exhibit 1: Q121 results highlights

€m

Q121

Q120

y-o-y

Revenues

21.5

16.3

32.1%

Licences & maintenance

2.0

2.3

-13.6%

Services

19.5

14.0

39.5%

Gross profit

8.3

7.3

13.7%

Gross margin

38.5%

44.7%

-6.2%

EBITDA

2.7

2.0

37.5%

EBITDA margin

12.6%

12.1%

0.5%

Normalised EBIT

2.2

1.5

43.0%

Normalised EBIT margin

10.1%

9.4%

0.8%

Reported EBIT

1.7

1.2

47.4%

Reported EBIT margin

8.0%

7.2%

0.8%

Reported net income

1.2

0.3

391.3%

Net cash

10.8

42.1

-74.3%

Source: TXT e-solutions, Edison Investment Research

TXT reported revenue growth of 32% y-o-y for Q121; excluding €5.0m of revenue contributed by acquisitions made in FY20, revenue grew 1% y-o-y. Gross profit grew 14% y-o-y, with gross margin declining 6pp as the acquisitions increased the weighting of lower-margin services revenue. EBITDA increased 38% y-o-y, with the margin increasing 0.5pp. R&D costs declined 8% reflecting the lower use of sub-contractors and synergies between group companies. Commercial costs increased 34%, mainly due to the acquired businesses but also due to investment in the fintech start-up businesses. G&A costs declined 14% as remote working reduced facilities costs and the company benefited from synergies across the group. Normalised EBIT increased 43% y-o-y and the normalised EBIT margin increased by 0.8pp. TXT generated net financial income of €0.3m from its invested funds. The reported tax rate was 38% in the quarter, down from 50% in Q120.

Exhibit 2: Changes in net cash position

€m

FY20

Q121

Cash & cash equivalents

11.9

13.5

Trading securities at fair value

68.2

53.5

Short-term bank debt

(28.2)

(29.0)

Short-term leases

(1.5)

(1.5)

Short-term earn outs

(1.0)

(1.0)

Long-term bank debt

(18.9)

(16.4)

Long-term lease debt

(3.6)

(3.3)

Long-term earn outs

(4.9)

(4.9)

Net cash

22.1

10.8

Source: TXT e-solutions

Net cash declined by €11.3m over the quarter. TXT paid €14.3m for its stake in Banca del Fucino (funded by selling trading securities) and €0.9m as part of the payment to buy out the 49% Assiopay minority interest. This was partially offset by €4.3m cash generated from operations. The company bought back 16k shares during Q1 at a cost of €0.1m and holds a total of 1.3 million treasury shares.

Divisional performance

The A&A division grew 4.4% y-o-y in Q121. Licence sales declined, partly due to lower civil aviation demand. Services revenue increased 8.9% y-o-y as the company sold more project work to the defence sector. With services making up 85% of divisional revenue in Q121 compared to 82% in Q120, this would have reduced divisional gross margin in Q121 versus Q120.

Exhibit 3: Divisional revenues, Q1

(€m)

Q121

Q120

y-o-y

Aerospace & Aviation (A&A)

11.0

10.5

4.4%

Software licences & maintenance

1.7

2.0

-15.5%

Services

9.3

8.6

8.9%

Fintech

10.5

5.7

83.3%

Software licences & maintenance

0.3

0.3

-1.3%

Services

10.2

5.4

88.1%

Group software licences & maintenance

2.0

2.3

-13.6%

Group services

19.5

14.0

39.5%

Source: TXT e-solutions

While business in civil aviation is currently subdued, in April PACE signed an agreement with NAVBLUE, a subsidiary of Airbus. NAVBLUE is a services company dedicated to flight operations and air traffic management solutions. PACE’s Pacelab FPO solution (flight planning optimisation software) will be integrated into NAVBLUE’s electronic flight folder (eFF+), representing a new route to market for PACE. TXT has also signed strategic partnerships for the use of its extended reality (XR) platform, WEAVR, with Paladin AI in Canada and for academic use at the Politecnico di Torino.

The Fintech division grew revenue 83.3% y-o-y. Stripping out the €5m contributed by MAC Solutions (acquired July 2020) and HSPI (acquired October 2020), revenue declined 3.5% y-o-y. The software testing business saw weaker demand during lockdown periods, which covered a greater proportion of Q121 than Q120. TXT continued to invest in the Faraday and Polaris solutions, with a net investment of €0.3m in the quarter.

In April, Cheleo signed a contract with AMCO to provide its NPL software to manage AMCO’s leasing receivables portfolio. In May, TXT Working Capital Solutions signed its first customer, Maire Tecnimont Group, to use its Polaris supply chain finance platform.

Changes to estimates

Exhibit 4: Changes to forecasts

FY21e old

FY21e new

change

y-o-y

FY22e old

FY22e new

change

y-o-y

Revenues (€m)

84.6

86.7

2.5%

26.1%

90.0

92.4

2.7%

6.5%

Gross margin

42.0%

40.8%

(1.2%)

(1.8%)

41.9%

41.6%

(0.2%)

0.8%

Gross profit

35.6

35.4

(0.5%)

20.9%

37.7

38.5

2.1%

8.7%

EBITDA (€m)

10.5

10.9

4.2%

27.2%

11.6

12.2

5.4%

11.7%

EBITDA margin

12.4%

12.6%

0.2%

0.1%

12.8%

13.2%

0.3%

0.6%

Normalised EBIT (€m)

8.4

8.8

5.4%

34.4%

9.4

10.1

6.7%

14.5%

Normalised EBIT margin

9.9%

10.1%

0.3%

0.6%

10.5%

10.9%

0.4%

0.8%

Reported operating profit (€m)

6.4

6.9

6.9%

112.9%

7.5

8.2

8.3%

18.5%

Normalised net income (€m)

5.9

6.3

5.4%

14.3%

6.7

7.2

6.7%

14.7%

Reported net income (€m)

4.6

4.9

7.0%

7.4%

5.4

5.8

8.4%

18.8%

Normalised EPS (€)

0.51

0.53

5.5%

13.9%

0.57

0.61

6.9%

14.5%

Reported basic EPS (€)

0.39

0.42

7.2%

7.0%

0.46

0.50

8.6%

18.6%

Net cash (€m)

13.9

13.6

(2.2%)

(38.3%)

20.2

20.3

0.3%

49.2%

Dividend (€)

0.06

0.06

0.0%

50.0%

0.08

0.08

0.0%

33.3%

Source: Edison Investment Research

We have revised our forecasts to reflect Q121 results. We have increased our revenue forecasts for FY21e (+2.5%) and FY22e (+2.7%). To reflect the increased proportion of services revenue in the mix, we have reduced our gross margin assumptions. This results in an increase in FY21e EBITDA of 4.2% and FY22e of 5.4%. We raise our EPS forecasts by 5.5% in FY21e and 6.9% in FY22e.

Valuation

The table below shows TXT’s valuation versus its peer group of European software and services providers. TXT continues to trade at a discount to its peer group on all measures, despite the deployment of a large proportion of the company’s cash balance into fintech acquisitions, and revenue growth and profitability above the group average. In our view, the company’s exposure to the aerospace and aviation market is likely to be weighing on the share price, as is uncertainty over the likely performance of the recent spate of acquisitions. We expect this discount to reduce as TXT provides evidence of:

A&A: performance remaining stable at least, until customers in COVID-19-hit sectors feel more confident of their futures and resume/accelerate orders.

Fintech: the early-stage businesses (TXT Risk Solutions, TXT Working Capital Solutions) starting to generate material revenues and reaching break-even; banks resuming normal activity for software testing; international revenues growing.

Overall, software revenues growing as a percentage of the total, as these generate much higher gross margins.

Exhibit 5: Peer group financial and valuation metrics

Company

Share price

Market cap

Rev growth

EBIT margin

EBITDA margin

EV/sales

EV/EBIT

P/E

Dividend yield

€m

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

TXT

7.38

87

26.1%

6.5%

10.1%

10.9%

12.6%

13.2%

0.7

0.7

7.3

6.4

13.8

12.0

0.8%

1.1%

European IT services companies

AKKA Technologies

23.06

724

3.6%

7.0%

0.4%

6.1%

9.5%

10.9%

0.7

0.6

158.8

10.4

N/A

11.5

0.1%

1.1%

Alten

99.05

3,415

12.3%

7.2%

7.4%

8.8%

10.1%

11.4%

1.3

1.2

17.2

13.5

24.2

18.9

1.0%

1.1%

AtoS

54.70

6,055

1.5%

2.5%

7.8%

8.7%

14.2%

14.7%

0.7

0.7

8.8

7.8

7.9

7.1

2.1%

2.5%

Cap Gemini

150.40

25,547

8.0%

5.6%

11.4%

11.9%

15.5%

15.7%

1.8

1.7

16.1

14.5

19.2

17.2

1.3%

1.5%

Devoteam

106.40

892

4.7%

6.6%

9.9%

10.3%

11.6%

11.5%

1.0

1.0

10.4

9.4

19.4

17.4

1.1%

1.2%

ESI Group

58.60

351

10.9%

6.2%

6.1%

7.5%

11.1%

12.3%

2.7

2.5

43.9

33.4

64.4

47.2

0.0%

0.0%

Reply

114.40

4,307

14.5%

10.1%

13.1%

13.5%

16.2%

16.4%

2.9

2.6

21.9

19.3

32.2

28.3

0.5%

0.6%

Sopra Steria

148.00

3,059

6.7%

3.9%

7.0%

7.7%

11.1%

11.9%

0.8

0.8

12.1

10.5

14.1

12.1

1.6%

1.8%

Average

7.8%

6.1%

7.9%

9.3%

12.4%

13.1%

1.5

1.4

36.2

14.8

25.9

20.0

1.0%

1.2%

(Discount)/premium to peers

(50%)

(50%)

(80%)

(57%)

(47%)

(40%)

(18%)

(14%)

Source: Edison Investment Research, Refinitiv (as at 13 May)

Exhibit 6: Financial summary

€'000s

2016

2017

2018

2019

2020

2021e

2022e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

33,060

35,852

39,957

59,091

68,753

86,731

92,410

Cost of sales

(18,954)

(20,224)

(22,289)

(31,825)

(39,469)

(51,329)

(53,941)

Gross profit

14,106

15,628

17,668

27,266

29,284

35,402

38,469

EBITDA

 

 

4,260

3,536

4,098

7,004

8,560

10,891

12,167

Operating Profit (before amort and except) 

3,954

3,180

2,755

5,408

6,542

8,795

10,071

Amortisation of acquired intangibles

(264)

(439)

(610)

(1,142)

(1,340)

(1,900)

(1,900)

Exceptionals and other income

(557)

0

(300)

(713)

(1,963)

0

0

Other income

0

(69)

0

0

0

0

0

Operating Profit

3,133

2,672

1,845

3,553

3,239

6,895

8,171

Net Interest

48

(208)

(1,284)

2,194

562

(100)

(100)

Profit Before Tax (norm)

 

 

4,002

2,972

1,471

7,602

7,104

8,695

9,971

Profit Before Tax (FRS 3)

 

 

3,181

2,464

561

2,315

5,958

6,795

8,071

Tax

(661)

(710)

4

(1,867)

(1,162)

(1,903)

(2,260)

Profit After Tax (norm)

3,170

2,170

1,204

5,473

5,718

6,261

7,179

Profit After Tax (FRS 3)

2,520

1,754

565

448

4,796

4,893

5,811

Ave. Number of Shares Outstanding (m)

11.7

11.7

11.7

11.7

11.7

11.7

11.7

EPS - normalised (€)

 

 

0.271

0.186

0.102

0.456

0.470

0.535

0.613

EPS - normalised fully diluted (€)

 

 

0.271

0.186

0.102

0.456

0.470

0.535

0.613

EPS - (IFRS) (€)

 

 

0.475

5.874

0.048

0.027

0.391

0.418

0.496

Dividend per share (€)

0.30

1.00

0.50

0.00

0.04

0.06

0.08

Gross margin (%)

42.7

43.6

44.2

46.1

42.6

40.8

41.6

EBITDA Margin (%)

12.9

9.9

10.3

11.9

12.5

12.6

13.2

Operating Margin (before GW and except) (%)

12.0

8.9

6.9

9.2

9.5

10.1

10.9

BALANCE SHEET

Fixed Assets

 

 

25,428

8,860

22,942

34,635

47,411

60,147

56,933

Intangible Assets

21,296

7,332

17,751

24,380

37,652

37,286

35,270

Tangible Assets

1,598

793

3,680

7,929

7,460

6,262

5,064

Other

2,534

735

1,511

2,326

2,299

16,599

16,599

Current Assets

 

 

37,085

109,426

134,674

127,052

126,036

115,708

117,308

Stocks

3,146

2,528

3,141

4,156

4,749

5,049

5,349

Debtors

26,369

17,215

16,992

24,150

41,193

47,524

50,636

Cash

7,570

89,683

114,541

98,746

80,094

63,135

61,323

Other

0

0

0

0

0

0

0

Current Liabilities

 

 

(21,051)

(13,612)

(29,366)

(43,129)

(55,446)

(61,075)

(62,854)

Creditors

(20,243)

(12,937)

(12,062)

(17,823)

(24,811)

(30,440)

(32,219)

Short term borrowings

(808)

(675)

(17,304)

(25,306)

(30,635)

(30,635)

(30,635)

Long Term Liabilities

 

 

(7,180)

(4,781)

(41,903)

(36,538)

(32,138)

(23,638)

(15,138)

Long term borrowings

(1,391)

(1,688)

(36,882)

(32,029)

(27,398)

(18,898)

(10,398)

Other long term liabilities

(5,789)

(3,093)

(5,021)

(4,509)

(4,740)

(4,740)

(4,740)

Net Assets

 

 

34,282

99,893

86,347

82,020

85,863

91,142

96,249

CASH FLOW

Operating Cash Flow

 

 

10,676

119

2,039

(354)

1,244

9,890

10,533

Net Interest

105

(208)

(69)

3,102

(988)

(100)

(100)

Tax

(2,022)

379

(624)

(229)

(1,332)

(1,903)

(2,260)

Capex

(738)

(661)

(548)

(916)

(1,156)

(782)

(782)

Acquisitions/disposals

(5,403)

82,250

1,314

(2,178)

(11,701)

(14,965)

0

Financing

(828)

(6)

(7,208)

(4,287)

(2,648)

(130)

0

Dividends

(2,931)

(3,496)

(11,710)

(5,781)

0

(469)

(703)

Net Cash Flow

(1,141)

78,377

(16,806)

(10,643)

(16,581)

(8,459)

6,688

Opening net debt/(cash)

 

 

(8,259)

(5,371)

(87,320)

(60,355)

(41,412)

(22,061)

(13,602)

HP finance leases initiated

0

0

(2,788)

(2,500)

0

0

0

Other

(1,747)

3,572

(7,371)

(5,800)

(2,770)

0

0

Closing net debt/(cash)

 

 

(5,371)

(87,320)

(60,355)

(41,412)

(22,061)

(13,602)

(20,290)

Source: TXT e-solutions, Edison Investment Research


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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 TXT e-solutions and prepared and issued by Edison, in consideration of a fee payable by TXT e-solutions. 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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