XP Power — German high-voltage acquisitions

XP Power (LSE: XPP)

Last close As at 24/04/2024

GBP10.62

26.00 (2.51%)

Market capitalisation

GBP252m

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Research: TMT

XP Power — German high-voltage acquisitions

XP Power has acquired two German companies specialising in high-voltage power solutions from a single vendor for cash of €39m/£32.8m, funded by existing debt facilities. The deal extends XP’s product range and strengthens its position in Europe. With higher combined operating margins than XP, the company expects the deal to be earnings enhancing this year. We have upgraded our FY22 diluted normalised EPS forecast by 1.7% and introduce FY23 forecasts for 12.3% EPS growth.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

XP Power

German high-voltage acquisitions

Acquisitions

Tech hardware & equipment

1 February 2022

Price

4,860p

Market cap

£954m

$1.38:€1.2:£1

Net debt (£m) at end FY21

24.7

Shares in issue

19.6m

Free float

90%

Code

XPP

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(4.7)

(7.1)

(3.2)

Rel (local)

(4.3)

(8.5)

(15.9)

52-week high/low

5700p

4470p

Business description

XP Power is a developer and designer of power control solutions, with production facilities in China, Vietnam and the United States and design, service and sales teams across Europe, the United States and Asia.

Next events

FY21 results

1 March 2022

Analyst

Katherine Thompson

+44 (0)20 3077 5730

XP Power is a research client of Edison Investment Research Limited

XP Power has acquired two German companies specialising in high-voltage power solutions from a single vendor for cash of €39m/£32.8m, funded by existing debt facilities. The deal extends XP’s product range and strengthens its position in Europe. With higher combined operating margins than XP, the company expects the deal to be earnings enhancing this year. We have upgraded our FY22 diluted normalised EPS forecast by 1.7% and introduce FY23 forecasts for 12.3% EPS growth.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/19

199.9

32.3

141.4

55.0

34.4

1.1

12/20

233.3

44.3

198.4

74.0

24.5

1.5

12/21e

240.2

43.5

179.0

95.0

27.2

2.0

12/22e

271.6

51.0

207.1

98.0

23.5

2.0

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

Buying German high-voltage solutions providers

XP has acquired from one vendor two German providers of high-voltage, high-power solutions, FuG Elektronik and Guth High Voltage. The deal expands XP’s product range with complementary solutions in the semiconductor manufacturing and industrial technology markets, and strengthens its position in Europe and Germany in particular (the largest market for power products in Europe). XP’s integration plans will focus on revenue rather than cost synergies: XP plans to use its direct salesforce and distributors to take FuG/Guth products to North America and Asia, where they currently have a very limited presence.

Earnings upgrade in FY22

We have revised our forecasts to reflect the acquisitions. XP expects the deal to be earnings enhancing in FY22 – we upgrade our normalised diluted EPS forecast by 1.7%. It also expects net debt/EBITDA to be well below 1x by the end of FY22 (we estimate 0.8x). We introduce forecasts for FY23, factoring in revenue growth of 7.5% and EPS growth of 12.3%, and for net debt/EBITDA to fall to 0.5x.

Valuation: Premium rating reflects profitability

On an FY22e P/E basis, XP is trading at a premium to both global power converter companies and UK electronics companies with a dividend yield at the upper end of the range. The company generates EBITDA and EBIT margins at the top end of both peer groups. After a pause in M&A activity during the pandemic, as the company was not able to undertake due diligence in person, the acquisitions mark a resumption of XP’s M&A strategy. With further debt capacity available and a track record of good cash generation, we expect to see further acquisitions to enhance the growth of the group.

Acquiring in Germany

XP has acquired two German companies, FuG Elektronik (FuG) and Guth High Voltage (Guth), from Dr Simon Consulting for a total of €39m/£32.8m in cash using existing debt facilities.

Deal rationale

From 2015 to 2018, XP acquired several businesses that extended its product range to include RF (radio frequency) power products and high-voltage, high-power products. Yesterday’s acquisitions will extend XP’s product range further into the high-voltage, high-power space (see Exhibit 1) and strengthen its position in Europe. The company estimates that Germany is the largest market for power products in Europe. The acquired businesses sell into the semiconductor equipment and industrial technology markets.

Exhibit 1: Updated product portfolio

Source: XP Power

The deal also brings development and manufacturing capacity in Europe. The FuG facility has an empty property that could be used to double capacity as required. As high-voltage products tend to be higher value but required in lower volumes, XP’s high-volume Asian manufacturing facilities would be less suitable.

XP believes it can accelerate the growth of the two businesses, which have, until now, predominantly focused on selling to European customers. XP expects to take FuG/Guth products to North America and Asia using its direct sales force and distributors.

Background on the two targets

FuG, based near Munich, was founded in 1978 and has 115 employees. It was acquired by Dr Simon Consulting in 2005. FuG designs and manufactures precision low- and high-voltage power solutions for industrial customers and scientific applications. In CY21, it generated revenue of c €13m.

Guth, based in Stuttgart, was founded in 1946 and has 35 employees. It was acquired by Dr Simon Consulting in 2008. Guth designs and manufactures high-voltage power solutions for applications including charging capacitors, insulation and measurement equipment, and transformers. In CY21, Guth generated revenue of c €5m.

Both businesses were run independently by Dr Simon Consulting. XP does not have immediate plans to bring the two companies together but may take advantage of FuG’s manufacturing facility for Guth products.

XP notes that while FuG and Guth operate in the same end-markets as XP, there is very little product overlap; XP’s largest customer is also a customer of FuG but for different products. In the semiconductor equipment market, the acquired businesses are not present in ion implant, etch or deposition (areas in which XP is active), instead focusing on areas such as electron beam lithography and microscopy, capacitor charging and test & burn-in. The deal also brings a new insulation capability: XP’s high-voltage range includes air-insulated products, whereas the acquired businesses offer an alternative type of insulation, encapsulation (or potting), that results in smaller products.

In terms of competition Spellman and Advanced Energy Industries are the major players, with this deal strengthening XP’s third place in the market. FuG and Guth also compete against niche players and, to a limited extent, Asian players such as TDK-Lambda and Matsusada Precision.

Terms of the deal

XP is paying cash of €39m/£32.8m from existing debt facilities. At the end of H121, the company had a net debt position of £20.3m and had £87m unused from its revolving credit facility.

The combined businesses generated an estimated €18m in revenue and €4.5m in adjusted EBITDA in CY21 (yet to be finalised), which implies a trailing EV/EBITDA of 8.7x compared to XP at 17.3x in FY21e. The company expects the deal to be earnings enhancing in FY22 and for net debt/EBITDA to be well below 1x by the end of FY22.

Changes to forecasts

We have revised our forecasts to include the two companies from 1 February. We also introduce FY23 forecasts. In FY22, we upgrade our normalised diluted EPS forecast by 1.7% and forecast a net debt/EBITDA ratio of 0.8x at year-end, reducing to 0.5x by the end of FY23.

Exhibit 2: Changes to forecasts

£m

FY21e

FY22e

FY23e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

New

y-o-y

Revenues

240.2

240.2

0.0%

3.0%

257.1

271.6

5.6%

13.0%

292.0

7.5%

Gross profit

111.0

111.0

0.0%

0.8%

120.2

127.4

6.0%

14.8%

137.1

7.6%

Gross margin

46.2%

46.2%

0.0%

(1.0%)

46.7%

46.9%

0.2%

0.7%

46.9%

0.0%

EBITDA

56.6

56.6

0.0%

(0.3%)

62.8

65.5

4.4%

15.7%

72.8

11.1%

EBITDA margin

23.6%

23.6%

0.0%

(0.8%)

24.4%

24.1%

(0.3%)

0.5%

24.9%

0.8%

Normalised operating profit

45.0

45.0

0.0%

(2.1%)

50.6

53.0

4.8%

17.7%

59.2

11.6%

Normalised operating margin

18.7%

18.7%

0.0%

(1.0%)

19.7%

19.5%

(0.2%)

0.8%

20.3%

0.7%

Reported operating profit

35.3

35.3

0.0%

(5.5%)

47.4

48.8

3.0%

38.2%

56.0

14.6%

Reported operating margin

14.7%

14.7%

0.0%

(1.3%)

18.4%

18.0%

(0.5%)

3.3%

19.2%

1.2%

Normalised PBT

43.5

43.5

0.0%

(1.7%)

49.3

51.0

3.6%

17.3%

57.5

12.7%

Reported PBT

33.8

33.8

0.0%

(5.2%)

46.1

46.8

1.7%

38.5%

54.3

16.0%

Normalised net income

35.7

35.7

0.0%

(8.4%)

40.7

41.3

1.7%

15.7%

46.4

12.3%

Reported net income

27.8

27.8

0.0%

(11.7%)

38.0

37.7

(0.6%)

35.6%

43.8

16.1%

Normalised basic EPS (p)

182.0

182.0

0.0%

(9.8%)

207.1

210.6

1.7%

15.7%

236.4

12.3%

Normalised diluted EPS (p)

179.0

179.0

0.0%

(9.8%)

203.7

207.1

1.7%

15.7%

232.6

12.3%

Reported basic EPS (p)

141.7

141.7

0.0%

(13.1%)

193.5

192.2

(0.6%)

35.6%

223.2

16.1%

Dividend per share (p)

95.0

95.0

0.0%

28.4%

98.0

98.0

0.0%

3.2%

102.0

4.1%

Net debt/(cash)

24.7

24.7

0.0%

37.7%

13.4

49.9

273.9%

102.5%

35.7

(28.4%)

Orders

343.4

343.4

0.0%

33.1%

322.6

322.6

0.0%

-6.1%

322.0

-0.2%

Net debt/EBITDA (x)

0.5

0.5

0.2

0.8

0.5

Source: Edison Investment Research

Valuation

In the table below, we show XP’s valuation versus two groups of peers: global power converter companies and UK electronics companies. On an FY22e P/E basis, XP is trading at a premium to both groups with a dividend yield at the upper end of the range. The company generates EBITDA and EBIT margins at the top end of both peer groups. After a pause in M&A activity during the pandemic, as the company was not able to undertake due diligence in person, the acquisitions mark a resumption of XP’s M&A strategy. With further debt capacity available and a track record of good cash generation, we expect to see further acquisitions to enhance the growth of the group.

Exhibit 3: Peer valuation metrics

Rev growth

EBITDA margin

EBIT margin

P/E (x)

EV/EBIT (x)

Div yield

CY

NY

CY

NY

CY

NY

CY

NY

NY+1

CY

NY

CY

NY

XP Power

3.0%

13.0%

23.6%

24.1%

18.7%

19.5%

27.2

23.5

20.9

21.7

18.5

2.0%

2.0%

Cosel

4.1%

10.5%

15.2%

15.7%

13.7

11.1

10.5

2.8%

3.3%

Delta Electronics

10.8%

10.1%

15.6%

16.2%

10.3%

11.1%

25.3

21.7

18.5

22.5

18.8

2.3%

2.6%

Advanced Energy Industries

0.0%

8.5%

16.5%

18.1%

14.2%

15.0%

18.7

15.9

12.6

14.6

12.7

0.0%

0.0%

Comet Holdings

27.5%

12.2%

19.7%

20.6%

15.7%

16.9%

35.7

30.7

22.7

27.7

22.9

0.7%

0.9%

Diploma

9.8%

5.5%

20.7%

20.8%

18.7%

18.8%

29.1

27.2

25.5

22.1

20.8

1.7%

1.8%

Electrocomponents

23.2%

6.1%

14.0%

14.6%

11.6%

12.3%

23.8

21.2

19.3

18.4

16.2

1.6%

1.8%

Gooch & Housego

4.1%

3.3%

17.0%

17.5%

11.4%

12.2%

24.8

22.3

20.6

18.3

16.5

1.2%

1.3%

TT Electronics

10.5%

6.5%

10.8%

12.0%

7.4%

8.7%

16.2

13.1

11.0

14.7

11.8

2.3%

2.8%

Average power converter companies

10.6%

10.3%

16.7%

17.6%

13.4%

14.4%

23.3

19.9

16.1

21.6

18.1

1.5%

1.7%

Average UK electronics companies

11.9%

5.3%

15.6%

16.2%

12.3%

13.0%

23.5

21.0

19.1

18.4

16.3

1.7%

1.9%

XP vs power converters

16%

18%

30%

1%

2%

XP vs UK electronics

16%

12%

9%

18%

13%

Source: Edison Investment Research, Refinitiv (as at 31 January). Note: For XP, CY = FY21e, NY = FY22e, NY+1 = FY23e.

Exhibit 4: Financial summary

£m

2015

2016

2017

2018

2019

2020

2021e

2022e

2023e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

109.7

129.8

166.8

195.1

199.9

233.3

240.2

271.6

292.0

Cost of Sales

(55.1)

(67.8)

(89.2)

(102.8)

(109.8)

(123.2)

(129.3)

(144.2)

(154.9)

Gross Profit

54.6

62.0

77.6

92.3

90.1

110.1

111.0

127.4

137.1

EBITDA

 

 

29.7

33.0

41.7

49.2

44.5

56.8

56.6

65.5

72.8

Normalised operating profit

 

 

25.9

28.8

36.4

42.9

35.0

46.0

45.0

53.0

59.2

Amortisation of acquired intangibles

0.0

(0.4)

(0.6)

(2.8)

(3.2)

(3.2)

(3.2)

(3.2)

(3.2)

Exceptionals

(0.3)

(0.4)

(3.3)

(0.8)

(5.1)

(5.4)

(6.5)

(1.0)

0.0

Share-based payments

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Reported operating profit

25.6

28.0

32.5

39.3

26.7

37.4

35.3

48.8

56.0

Net Interest

(0.2)

(0.2)

(0.3)

(1.7)

(2.7)

(1.7)

(1.5)

(2.0)

(1.6)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Exceptional & other financial

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

25.7

28.6

36.1

41.2

32.3

44.3

43.5

51.0

57.5

Profit Before Tax (reported)

 

 

25.4

27.8

32.2

37.6

24.0

35.7

33.8

46.8

54.3

Reported tax

(5.5)

(6.3)

(3.6)

(7.2)

(3.2)

(4.0)

(5.8)

(8.9)

(10.3)

Profit After Tax (norm)

20.2

22.3

28.8

33.9

27.9

39.2

36.0

41.6

46.7

Profit After Tax (reported)

19.9

21.5

28.6

30.4

20.8

31.7

28.1

38.0

44.1

Minority interests

(0.2)

(0.2)

(0.3)

(0.2)

(0.3)

(0.2)

(0.3)

(0.3)

(0.3)

Discontinued operations

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

20.0

22.1

28.5

33.7

27.6

39.0

35.7

41.3

46.4

Net income (reported)

19.7

21.3

28.3

30.2

20.5

31.5

27.8

37.7

43.8

Basic ave. number of shares outstanding (m)

19.0

19.0

19.1

19.1

19.2

19.3

19.6

19.6

19.6

EPS - basic normalised (p)

 

 

105.3

116.2

149.4

176.1

144.1

201.8

182.0

210.6

236.4

EPS - diluted normalised (p)

 

 

104.3

115.3

147.0

172.8

141.4

198.4

179.0

207.1

232.6

EPS - basic reported (p)

 

 

103.7

112.0

148.3

157.8

107.0

163.0

141.7

192.2

223.2

Dividend (p)

66

71

78

85

55

74

95

98

102

Revenue growth (%)

8.5

18.3

28.5

17.0

2.5

16.7

3.0

13.0

7.5

Gross Margin (%)

49.8

47.8

46.5

47.3

45.1

47.2

46.2

46.9

46.9

EBITDA Margin (%)

27.0

25.4

25.0

25.2

22.3

24.3

23.6

24.1

24.9

Normalised Operating Margin

23.6

22.2

21.8

22.0

17.5

19.7

18.7

19.5

20.3

BALANCE SHEET

Fixed Assets

 

 

65.4

73.2

88.1

129.2

137.4

135.2

141.4

177.8

181.9

Intangible Assets

48.2

53.0

63.9

97.7

99.6

98.8

105.4

140.6

143.4

Tangible Assets

16.1

19.1

22.5

30.7

35.9

33.5

33.1

34.3

35.6

Investments & other

1.1

1.1

1.7

0.8

1.9

2.9

2.9

2.9

2.9

Current Assets

 

 

53.5

65.7

83.5

105.1

96.0

107.0

105.3

123.8

130.9

Stocks

28.7

32.2

37.8

56.5

44.1

54.2

54.5

60.8

65.4

Debtors

17.5

21.5

23.8

33.0

34.8

30.2

39.9

44.6

48.0

Cash & cash equivalents

4.9

9.2

15.0

11.5

11.2

13.9

2.1

9.7

8.9

Other

2.4

2.8

6.9

4.1

5.9

8.7

8.7

8.7

8.7

Current Liabilities

 

 

(19.8)

(25.8)

(25.1)

(26.8)

(30.4)

(34.7)

(36.1)

(39.7)

(41.8)

Creditors

(14.6)

(16.1)

(21.4)

(22.4)

(25.2)

(28.3)

(29.7)

(33.3)

(35.4)

Tax and social security

(1.2)

(3.3)

(3.5)

(4.2)

(3.1)

(4.9)

(4.9)

(4.9)

(4.9)

Short term borrowings

(4.0)

(5.5)

0.0

0.0

(1.6)

(1.5)

(1.5)

(1.5)

(1.5)

Other

0.0

(0.9)

(0.2)

(0.2)

(0.5)

0.0

0.0

0.0

0.0

Long Term Liabilities

 

 

(10.0)

(6.2)

(29.6)

(70.1)

(64.1)

(43.0)

(36.3)

(68.9)

(53.7)

Long term borrowings

(4.6)

0.0

(24.0)

(63.5)

(57.3)

(35.2)

(28.5)

(61.1)

(45.9)

Other long-term liabilities

(5.4)

(6.2)

(5.6)

(6.6)

(6.8)

(7.8)

(7.8)

(7.8)

(7.8)

Net Assets

 

 

89.1

106.9

116.9

137.4

138.9

164.5

174.2

193.0

217.2

Minority interests

(0.8)

(0.8)

(0.9)

(1.0)

(0.7)

(0.7)

(0.8)

(0.8)

(0.9)

Shareholders' equity

 

 

88.3

106.1

116.0

136.4

138.2

163.8

173.5

192.2

216.4

CASH FLOW

Op Cash Flow before WC and tax

29.7

33.0

41.7

49.2

44.5

56.8

56.6

65.5

72.8

Working capital

(4.6)

(6.1)

0.4

(21.6)

10.6

(6.2)

(8.6)

(7.4)

(5.8)

Exceptional & other

0.6

5.1

(6.3)

3.2

(4.4)

(1.7)

(6.5)

(1.0)

0.0

Tax

(4.7)

(4.1)

(6.1)

(4.1)

(4.5)

(3.3)

(5.8)

(8.9)

(10.3)

Net operating cash flow

 

 

21.0

27.9

29.7

26.7

46.2

45.6

35.7

48.2

56.7

Capex

(5.4)

(6.8)

(10.1)

(15.0)

(16.3)

(14.9)

(21.0)

(17.8)

(19.4)

Acquisitions/disposals

(8.3)

0.1

(18.3)

(35.4)

0.0

(0.5)

0.0

(32.8)

0.0

Net interest

(0.1)

(0.2)

(0.2)

(1.5)

(2.7)

(1.3)

(1.5)

(2.0)

(1.6)

Equity financing

0.0

0.2

(0.2)

0.6

0.5

3.5

0.0

0.0

0.0

Dividends

(12.2)

(13.1)

(14.2)

(15.6)

(17.2)

(7.3)

(18.3)

(19.2)

(19.8)

Other

0.2

0.0

0.0

0.0

(1.5)

(1.7)

(1.7)

(1.7)

(1.7)

Net Cash Flow

(4.8)

8.1

(13.3)

(40.2)

9.0

23.4

(6.8)

(25.3)

14.2

Opening net debt/(cash)

 

 

(1.3)

3.7

(3.7)

9.0

52.0

41.3

17.9

24.7

49.9

FX

(0.2)

(0.5)

0.6

(2.7)

1.7

0.0

0.0

0.0

0.0

Other non-cash movements

0.1

(0.2)

0.0

(0.1)

0.0

0.0

0.0

0.0

0.0

Closing net debt/(cash)

 

 

3.7

(3.7)

9.0

52.0

41.3

17.9

24.7

49.9

35.7

Source: XP Power, Edison Investment Research

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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 XP Power and prepared and issued by Edison, in consideration of a fee payable by XP Power. 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 2022 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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