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Update on Q3 trading and regulation

EML Payments 14 June 2021 Update
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EML Payments

Update on Q3 trading and regulation

Trading update

Software & comp services

14 June 2021

Price

A$3.77

Market cap

A$1,364m

US$0.78/€0.64/£0.55/A$

Net cash (A$m) at end H121

100.3

Shares in issue

361.8m

Free float

93%

Code

EML

Primary exchange

ASX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(28.7)

(25.6)

(3.1)

Rel (local)

(31.0)

(31.8)

(22.2)

52-week high/low

A$5.75

A$2.69

Business description

EML Payments is a payment solutions company specialising in the prepaid stored value market, with mobile, physical and virtual card offerings. It provides solutions for payouts, gifts, incentives, rewards and supplier payments, managing thousands of programmes across 28 countries in Europe, North America and Australia.

Next events

FY21 results

August

Analyst

Katherine Thompson

+44 (0)20 3077 5730

EML Payments is a research client of Edison Investment Research Limited

EML Payments’ Q321 trading update confirmed that revenue for the first nine months (9M) of 2021 was 65% higher y-o-y and EBITDA was 62% higher (margin 30.5%). The company also gave an update on the regulatory issue in Ireland, confirming ongoing dialogue with the regulator. We have updated our forecasts to reflect one-off costs relating to this issue and revised the mix of revenue for FY21 based on Q321 performance. This results in lower GDV and revenue forecasts for the General Purpose Reloadable (GPR) and Virtual Account Numbers (VANs) divisions in FY22/23 and reduces our NPATA forecasts for both years.

Year end

Revenue (A$m)

PBT*
(A$m)

NPATA** (A$m)

Dil. EPS*
(c)

DPS
(c)

P/E
(x)

EV/EBITDA
(x)

06/19

97.2

25.6

20.6

7.8

0.0

48.3

46.4

06/20

121.0

21.6

24.0

5.5

0.0

68.1

42.4

06/21e

182.7

34.7

29.2

7.5

0.0

50.1

27.5

06/22e

243.2

47.2

38.3

9.9

0.0

37.9

20.3

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Net profit after tax, excluding acquisition-related costs.

Q321 trading update

EML’s trading update reported 9M21 group GDV of A$14.9bn (+52% y-o-y), group revenue of A$143.5m (+65% y-o-y) and group EBITDA of A$43.8m (+62% y-o-y). This equates to Q321 GDV of A$4.7bn (+46% y-o-y), revenue of A$48.2m (+73% y-o-y) and EBITDA of A$15.7m (+116% y-o-y). We have revised our forecasts to reflect stronger Gift & Incentive (G&I) GDV and revenue for FY21 (helped by higher breakage), offset by weaker GDV and revenue for the other two divisions. This has a neutral impact on FY21 forecasts but reduces FY22 and FY23 revenue, EBITDA and NPATA. The Sentenial acquisition is ongoing, with change of control applications being considered by the FCA in the UK and the ACPR in France.

Update on Irish regulatory issue

EML confirmed it has provided its written response to the Central Bank of Ireland (CBI) by 27 May and continues to communicate with the CBI on a regular basis. EML has set up a project governance structure to manage the issue and expects to incur professional fees of up to A$2m in FY21. We have factored this, and an additional A$2m in FY22, into our forecasts. The company does not have visibility on when the issue may be resolved.

Valuation: Uncertainty weighing on share price

The stock has recovered 40% since the initial 46% decline when the regulatory issue was announced. Without knowing the outcome of the investigation, it is not possible to estimate the impact on our forecasts, making comparisons with peers less meaningful.

Q3 trading update

Based on the data given in the update for 9M21, we have calculated the following GDV, yields and revenues by division for Q321. EBITDA for the quarter generated a margin of 32.6%, up from 26.1% a year ago and 29.4% for H121.

Exhibit 1: Divisional quarterly performance

Q321

Q320

y-o-y

GDV (A$m)

G&I

0.16

0.19

-15.8%

GPR

2.38

0.70

240.0%

VANS

2.16

2.32

-6.9%

Group GDV

4.70

3.21

46.4%

Yield (bp)

G&I

1225

949

276

GPR

109

90

19

VANS

12

13

-1

Revenue (A$m)

G&I

19.6

18.5

5.9%

GPR

25.9

6.3

311.1%

VANS

2.6

2.9

-11.2%

Net interest contribution (estimate)

0.1

0.2

Group revenue

48.2

27.9

72.5%

EBITDA (A$m)

15.7

7.3

115.7%

EBITDA margin

32.6%

26.1%

6.5%

Source: EML Payments, Edison Investment Research

Gift and Incentive records high levels of breakage

While G&I GDV declined 16% y-o-y, a higher level of breakage resulted in a 6% revenue increase y-o-y. With many malls closed due to COVID-19 lockdowns, consumers have not been able to use their gift cards, resulting in higher rates of breakage. We estimate the division generated a yield of 1225bp compared to 949bp a year ago. Malls reopened in the UK in mid-April and in the US, volumes are improving. Lockdowns remain in parts of Canada and Europe.

GPR sees early completion of salary packaging transition

GPR GDV grew 240% y-o-y, as Q320 did not include the PFS acquisition. The company noted that excluding PFS, underlying GDV grew 22% y-o-y helped by the transition of salary packaging accounts in Australia, which was completed ahead of schedule. The yield of 109bp was in line with management expectations and higher than a year ago due to the contribution of PFS.

VANs volumes slightly down

VANs GDV declined 7% y-o-y as a result of lower volumes in North America – the company noted that BillGo had taken payment processing in-house, which reduced volume by c A$0.26bn. The yield was in line with management expectations at 12bp. The Sentential acquisition is ongoing, with change of control applications filed with the FCA in the UK and ACPR in France. The completion of the acquisition is dependent on receiving these change of control approvals – the company estimates this could happen any time from early July to late August. Our forecasts assume the acquisition completes at the start of FY22.

Regulatory update

EML has confirmed it responded to the CBI’s Section 45 letter by the 27 May deadline. The company remains in dialogue with the CBI and has set up a project governance structure to help the EML team in Ireland. This includes a subcommittee of the EML board, members of the EML executive team, external expert regulatory consultants and legal resources. There is no statutory timeframe for the CBI to finalises its consideration of the issue.

The company noted it is also proactively communicating with other regulators in the regions where EML operates, providing information if and when requested.

It is incurring one-off legal and professional advisory fees, which it expects to total less than A$2m in FY21. It also noted there may be an impact on programme launches and potential delays could affect establishment income and transaction fees. The financial impact for FY22 can therefore not be fully determined at this time.

Changes to forecasts

We have revised our forecasts to reflect:

Higher G&I GDV and yield for FY21 and higher GDV for FY22/23.

Lower GPR and VANs GDV for FY21, which results in lower GDV for FY22/23.

One-off costs related to the regulatory issue of A$2m in FY21 and A$2m in FY22. This is not adjusted out of our NPATA forecasts.

Exhibit 2: Changes to forecasts

FY21e

FY21e

FY22e

FY22e

FY23e

FY23e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Revenues

A$m

182.2

182.7

0.3%

51.0%

249.4

243.2

-2.5%

33.1%

298.9

291.7

-2.4%

19.9%

Gross profit

A$m

125.4

125.4

0.0%

42.4%

176.9

173.1

-2.2%

38.0%

215.4

210.8

-2.1%

21.8%

Gross margin

68.8%

68.6%

-0.2%

-4.2%

70.9%

71.2%

0.2%

2.5%

72.1%

72.3%

0.2%

1.1%

EBITDA

A$m

50.1

50.1

0.0%

53.9%

71.2

67.8

-4.8%

35.4%

98.0

93.9

-4.2%

38.5%

EBITDA margin

27.5%

27.4%

-0.3%

0.5%

28.6%

27.9%

-2.4%

0.5%

32.8%

32.2%

-1.8%

4.3%

Normalised operating profit

A$m

36.1

36.1

0.0%

61.5%

53.6

50.2

-6.4%

39.0%

75.5

71.4

-5.5%

42.2%

Normalised operating margin

19.8%

19.8%

-0.1%

1.3%

21.5%

20.6%

-0.9%

0.9%

25.3%

24.5%

-0.8%

3.8%

Reported operating profit

A$m

2.7

0.6

-75.5%

-111.5%

37.1

31.7

-14.6%

N/A

59.0

54.9

-7.0%

73.2%

Reported operating margin

1.5%

0.4%

-1.1%

5.0%

14.9%

13.0%

-1.9%

12.7%

19.7%

18.8%

-0.9%

5.8%

Normalised PBT

A$m

34.7

34.7

0.0%

60.5%

50.7

47.2

-6.8%

36.0%

72.5

68.4

-5.7%

44.9%

Reported PBT

A$m

-31.1

-33.1

6.4%

404.2%

32.7

27.2

-16.7%

-182.1%

55.0

50.9

-7.5%

87.1%

Normalised net income

A$m

27.8

27.8

0.0%

60.5%

40.5

37.8

-6.8%

36.0%

58.0

54.7

-5.7%

44.9%

NPATA

A$m

30.8

29.2

-5.2%

21.3%

42.6

38.3

-10.2%

31.2%

59.0

55.7

-5.6%

45.6%

Reported net income

A$m

-24.9

-26.5

6.4%

352.9%

26.1

21.8

-16.7%

-182.1%

44.0

40.7

-7.5%

87.1%

Normalised basic EPS

A$

0.08

0.08

0.0%

35.2%

0.11

0.10

-6.8%

32.0%

0.16

0.15

-5.7%

44.9%

Normalised diluted EPS

A$

0.08

0.08

0.0%

36.0%

0.107

0.099

-6.8%

32.1%

0.153

0.144

-5.7%

44.9%

Reported basic EPS

A$

-0.07

-0.07

6.4%

281.5%

0.07

0.06

-16.7%

-179.7%

0.12

0.11

-7.5%

87.1%

NPATA/share

A$

0.08

0.08

-5.2%

2.8%

0.11

0.10

-10.2%

27.4%

0.16

0.15

-5.6%

45.6%

Dividend per share

A$

0.00

0.00

N/A

N/A

0.00

0.00

N/A

N/A

0.00

0.00

N/A

N/A

Net debt/(cash)

A$m

(47.0)

(45.1)

-4.1%

-45.4%

(54.4)

(47.8)

-12.2%

5.9%

(75.6)

(65.7)

-13.2%

37.5%

GDV

A$bn

20.6

19.8

-3.8%

42.9%

105.9

105.0

-0.9%

429.5%

122.9

121.9

-0.8%

16.1%

Yield

0.88%

0.92%

0.0%

0.04%

0.24%

0.23%

0.00%

-0.69%

0.24%

0.24%

0.00%

0.01%

Source: Edison Investment Research


Exhibit 3: Financial summary

A$'m

2017

2018

2019

2020

2021e

2022e

2023e

30-June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

58.0

71.0

97.2

121.0

182.7

243.2

291.7

Cost of Sales

(13.7)

(17.7)

(24.2)

(32.9)

(57.3)

(70.2)

(80.9)

Gross Profit

44.2

53.3

73.0

88.1

125.4

173.1

210.8

EBITDA

 

 

14.5

21.0

29.7

32.5

50.1

67.8

93.9

Normalised operating profit

 

 

11.9

18.1

25.6

22.4

36.1

50.2

71.4

Amortisation of acquired intangibles

(8.9)

(7.2)

(7.5)

(10.6)

(18.5)

(14.0)

(14.0)

Exceptionals

0.2

(0.3)

(3.0)

(11.2)

(10.6)

(2.0)

0.0

Share-based payments

(5.3)

(5.0)

(4.2)

(6.1)

(6.3)

(2.5)

(2.5)

Reported operating profit

(2.1)

5.6

10.9

(5.6)

0.6

31.7

54.9

Net Interest

0.0

(0.1)

(0.0)

(0.7)

(1.4)

(3.0)

(3.0)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

(0.5)

(1.8)

(0.2)

(32.4)

(1.5)

(1.0)

Profit Before Tax (norm)

 

 

11.9

17.9

25.6

21.6

34.7

47.2

68.4

Profit Before Tax (reported)

 

 

(2.1)

5.0

9.0

(6.6)

(33.1)

27.2

50.9

Reported tax

2.1

(2.8)

(0.6)

0.7

6.6

(5.4)

(10.2)

Profit After Tax (norm)

8.9

14.4

20.5

17.3

27.8

37.8

54.7

Profit After Tax (reported)

0.0

2.2

8.5

(5.9)

(26.5)

21.8

40.7

Minority interests

0.0

0.0

(0.2)

0.0

0.0

0.0

0.0

Discontinued operations

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

8.9

14.4

20.3

17.3

27.8

37.8

54.7

Net income (reported)

0.0

2.2

8.3

(5.9)

(26.5)

21.8

40.7

Basic ave. number of shares outstanding (m)

245

246

249

304

361

372

372

EPS - basic normalised (A$)

 

 

0.036

0.058

0.081

0.057

0.077

0.102

0.147

EPS - diluted normalised (A$)

 

 

0.036

0.057

0.078

0.055

0.075

0.099

0.144

EPS - basic reported (A$)

 

 

0.000

0.009

0.033

(0.019)

(0.073)

0.059

0.109

Dividend (A$)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

148.6

22.5

36.9

24.4

51.0

33.1

19.9

Gross Margin (%)

76.3

75.1

75.1

72.8

68.6

71.2

72.3

EBITDA Margin (%)

25.1

29.6

30.6

26.9

27.4

27.9

32.2

Normalised Operating Margin

20.5

25.4

26.4

18.5

19.8

20.6

24.5

BALANCE SHEET

Fixed Assets

 

 

90.6

108.0

162.9

905.2

1,068.1

1,148.8

1,208.0

Intangible Assets

60.1

65.8

104.6

404.7

554.6

541.8

527.3

Tangible Assets

2.8

3.5

5.4

14.6

12.0

9.6

7.1

Investments & other

27.6

38.7

53.0

485.8

501.4

597.3

673.6

Current Assets

 

 

96.9

131.6

313.8

1,001.1

1,219.8

1,456.7

1,661.0

Stocks

10.3

12.6

18.2

22.3

21.2

23.3

25.7

Debtors

6.3

8.9

14.4

21.7

32.4

42.9

51.2

Cash & cash equivalents

39.9

39.0

33.1

118.4

111.9

114.6

132.5

Other

40.4

71.1

248.2

838.7

1,054.2

1,275.9

1,451.6

Current Liabilities

 

 

(62.8)

(90.5)

(299.0)

(1,326.3)

(1,603.3)

(1,936.9)

(2,177.8)

Creditors

(23.8)

(21.2)

(33.9)

(47.5)

(62.7)

(79.7)

(89.7)

Tax and social security

(0.0)

0.0

(0.8)

(0.2)

(0.2)

(0.2)

(0.2)

Short term borrowings

0.0

0.0

(15.0)

0.0

0.0

0.0

0.0

Other

(39.0)

(69.3)

(249.4)

(1,278.6)

(1,540.3)

(1,857.0)

(2,087.9)

Long Term Liabilities

 

 

(4.2)

(19.3)

(33.5)

(139.0)

(218.4)

(178.1)

(157.4)

Long term borrowings

0.0

0.0

0.0

(35.8)

(66.8)

(66.8)

(66.8)

Other long term liabilities

(4.2)

(19.3)

(33.5)

(103.2)

(151.5)

(111.2)

(90.6)

Net Assets

 

 

120.6

129.8

144.2

441.0

466.2

490.5

533.8

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

120.6

129.8

144.2

441.0

466.2

490.5

533.8

CASH FLOW

Op Cash Flow before WC and tax

13.1

19.7

28.4

31.2

48.2

66.0

92.1

Working capital

4.9

(9.2)

2.0

3.6

6.1

3.5

(1.6)

Exceptional & other

(0.8)

(1.2)

(0.7)

(12.7)

(8.5)

(2.0)

0.0

Tax

2.1

(2.8)

(0.6)

0.7

6.6

(5.4)

(10.2)

Net operating cash flow

 

 

19.3

6.5

29.2

22.8

52.5

62.0

80.3

Capex

(2.9)

(5.3)

(5.8)

(11.0)

(13.1)

(14.6)

(17.6)

Acquisitions/disposals

0.0

(0.7)

(44.0)

(142.5)

(73.6)

(40.0)

(40.0)

Net interest

0.0

(0.1)

(0.0)

(0.7)

(1.4)

(3.0)

(3.0)

Equity financing

0.2

0.0

0.4

240.8

0.0

0.0

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

(3.6)

(0.6)

(0.4)

(7.0)

(1.8)

(1.8)

(1.8)

Net Cash Flow

13.0

(0.2)

(20.6)

102.3

(37.4)

2.7

17.9

Opening net debt/(cash)

 

 

(26.9)

(39.9)

(39.0)

(18.1)

(82.5)

(45.1)

(47.8)

FX

(0.0)

(0.6)

(0.3)

(2.0)

0.0

0.0

0.0

Other non-cash movements

0.0

0.0

0.0

(35.8)

0.0

0.0

0.0

Closing net debt/(cash)

 

 

(39.9)

(39.0)

(18.1)

(82.5)

(45.1)

(47.8)

(65.7)

Source: EML Payments, Edison Investment Research

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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

General disclaimer and copyright

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