JDC Group — Accelerating into H223

JDC Group (SCALE: JDC)

Last close As at 18/05/2024

EUR23.70

−0.10 (−0.42%)

Market capitalisation

EUR324m

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Research: Financials

JDC Group — Accelerating into H223

JDC Group (JDC) reported H123 results that showed accelerating growth at its key Advisortech division (c 89% of revenue) of 11.2%. After three slower quarters, JDC expects overall growth to accelerate in H223 and reiterated its challenging but realistic FY23 guidance of 17% revenue growth at the midpoint, with EBITDA of €11.5–13.0m. JDC trades at an FY24e EV/EBITDA multiple of 13.2x on consensus estimates, which we believe is undemanding for what is essentially a fast-scaling platform business. Our DCF calculation provides a valuation of €34.09/share.

Edwin de Jong

Written by

Edwin De Jong

Analyst

Financials

JDC Group

Accelerating into H223

H123 results update

Diversified financials

16 August 2023

Price

€17.60

Market cap

€233m

Net debt (€m) at end H123

1.6

Shares in issue

13.7m

Free float

51%

Code

JDC

Primary exchange

Deutsche Börse Scale

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

1.4

7.6

(15.8)

Rel (local)

3.6

8.7

(26.2)

52-week high/low

€20.5

€14.6

Business description

JDC Group is a leading German insurance platform, providing advice and financial services for professional intermediaries and banks but also directly for end-customers. JDC’s digital platform, for end-clients and for the administration and processing of insurance products, is also provided as a white-label product.

Next events

Benelux roadshow Edison

12/13 October 2023

Q3 results

8 November 2023

Analyst

Edwin De Jong

+44 (0)20 3077 5700

JDC Group is a research client of Edison Investment Research Limited

JDC Group (JDC) reported H123 results that showed accelerating growth at its key Advisortech division (c 89% of revenue) of 11.2%. After three slower quarters, JDC expects overall growth to accelerate in H223 and reiterated its challenging but realistic FY23 guidance of 17% revenue growth at the midpoint, with EBITDA of €11.5–13.0m. JDC trades at an FY24e EV/EBITDA multiple of 13.2x on consensus estimates, which we believe is undemanding for what is essentially a fast-scaling platform business. Our DCF calculation provides a valuation of €34.09/share.

Year end

Revenue
(€m)

EBITDA
(€m)

EPS*
(€)

DPS
(€)

EV/EBITDA
(x)

P/E
(x)

12/21

146.8

8.3

0.07

0.0

40.8

262.9

12/22

156.1

9.0

0.07

0.0

25.9

267.8

12/23e

182.3

12.2

0.22

0.0

19.5

79.8

12/24e

212.4

17.4

0.51

0.0

13.2

38.7

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

Accelerated growth in H123

H123 revenue growth of 4.5% was driven by JDC’s Advisortech platform business. Within this division, major clients (+22.1%) like in-house insurance brokers of large companies and savings bank-related insurer Provinzial contributed to growth. EBITDA decreased 6.0% to €5.1m due to a higher cost base, in particular staffing. Net income was at the same level as in H122 at €1.6m. JDC reiterated its FY23 outlook of revenues of €175–190m and EBITDA of €11.5–13.0m. This seems demanding at first glance as H123 revenues were €84.6m and EBITDA €5.1m. However, given the acceleration of platform activity in Q2 continuing in Q3 so far, a weak comparison base and typical seasonal patterns (a strong Q4), the guidance seems realistic. As a result, we have made minor adjustments to our estimates for the coming years.

Scale could also start to improve gross margin

In H123 JDC reached the €1bn mark in terms of annual premiums going through its platform. The increasing scale of JDC could lead to it negotiating better commission percentages with insurance companies and in turn that should lead to higher gross profit margins. We calculate that a 100bp increase in gross margin could lead to 10% growth of EBITDA in 2025.

Valuation: FY24e EV/EBITDA of 13.2x

JDC trades at an FY24e P/E of 38.7x and EV/EBITDA of 13.2x on consensus estimates. Our EPS estimates are ~10% higher compared to consensus and we arrive at an FY24e P/E of 34.8x. Compared to the average of platform peers like Hypoport and Goosehead, JDC’s EV/EBITDA discount is relatively stable, which we do not find justified given the more stable business model. A DCF analysis based on our updated estimates gives a valuation of €34.09/share.

Growth path resumes in H123

After three quarters of subdued year-on-year growth (Q123: 1.4%, Q422: -7.7% and Q322: 1.1%), Q223 signalled a return to a more substantial revenue growth level of 8%. For H123 this implies revenue growth of 4.5% to €84.6m. This increase is fully fuelled by JDC’s largest division, Advisortech (82% of revenues), which includes its insurance platform business. Revenue in this segment increased 11.2% to €75.0m with an acceleration in Q2 (+16.9%). Revenue from IFA clients, the independent financial advisers connected to JDC’s insurance platform, showed an increase in revenues of 9% in H1 to €63.5m, after a small decrease in Q123. This is the most important client group within JDC Group.

Revenues from major customers – savings bank and cooperative bank related insurers and in house insurance brokers from companies like Lufthansa, Volkswagen and BMW – increased 22% to €19.3m in H123, to almost 23% of JDC’s revenues. This percentage is gradually increasing. Within this group, the savings bank and cooperative bank related insurers in particular provide a large opportunity, as they have a massive client base in Germany.

The onboarding of Provinzial, the first savings bank-related insurer contract, to JDC’s platform is slow but on track, with 60 local banks onboarded and around 25 more to go this year. The transfer of insurance contracts to the platform, which generate turnover for JDC, is much faster at some branches than others. For example, Cologne (one million customers, balance sheet total €30bn) is the bank with the best adoption of the platform. This bank is responsible for the largest part of the revenues that saving banks will generate for JDC Group this year. As such it will take several years before the Provinzial contract will realise its full revenue potential.

Exhibit 1: H123 results highlights

€m

FY21

FY22

H122

H123

H123 y-o-y change

Total revenue

146.8

156.1

81.0

84.6

4.5%

– Advisortech

121.0

132.9

67.5

75.0

11.2%

– Advisory

35.7

34.7

18.1

15.9

-12.2%

– Holding

(9.9)

(11.5)

(4.6)

(6.3)

37.1%

Initial commission

100.2

102.2

52.8

57.2

8.4%

Insurance products

77.3

83.5

40.4

49.9

23.5%

Investment funds

15.9

12.7

8.8

5.3

-40.3%

Shares/closed-end funds

7.0

6.1

3.6

2.1

-42.8%

Follow-up commission

26.0

29.4

15.2

15.9

4.4%

Overrides

6.8

6.9

3.7

3.3

-10.8%

Services

4.4

3.5

2.1

1.1

-46.5%

Fee-based advisory

3.1

3.4

1.9

1.5

-21.9%

Other income

6.3

10.7

5.4

5.7

6.0%

Capitalised services

1.2

1.4

0.7

0.8

24.2%

Other operating income

0.7

1.6

0.6

0.5

-13.4%

Commission expenses

(107.0)

(111.3)

(58.4)

(61.1)

4.6%

Commission expense as % of revenues

72.9%

71.3%

72.1%

72.2%

0.1%

Personnel expenses

(22.3)

(27.2)

(13.1)

(14.0)

6.6%

Other operating expenses

(11.1)

(11.6)

(5.3)

(5.8)

8.6%

EBITDA

8.3

9.0

5.4

5.1

-6.0%

D&A

(5.4)

(6.1)

(3.0)

(2.7)

-8.2%

EBIT

2.9

2.9

2.4

2.3

-3.3%

Associates

0.1

(0.3)

0

(0.3)

0.2%

Pre-tax profit

1.4

1.1

1.7

1.7

0.2%

Net income

0.9

0.9

1.6

1.6

2.8%

EPS (€)

0.07

0.07

0.12

0.12

8.3%

Source: JDC Group financial accounts

The contract with savings bank-related insurance company VKB (Versicherungskammer Bayern) was signed on 16 August and the roll out of JDC’s platform to the savings banks in VKB’s business region is scheduled to start in Q124. The successful pilot with cooperative bank insurer R+V Versicherung has been continued and expanded to 20 branches, from four. Provinzial, VKB and R+V are all potential >€100m turnover clients for JDC Group, according to management.

JDC’s second division, Advisory (18% of revenues), is still performing at subdued levels with a decrease in revenues of 12.2% in H123, driven by the persistently difficult economic environment in Germany. This is reflected in the commissions on investments funds and shares/closed-end funds, which decreased 40.3% and 42.8%, respectively.

As a platform provider, JDC Group passes on the majority of the commission income generated on the platform to its platform clients. The percentage of received commissions through the platform passed on to JDC’s clients is decreasing slowly, from 73.7% in 2020 to 72.2% in H123, but in H123 it was 0.1% higher compared to H122. This reflects negatively on profitability levels.

Staff expenses were €14.0m, compared with €13.1m in H122, which largely explains the decrease in EBITDA to €5.1m from €5.4m in H122. Other operating costs were also higher. As a result of lower D&A, EBIT came in at more or less the same level as last year and net profit arrived was €1.6m, the same as last year.

More importantly, JDC reiterated its FY23 outlook on the basis of cooperation contracts already signed, of revenues of €175–190m and EBITDA of €11.5–13.0m.

JDC’s net debt at end H123 amounted to €1.6m (FY22: €3.0m). Interest-bearing liabilities of €19.7m (largely from its outstanding bond) are partly offset by a cash position of €18.1m. JDC also has 687k (FY22: 687k) of its own shares due to its buyback programmes, which provides a solid financial position.

Guidance assumes continued acceleration in H2

At the midpoint, JDC’s FY23 guidance implies an acceleration of growth to 15.7% compared to H123 in terms of revenues in H2 and of 41.1% in EBITDA, as can be seen in Exhibit 2 below.

Exhibit 2: Implied H223 at FY23 guidance

€m

H122

H222

H123

H223 mid guidance

Change H223e vs H123

Total revenue

81.0

75.1

84.6

97.9

+15.7%

EBITDA

5.4

3.6

5.1

7.2

+41.1%

Source: JDC Group financial accounts, Edison Investment Research

This guidance might seem challenging, but as we break down the revenue guidance, a relatively small improvement in revenues in Advisortech is necessary to reach the midpoint, while in Advisory a return to more usual levels of activity compared to the depressed levels of the last 12 months is required.

In Advisortech we expect an improvement in revenues of 13.8% in H223 compared to H123. This is a smaller improvement than we saw in 2021 (see below). CFO Ralph Konrad said in the conference call after the H123 results that the start of Q3 was strong with relatively high platform activity, which provides confidence that H223 will be better than H123. Q4 usually is by far the best quarter for this activity.

In Advisory we should see a return to more usual levels of activity (like H221), as the interest and inflationary environment seem likely to stabilise. We see an increase in revenues of 13.8% in this segment.

Exhibit 3: Sales development per division

Source: JDC Group financial accounts, Edison Investment Research

JDC Group’s business model incorporates a large amount of operating leverage and that should boost EBITDA, as revenue growth picks up in H223. JDC’s business is largely an electronic platform business with as little human interaction as possible and the higher levels of platform activity do not require much more operating expenses. We have pencilled in 11.9% higher operating expenses for the year on 16.8% higher revenues. As such, EBITDA will increase much faster than revenues. This should bring FY23 EBITDA well within the guided range.

Minor changes to estimates

We have made minor changes to our estimates after the H123 results. In the next few years, we continue to expect a further acceleration of growth in the Advisortech segment, driven not only by key clients, but also by increased growth in the IFA business. Furthermore, JDC is connecting more and more insurance brokers to its platform through the joint venture with Bain and JDC’s major shareholder GWL as well as the agency networks of insurance companies like Gothaer Versicherungen.

In FY23, we estimate that Advisortech revenues will increase by 20.7% to €160.3m, fuelled by a 25% increase at key clients and 20% in the IFA business, which will also benefit from a weak comparison base. In Advisory, we expect FY23 revenues to decrease by 2% to €34.0m, after an already weak FY22. With a recovery in H223 we expect revenue growth in Advisory to return to a more normalised level of 5% in the coming years.

Compared to our previous estimates, our revenue forecasts are more or less unchanged and our EBITDA forecasts are 1.1% lower in FY23 and 0.3% higher in FY24. We expect net profit to increase to €3.0m in FY23 and €6.9m in 2024, from €0.9m in 2022.

Exhibit 4: Estimate changes

€m

FY22

FY23e old

FY23e new

Change

FY24e old

FY24e new

Change

FY25e

Total revenue

156.1

182.7

182.3

-0.2%

212.2

212.4

0.1%

250.9

EBITDA

9.0

12.3

12.2

-1.1%

17.4

17.4

0.3%

26.5

EBIT

2.9

5.7

5.5

-2.3%

10.4

10.5

0.5%

19.2

Pre-tax profit

1.1

3.9

3.7

-3.4%

8.6

8.7

0.5%

17.4

Net income

0.9

3.1

3.0

-3.4%

6.9

6.9

0.5%

13.9

EPS (€)

0.07

0.23

0.22

-3.4%

0.50

0.51

0.5%

1.02

Source: JDC Group financial accounts, Edison Investment Research


More gross margin potential

JDC Group passed the €1bn annual premium mark of insurance premium volume that passes through its platform in the last half year. CFO Ralph Konrad signalled that as an important development for the group. Due to its increasing size, JDC can negotiate more favourable terms for the commission it receives from insurance companies. Mr Konrad stated in the conference call after the results that for Property & Casualty business up to 500bp more commission could be possible in the long run, but in the medium term 200bp is more probable

These higher incoming commissions would probably partly end up at the platform clients, but also partly at JDC. In our estimates we have kept the paid out commission constant as a percentage of revenues, but this might prove to be too conservative if platform growth continues as planned.

An increase in commission received from insurance companies of 100bp, of which 50bp is passed on to platform partners, would translate into a 500bp decrease of commission paid out to platform partners. Compared to our current estimate of a stable 71% pay out, this would result in almost 5% EBITDA growth in 2025 according to our calculations.

Valuation: Discount to platform peers still high

DCF

Our DCF analysis results in a value of €34.09 per share, up from €32.51 in our April update note (published on 17 April 2023). This increase is the result of our higher estimates for 2024 and 2025. The most important assumptions in our DCF model are:

We only consider organic revenue growth, although we expect JDC to remain active in M&A. We expect organic revenue growth to increase in the next few years to 25%, as adoption of the platform by retail clients grows, before levelling off to a terminal growth rate of 2.5%.

We expect the operating margin to increase to 7.6% in 2025 from 1.9% in 2022, as JDC benefits from platform effects and operational leverage. Given the operating leverage, the net operating margin has the potential to reach 10% post 2025.

We assume an effective tax rate of 32%, based on the corporate tax rate in Germany, starting at a lower level as a result of JDC’s tax shield.

We use a beta of 1.5 to reflect the relatively low-risk IFA/advisory business, offset by a more uncertain key client development.

We set a risk-free rate and market equity risk premium of 3.0% and 5.0%, delivering a WACC of 9%.

We have excluded treasury shares from our calculations.

Peer valuation

Compared to financial brokers like Aon and aggregators in the UK like Moneysupermarket.com, which we see as peers for JDC’s relatively small advisory business, JDC continues to trade at a premium on EV/EBITDA but at a steep discount on EV/sales for the next two years. Compared to earlier this year, the premium has widened somewhat.

JDC’s much bigger Advisortech activities are better comparable to the platforms of German mortgage specialist Hypoport, which also offers an insurance platform, and US-based platforms Goosehead Insurance and Lemonade. As Lemonade is not EBITDA positive in the coming years, it does not make sense to include it in our peer group.

Hypoport issued a profit warning in H123, driven by the lacklustre German mortgage market. However, its share price is still up 60% this year, which means that the premium to JDC Group both on EV/sales and EV/EBITDA in 2023e and 2024e has widened. Also, compared to Goosehead (share price +81% this year) Hypoport now trades at a premium. However, keep in mind that 2022 was a disastrous year for Hypoport’s share price (-80%).

Compared to the large share price movements of Goosehead and Hypoport this year, JDC’s share price has not performed very well, with a minor improvement (+1.4%). JDC’s discount on consensus FY24e EV/EBITDA now is 24.6%, which is relatively stable compared to our last report in April (26.4%). We do not see this large discount compared to platform peers as justified given the much more stable business model and large potential of JDC’s platform and its large client wins.

Exhibit 5: Peer valuation

Market cap (local currency, m)

FY23e EV/sales

FY24e EV/sales

FY23e EV/EBITDA

FY24e EV/EBITDA

Aon

$65,100

5.62

5.28

17.3

15.9

Moneysupermarket.com

£1,328

3.22

2.93

10.5

9.29

Netfonds

€93

0.48

0.45

12.9

9.35

Average financial brokers

 

3.1

2.9

13.6

11.5

Goosehead

$1,526

5.81

4.36

23.8

17.7

Hypoport

€1101

2.95

2.61

24.1

17.6

Average platforms

 

4.4

3.5

24.0

17.7

JDC Group

€233

1.31

1.02

19.7

13.3

Premium/(discount) financial brokers

 

-57.8%

-64.7%

45.2%

15.5%

Premium/(discount) to platform

 

-70.1%

-70.7%

-17.7%

-24.6%

Source: Refinitiv, Edison Investment Research Note: Priced at 14 August 2023.

Exhibit 6: Financial summary

€m

2021

2022

2023e

2024e

2025e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

146.8

156.1

182.3

212.4

250.9

Cost of Sales

(105.1)

(108.3)

(126.7)

(148.1)

(175.5)

Gross Profit

41.7

47.8

55.6

64.3

75.5

EBITDA

 

 

8.3

9.0

12.2

17.4

26.5

Operating profit (before amort. and excepts.)

 

2.9

2.9

5.5

10.5

19.2

Amortisation of acquired intangibles

-

-

-

-

-

Exceptionals

-

-

-

-

-

Share-based payments

-

-

-

-

-

Reported operating profit

 

 

2.9

2.9

5.5

10.5

19.2

Net Interest

 

 

(1.6)

(1.5)

(1.8)

(1.8)

(1.8)

Joint ventures & associates (post tax)

1.4

(0.3)

-

-

-

Profit Before Tax (norm)

2.7

1.1

3.7

8.7

17.4

Profit Before Tax (reported)

2.7

1.1

3.7

8.7

17.4

Reported tax

(0.5)

(0.2)

(0.7)

(1.7)

(3.5)

Profit After Tax (norm)

0.9

0.9

3.0

6.9

13.9

Profit After Tax (reported)

0.9

0.9

3.0

6.9

13.9

Basic average number of shares outstanding (m)

13.7

13.7

13.7

13.7

13.7

Average Number of Shares Outstanding (m)

 

 

13.1

13.7

13.7

13.7

13.7

EPS (€)

 

 

0.07

0.07

0.22

0.51

1.02

EPS - normalised (€)

0.07

0.07

0.22

0.51

1.02

DPS (€)

-

-

-

-

-

Gross Margin (%)

28.4

30.6

30.5

30.3

30.1

EBITDA Margin (%)

5.7

5.7

6.7

8.2

10.6

Normalised Operating Margin (%)

2.0

1.9

3.0

4.9

7.6

BALANCE SHEET

Fixed Assets

 

 

 

78.0

74.5

71.6

69.0

66.9

Intangible Assets

66.4

64.1

61.9

60.0

58.4

Tangible Assets

5.6

4.9

4.1

3.5

3.0

Investments & other

6.0

5.6

5.6

5.6

5.6

Current Assets

 

 

 

43.7

38.5

47.4

60.4

80.9

Stocks

-

-

-

-

-

Debtors

19.2

17.6

20.6

24.0

28.3

Cash & cash equivalents

21.9

16.7

21.9

30.7

45.9

Other

2.6

4.2

4.9

5.7

6.8

Current Liabilities

 

 

 

36.9

32.7

35.8

39.3

43.8

Creditors

23.8

18.1

21.2

24.7

29.2

Tax and social security

-

-

-

-

-

Short term borrowings

1.0

0.0

0.0

0.0

0.0

Other

12.1

14.6

14.6

14.6

14.6

Long Term Liabilities

 

 

 

46.0

43.3

43.3

43.3

43.3

Long term borrowings

19.5

19.7

19.7

19.7

19.7

Other long term liabilities

26.5

23.6

23.6

23.6

23.6

Net Assets

 

 

 

38.8

37.0

40.0

46.9

60.8

Minority interests

-

-

-

-

-

Shareholders' equity

 

 

 

38.8

37.0

40.0

46.9

60.8

CASH FLOW

Operating Cash Flow

5.6

7.2

11.5

15.7

23.0

Working capital

9.3

0.4

(0.6)

(0.7)

(0.9)

Net operating cash flow

 

 

 

14.9

7.6

10.8

15.0

22.1

Capex

(2.1)

(3.2)

(3.8)

(4.4)

(5.2)

Acquisitions/disposals

(11.0)

-

-

-

-

Net interest

-

(6.4)

(1.8)

(1.8)

(1.8)

Equity financing

10.6

(3.2)

-

-

-

Dividends

-

-

-

-

-

Other

(2.2)

-

-

-

-

Net Cash Flow

10.2

(5.2)

5.3

8.8

15.1

Opening net debt/(cash)

 

 

 

(11.6)

(1.4)

3.0

(2.2)

(11.0)

FX

-

-

-

-

-

Closing net debt/(cash)

 

 

 

(1.4)

3.0

(2.2)

(11.0)

(26.2)

Source: JDC Group, Edison Investment Research

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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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by JDC Group and prepared and issued by Edison, in consideration of a fee payable by JDC Group. Edison Investment Research standard fees are £60,000 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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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