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Valuation remains attractive after strong Q1

ADMIE Holding 10 June 2019 Update
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ADMIE Holding

Valuation remains attractive after strong Q1

Q1 update

Utilities

10 June 2019

Price

€1.89

Market cap

€438m

Net cash (€m) at 31 March 2019

4.9

Shares in issue

232.0m

Free float

48.9%

Code

ADMIE

Primary exchange

ASE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

11.2

11.1

7.1

Rel (local)

11.6

6.2

13.9

52-week high/low

€1.95

€1.46

Business description

ADMIE Holding is a holding company that owns a 51% stake in IPTO, a Greek regulated utility. IPTO owns, manages and operates the Greek electricity transmission grid. The network includes 11,801km of high voltage lines. The company plans a c €4bn investment plan over 2019–27.

Next events

H1 results

September 2019

Analyst

Dario Carradori

+44 (0)20 3077 5700

ADMIE Holding is a research client of Edison Investment Research Limited

ADMIE Holding started FY19 with a strong Q1 (IPTO’s EBITDA +19% y-o-y). We increased FY20e DPS by 12% and made small changes to earnings forecasts (FY19e adjusted net income +5%). Despite the recent share price appreciation, the stock still trades at a large discount to both European regulated utilities and the implied equity regulated asset base (RAB).

Year end

EBIT* (€m)

Net income*
(€m)

EPS*
(c)

DPS**
(c)

P/E
(x)

Dividend yield
(%)

12/17

25.1

25.1

10.84

0.00

17.4

N/A

12/18

36.2

36.4

15.68

5.96

12.1

3.2

12/19e

38.0

38.2

16.47

8.83

11.5

4.7

12/20e

39.7

39.9

17.19

8.24

11.0

4.4

Note: *EBIT, net income and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Related to fiscal year (not cash dividend).

Q1 earnings well above our forecast trend for 2019

IPTO’s Q1 adjusted EBITDA grew 19% y-o-y, well above the trend we previously forecast for the full year (-3%). The EBITDA increase was driven by revenue growth (+14% due to increased electricity demand as a result of more favourable weather conditions) and stable costs. Although we see no read-across for revenue in Q2–Q4, the stability in costs was supportive for future profitability. We calculate that IPTO’s net income, adjusted for a one-off provision release, grew by 75% y-o-y to €21m. IPTO spent little capex in Q1, but we expect a pick-up of investments in the coming quarters when most of the work for extending the network should be carried out. We have made small changes to our FY19 forecasts for ADMIE Holding with adjusted net income increasing 5% and FY20e DPS increasing 12%.

Investment case focused on network expansion

ADMIE Holding offers exposure to growth in the Greek electricity transmission grid company IPTO, a regulated utility with significant growth opportunities from investments in new transmission lines. IPTO’s underleveraged balance sheet (0.9x adjusted net debt/EBITDA at the end of 2018) sustains a c €4bn investment plan, which we estimate will result in an RAB CAGR of 11% in 2018–27. We estimate a 9% EPS CAGR for ADMIE Holding (FY19-23) and a 5% DPS CAGR (FY19-24).

Valuation: Large discount to peers and RAB

Despite the recent share price increase, ADMIE Holding is trading at a large discount to other European regulated utilities on P/E, EV/EBITDA and dividend yield. In addition, ADMIE Holding is trading at c 35% discount to equity RAB, even though we believe the returns allowed by the regulator are broadly in line with ADMIE’s WACC. Our RAB-based valuation of €2.85/share (from €2.83 per share) is c 50% higher than the current share price and implies no premium or discount to RAB.

ADMIE Holding reports strong Q1

ADMIE Holding/ IPTO started FY19 with a strong Q1 (IPTO’s EBITDA up 19% y-o-y). We have increased our FY20 DPS estimate by 12% and made small changes to earnings forecasts (FY19 adjusted net income +5%). Despite the recent share price appreciation, the stock still trades at a large discount to both European regulated utilities and the implied equity RAB.

FY19 off to a strong start

ADMIE Holding and IPTO started FY19 with strong earnings growth, ahead of our full-year expectations.

IPTO’s adjusted EBITDA grew 19% y-o-y, which is well above the trend we previously forecasted for the full year (-3%). The EBITDA growth was driven by revenue growth (+14%) and broadly stable costs (EBITDA margins grew to 70.6% in Q119 from 67.6% one year earlier). Revenue growth was helped by increased electricity demand as a result of more favourable weather conditions. Although we see no read-across for revenue in Q2–Q4, we feel the stability in costs is encouraging. We calculate that IPTO’s net income, adjusted for a one-off provision release, grew by 75% y-o-y to €21m.

IPTO’s capex in Q1 was €19m, up 76% y-o-y but representing only 5% of the capex we expect for the full-year (€390m). Although capex may appear low, we note that Q118 capex also represented only 6% of the FY18 amount – we expect a pick-up of investments in the coming quarters when most of the work for extending the network should be carried out. Capex is the key growth driver of IPTO, as it increases the regulated asset base on which IPTO is remunerated (RAB multiplied by the allowed rate of return = allowed EBIT).

Small earnings forecasts changes post Q1; FY20e DPS increased 12%

We have made small forecast earnings changes, mainly reflecting the stronger than expected Q1. The most notable change is the increase in DPS for FY20e (+12%), which reflects a stable payout ratio applied to increased earnings (FY19e adj. net income up 5%; in addition reported earnings, on which DPS is calculated, benefitted from a one-off provision release of €6.9m in Q1).

Exhibit 1: Forecast changes: small increase for FY19

ADMIE Holding

IPTO

€ 000

2019e

2020e

2021e

€m

2019e

2020e

2021e

Adj. EBIT

NEW

38,044

39,732

41,435

Revenues

NEW

256

273

279

OLD

36,208

39,691

41,336

OLD

251

273

279

% change

5%

0%

0%

% change

2%

0%

0%

Adj. net income

NEW

38,200

39,888

41,591

Adj. EBITDA

NEW

168

185

190

OLD

36,364

39,846

41,492

OLD

163

185

190

% change

5%

0%

0%

% change

3%

0%

0%

DPS

NEW

0.088

0.082

0.081

Adj. net income

NEW

75

79

82

OLD

0.088

0.073

0.081

OLD

72

79

82

% change

0%

12%

0%

% change

5%

0%

0%

Adj. net debt

NEW

368

728

1025

OLD

374

742

1039

% change

-1%

-2%

-1%

Source: Edison Investment Research

Investment case: Regulated utility with large capex opportunity

IPTO has launched a c €4bn investment plan, mainly focused on the connection of the Greek islands to the electricity grid of the mainland, with the objectives of reducing costs for consumers, improving security of supply and environmental sustainability. The investment plan is very large when compared to the current RAB of IPTO (€1.4bn at the end of 2018) and we estimate it should result in an 11% 2018–27 RAB CAGR (in real terms). We forecast FY19–23 EBITDA and net income CAGR of 16% and 9%, respectively, for IPTO, based on the assumption that the capex plan is implemented in a timely manner. This translates into a 9% EPS CAGR for ADMIE Holding. IPTO has a target of a minimum 50% payout ratio on earnings. Assuming a flat dividend payout ratio on earnings of 50% for IPTO, we forecast a 5% DPS CAGR for ADMIE Holding. We note the payout ratio of 50% is well below the average level of European regulated utilities (70%+), which indicates the future growth potential of the dividend is significantly higher than other European peers. Because of the high level of capex, we expect an average annual cash outflow of c €300m for IPTO. As a result, the leverage increases significantly but only towards levels broadly in line with other European regulated utilities (around 5x net debt/EBITDA and c 50% debt/RAB in 2025). In our view, these levels do not suggest a capital increase is needed.

Exhibit 2: Key financials for IPTO (revised post Q1; see exhibit 1 for forecasts changes)

€m

2017

2018

2019e

2020e

2021e

2022e

2023e

Revenues

256.5

249.2

255.8

273.1

278.9

283.6

418.0

% y-o-y change

-3%

3%

7%

2%

2%

47%

Reported EBITDA

172.0

182.7

174.7

185.1

189.9

194.8

316.4

% y-o-y change

6%

-4%

6%

3%

3%

62%

Adj. EBITDA

177.5

168.0

167.8

185.1

189.9

194.8

316.4

% y-o-y change

-5%

0%

10%

3%

3%

62%

Reported EBIT

107.7

115.4

116.7

109.1

112.9

116.6

195.2

% y-o-y change

7%

1%

-6%

4%

3%

67%

Adjusted EBIT

113.2

100.7

109.8

109.1

112.9

116.6

195.2

% y-o-y change

-11%

9%

-1%

4%

3%

67%

Reported net income

61.7

85.9

80.2

78.6

81.9

89.5

107.8

% y-o-y change

39%

-7%

-2%

4%

9%

20%

Adjusted net income

65.9

74.3

75.3

78.6

81.9

89.5

107.8

% y-o-y change

13%

1%

4%

4%

9%

20%

Adjusted net debt

285.8

171.1

368.5

727.9

1024.9

1415.0

1459.6

Capex (gross of subsidies) incl. ARIADNE

70.1

183.1

390.7

592.3

436.2

550.8

262.8

Source: Company data, Edison Investment Research.

Valuation: Discount to peers and RAB still excessive

Despite the recent share price appreciation, we believe ADMIE Holding still trades at an excessive discount to both its own implied equity RAB value (Exhibit 3) and other European regulated utilities (Exhibit 4).

Exhibit 3: Discount to RAB

€m

2018

2019e

2020e

2021e

EV RAB of IPTO + work in progress

1437

1741

2133

2424

-net debt

-171

-368

-728

-1025

-provisions

-78

-74

-77

-80

Equity RAB of IPTO

1188

1299

1328

1319

ADMIE Holding's stake in IPTO

51%

51%

51%

51%

Value of ADMIE Holding's 51% stake in IPTO

606

662

677

673

ADMIE Holding adjustments (net cash position, DCF of corporate costs)

-2

2

1

2

RAB-based equity value of ADMIE Holding

603

664

679

675

Market cap

438

438

438

438

Premium / (discount) to equity RAB

-27%

-34%

-35%

-35%

Premium / (discount) to EV RAB

-23%

-25%

-22%

-19%

Source: Company data, Edison Investment Research

Exhibit 4: Valuation multiples of European regulated utilities

Company

Country

Mkt cap (€m)

---P/E---

---EV/EBITDA---

---Div. Yld---

FY0–FY2 EBITDA CAGR

FY0–FY2 EPS CAGR

FY0

FY1

FY2

FY0

FY1

FY2

FY0

FY1

FY2

Terna Rete Elettrica Nazionale

Italy

14,828

16.4x

15.6x

15.1x

11.8x

11.2x

10.8x

4.1%

4.3%

4.7%

4.4%

4.2%

Snam

Italy

20,625

15.7x

15.1x

14.7x

13.0x

12.8x

12.5x

4.8%

5.0%

5.3%

2.1%

3.2%

Italgas

Italy

6,181

15.2x

14.5x

13.9x

10.2x

10.1x

9.8x

3.9%

4.1%

4.4%

1.8%

4.8%

Enagas

Spain

7,803

13.7x

14.4x

13.4x

10.1x

10.2x

10.0x

5.9%

6.3%

6.6%

0.5%

1.1%

Red Electrica Corporacion

Spain

13,679

15.0x

14.6x

15.1x

10.0x

9.5x

9.6x

5.0%

5.3%

5.4%

2.2%

-0.4%

National Grid PLC

UK

40,759

13.6x

14.2x

13.3x

10.9x

10.4x

9.8x

5.8%

5.9%

6.1%

5.1%

1.0%

Elia System Operator SA

Belgium

5,747

14.5x

16.7x

15.9x

13.9x

10.9x

10.3x

1.8%

2.6%

2.7%

16.1%

-4.5%

Ren Redes Energeticas Nacionais

Portugal

2,114

14.5x

13.4x

13.3x

8.6x

8.8x

8.9x

5.0%

6.7%

6.8%

-1.3%

4.5%

Severn Trent PLC

UK

7,148

14.3x

15.7x

18.0x

11.9x

11.5x

11.9x

4.5%

4.8%

4.9%

0.0%

-11.0%

Pennon Group PLC

UK

4,638

13.2x

12.9x

14.0x

NA

10.8x

11.1x

5.4%

5.8%

6.0%

NA

-3.0%

United Utilities Group PLC

UK

8,241

15.0x

14.5x

18.2x

12.7x

11.5x

12.5x

4.9%

5.0%

5.0%

0.9%

-9.1%

Average

14.5x

14.5x

14.7x

11.3x

10.8x

10.3x

4.9%

5.0%

5.3%

2.0%

1.0%

ADMIE Holding

Greece

438

12.1x

11.5x

11.0x

6.6x

7.8x

9.0x

3.2%

4.7%

4.4%

5.0%

4.7%

Source: Refinitiv, Edison Investment Research. Note: Priced at 7 June 2019.

While we believe there may be some reasons that partly justify a discount to other European peers (limited liquidity of the stock, higher country risk premium, control by the Greek government and the fact that the regulation for IPTO has a shorter track record than other European countries), we believe the discount is excessive.

Our RAB-based valuation of ADMIE Holding is €2.85/share (small change vs €2.83/share previously thanks to slightly lower net debt) and is broadly in line with the equity RAB implied by IPTO. This is because we calculate that the return allowed by the regulator is broadly in line with the actual cost of capital for the company, based on current market values for cost of debt and cost of equity.

As the capex plan is gradually implemented and the company establishes a growth track record, we expect a gradual rerating of the stock.

Key risks for ADMIE Holding are rising interest rates, changes in the regulatory framework, increasing country risk premium and political intervention risks.

Exhibit 5: Financial summary

Accounts: IFRS, Yr end: December, EUR: Thousands

 

 

2017

2018

2019e

2020e

2021e

2022e

2023e

Income statement

 

 

 

 

 

 

 

 

 

Total revenues

 

 

0

0

0

0

0

0

0

Cost of sales

 

 

0

0

0

0

0

0

0

Gross profit

 

 

0

0

0

0

0

0

0

SG&A (expenses)

 

 

(973)

(239)

(335)

(341)

(348)

(355)

(362)

Profit (loss) from JVs / associates (post tax)

 

 

24,024

42,353

40,919

40,082

41,794

45,646

54,971

Depreciation and amortisation

 

 

(2)

(4)

(6)

(8)

(10)

(12)

(14)

Reported EBIT

 

 

23,049

42,110

40,578

39,732

41,435

45,279

54,595

Finance income/(expense)

 

 

(8)

156

156

156

156

156

156

Reported PBT

 

 

23,041

42,265

40,733

39,888

41,591

45,434

54,751

Income tax expense (includes exceptionals)

 

 

0

0

0

0

0

0

0

Reported net income

 

 

23,041

42,265

40,733

39,888

41,591

45,434

54,751

Adjusted net income

25,139

36,376

38,200

39,888

41,591

45,434

54,751

Basic average number of shares, m

 

 

232

232

232

232

232

232

232

Basic EPS, €cents/share

 

 

9.93

18.22

17.56

17.19

17.93

19.58

23.60

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

25,149

36,225

38,050

39,740

41,446

45,291

54,609

Adjusted EBIT

 

 

25,147

36,221

38,044

39,732

41,435

45,279

54,595

Adjusted PBT

 

 

25,139

36,376

38,200

39,888

41,591

45,434

54,751

Adjusted EPS, cents/share

 

 

10.84

15.68

16.47

17.19

17.93

19.58

23.60

Adjusted diluted EPS, cents/share

 

 

10.84

15.68

16.47

17.19

17.93

19.58

23.60

DPS, cents/share (declared for fiscal year)

 

 

0.00

5.96

8.83

8.24

8.06

8.41

9.20

DPS, €cents/share (cash payment for the year)

 

 

0.00

3.16

8.80

8.83

8.24

8.06

8.41

Balance sheet

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

5

5

9

11

10

8

4

Intangible assets

 

 

9

7

7

7

7

7

7

Other non-current assets

 

 

520,134

550,439

569,466

589,088

610,841

635,590

667,739

Total non-current assets

 

 

520,148

550,451

569,482

589,106

610,858

635,606

667,750

Cash and equivalents

 

 

2,181

4,843

6,130

5,914

6,640

8,619

11,711

Inventories

 

 

0

0

0

0

0

0

0

Trade and other receivables

 

 

79

9,907

9,907

9,907

9,907

9,907

9,907

Other current assets

 

 

0

0

0

0

0

0

0

Total current assets

 

 

2,260

14,750

16,037

15,821

16,547

18,526

21,618

Non-current loans and borrowings

 

 

0

0

0

0

0

0

0

Other non-current liabilities

 

 

0

0

0

0

0

0

0

Total non-current liabilities

 

 

0

0

0

0

0

0

0

Trade and other payables

 

 

18

20

20

20

20

20

20

Current loans and borrowings

 

 

0

0

0

0

0

0

0

Other current liabilities

 

 

3,731

0

0

0

0

0

0

Total current liabilities

 

 

3,749

20

20

20

20

20

20

Equity attributable to company

 

 

518,659

565,181

585,498

604,906

627,385

654,112

689,348

Non-controlling interest

 

 

0

0

0

0

0

0

0

 

 

 

 

 

 

 

 

 

 

Cashflow statement

 

 

 

 

 

 

 

 

 

Profit before tax

 

 

23,041

42,265

40,733

39,888

41,591

45,434

54,751

Net finance expenses

 

 

19

(156)

(156)

(156)

(156)

(156)

(156)

Depreciation and amortisation

 

 

2

4

6

8

10

12

14

Other adjustments

 

 

(24,024)

(42,353)

(40,919)

(40,082)

(41,794)

(45,646)

(54,971)

Movements in working capital

 

 

(622)

(1,053)

0

0

0

0

0

Cash from operations (CFO)

 

 

(1,584)

(1,293)

(335)

(341)

(348)

(355)

(362)

Capex

 

 

(16)

(2)

(10)

(10)

(10)

(10)

(10)

Cash used in investing activities (CFIA)

 

 

(16)

(2)

(10)

(10)

(10)

(10)

(10)

Net proceeds from issue of shares

 

 

70

0

0

0

0

0

0

Dividends paid

 

 

0

(6,300)

(20,416)

(20,479)

(19,112)

(18,708)

(19,515)

Other financing activities

 

 

3,711

10,256

22,047

20,615

20,196

21,052

22,979

Cash from financing activities (CFF)

 

 

3,781

3,956

1,631

135

1,084

2,344

3,464

Increase/(decrease) in cash and equivalents

 

 

2,181

2,662

1,287

(216)

726

1,979

3,092

Cash and equivalents at end of period

 

 

2,181

4,843

6,130

5,914

6,640

8,619

11,711

Net (debt) cash

 

 

2,181

4,843

6,130

5,914

6,640

8,619

11,711

Movement in net (debt) cash over period

 

 

2,181

2,662

1,287

(216)

726

1,979

3,092

Source: Company data, Edison Investment Research

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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

United Kingdom

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

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

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

United States

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

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

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

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No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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

United Kingdom

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

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

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

United States

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

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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