Mytilineos — Renewables to drive EBITDA above €1bn/year

Mytilineos (ASE: MYTIL)

Last close As at 23/02/2024

EUR36.74

−0.26 (−0.70%)

Market capitalisation

EUR5,287m

More on this equity

Research: Industrials

Mytilineos — Renewables to drive EBITDA above €1bn/year

We are raising our earnings estimates for Mytilineos and increasing our valuation 29% from €28/share to €36/share. Cyclical factors helped earnings acceleration in 2022, but we see underlying organic growth (particularly in Energy) resetting earnings to €1bn/year from FY24. Mytilineos is simplifying its story around two key activities in a roughly 70/30 earnings mix: Energy (renewables, generation and natural gas supply) and Metallurgy (aluminium smelting). Its renewables business is particularly well positioned to benefit from European policy initiatives.

Written by

Andrew Keen

MD - Head of Content, Energy & Resources, Industrials

Mytilineos_resized

Industrials

Mytilineos

Renewables to drive EBITDA above €1bn/year

Valuation update

Industrials

21 March 2023

Price

€25.2

Market cap

€3,601m

Net debt (€m) at 31 December 2022

716

Shares in issue

138.7m

Free float

70.5%

Code

MYTIL

Primary exchange

ASE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(3.0)

28.1

75.9

Rel (local)

6.1

14.2

47.7

52-week high/low

€25.52

€12.80

Business description

Mytilineos is a leading industrial company with an international presence in all five continents. The company is active in Energy and Metals (integrated aluminium smelting). Its renewable energy business is growing strongly organically, helped by European policy initiatives.

Next events

Q1 trading update

4 May 2023

Analysts

Andrew Keen

+44 (0)20 3077 5700

Harry Kilby

+44 (0)20 3077 5700

Mytilineos is a research client of Edison Investment Research Limited

We are raising our earnings estimates for Mytilineos and increasing our valuation 29% from €28/share to €36/share. Cyclical factors helped earnings acceleration in 2022, but we see underlying organic growth (particularly in Energy) resetting earnings to €1bn/year from FY24. Mytilineos is simplifying its story around two key activities in a roughly 70/30 earnings mix: Energy (renewables, generation and natural gas supply) and Metallurgy (aluminium smelting). Its renewables business is particularly well positioned to benefit from European policy initiatives.

Year
end

EBITDA
(€m)

Net income*
(€m)

EPS**
(€)

DPS***
(€)

P/E****
(x)

Yield****
(%)

12/21

359

180

1.19

0.42

12.2

2.9

12/22

823

466

3.41

1.20

4.6

7.6

12/23e

931

520

3.77

1.32

6.4

5.4

12/24e

1,048

595

4.31

1.51

5.5

6.3

Note: *Reported. **Number of shares is adjusted for the company’s ongoing buyback scheme. ***Final distributed dividend per share. ****At average share prices in 2021 & 2022.

Earnings growth structural rather than cyclical

Mytilineos’s annualised EBITDA rate in Q4 exceeded €1bn (€290m), bringing total 2022 EBITDA to €823m, up 130% year-on-year. In a volatile energy price environment, it can be tempting to treat energy earnings gains as purely cyclical, but we see the strong organic growth in power generation (both conventional and renewable generation and energy supply) as not yet being recognised by the market. We are raising our 2023 EBITDA estimate from €784m to €931m and our 2024 estimate from €796m to €1,048m, based on a reassessment of medium-term energy earnings, and see €1bn/year as sustainable underlying EBITDA from 2024.

Renewables a key driver of growth

Mytilineos has two sources of competitive advantage in energy. First, it is a highly efficient electricity generator with the capacity to source natural gas at a discount (or at competitive prices), giving it a structural advantage when prices are set by less efficient power generators at high gas prices. If gas prices fall significantly, power pricing can revert to being set by alternate fuels (principally lignite), leading to margin expansion at the other end of the pricing spectrum as well. Second, Mytilineos’s earnings growth will be driven increasingly by its renewables capacity, which already exceeds 9GW globally. It is reinvesting current cash flows in a favourable policy environment (the EU has dedicated significant funding and is accelerating permitting processes to electrify Europe and diversify energy sources). Mytilineos has significant experience building solar capacity for itself and others and is able to grow this business significantly over the next few years.

Valuation: A step change

We are raising our valuation 29% from €28/share to €36/share. Mytilineos’s stock has rallied strongly recently, up from €13.56 (€1.85bn market cap) in late Q222 to €25.20 currently (€3.6bn market cap), but in our view still does not reflect the medium-term earnings outlook. If, as we forecast, EBITDA can be maintained at over €1bn/year from FY24, we determine a valuation of €36/share (€5.0bn) (based on a 10-year discounted cash flow analysis).

Divisional earnings forecast updates

Key changes

We are raising our 2023 EBITDA estimate by 19% and our 2024 EBITDA estimate by 32%. The largest driver of this change at a group level is higher earnings estimates from the new Energy segment. Our 2024 EBITDA estimate for this division is €648m. We have made some revisions to our Metallurgy and Sustainable Engineering Solutions (SES) estimates to reflect a strong result in 2022 (Metallurgy was 8% ahead of our estimates, and SES was 30% ahead of our estimates) and a revision to some of our modelling approaches. This note focuses primarily on our revision to Energy earnings, where we see a sustainable level above €700m beyond 2025.

Much of the earnings growth in the Energy division reflects a rise in power generating capacity in both renewables and thermal technology. Mytilineos is in the process of doubling its thermal power capacity in Greece, with a new and highly efficient plant in hot commissioning. In addition, Mytilineos will deliver significant additional organic growth in solar capacity over the next three to five years, growing its existing renewable capacity of 550MW globally by switching to a strong build out of owned solar generating capacity. In Greece alone we see a renewables capacity of 400MW by the end of 2024, then the addition of 400MW each year for at least the subsequent two years.

Mytilineos’s annualised EBITDA rate in Q4 exceeded €1bn (€290m), bringing total 2022 EBITDA to €823m, up 130% year-on-year. Mytilineos announced its transformation into a new structure in December 2022 (focusing on energy and metals) and will report on this basis from 2023 onwards. We show below our published estimates according to its existing grouping of businesses and a potential simplification into the groupings described, but note that the company has not reported in these groupings, so we show this only as an illustration.

Exhibit 1: Changes to Edison forecasts (€m, unless shown)

Edison new

Edison old

Difference

2022

2023e

2024e

2022e

2023e

2024e

2022

2023e

2024e

Divisional EBITDA:

Metallurgy

270

262

274

251

222

249

8%

18%

10%

SES

91

100

105

70

65

68

30%

54%

54%

RSD

105

143

178

96

122

137

9%

18%

30%

P&G

373

430

495

320

379

346

17%

13%

43%

Other

(16)

(4)

(4)

(19)

(4)

(4)

(16%)

n/m

n/m

Group EBITDA

823

931

1,048

718

784

796

15%

19%

32%

New structure EBITDA:

Metallurgy

270

262

274

251

222

249

8%

18%

10%

Energy

554

648

728

n/m

n/m

n/m

n/m

n/m

n/m

Of which M Renewables

165

203

253

n/m

n/m

n/m

n/m

n/m

n/m

Construction/concession subs.

15

25

50

n/m

n/m

n/m

n/m

n/m

n/m

Other

(16)

(4)

(4)

n/m

n/m

n/m

n/m

n/m

n/m

Group EBITDA

823

931

1,048

718

783

796

15%

16%

32%

Net income*

466

520

595

392

441

450

19%

14%

32%

Reported EPS (€)

3.41

3.77

4.31

2.87

3.23

3.30

19%

13%

31%

Source: Edison Investment Research. Note: *Adjusted for minorities; change in EPS forecasts are different to net income due to own shares held.

Exhibit 2: Progression of quarterly EBITDA from Q319 to Q422 (€m)

Source: Edison Investment Research, Mytilineos

Energy

Mytilineos’s energy business involves four key activities: power generation, power supply (ie retailing/wholesale delivery), natural gas supply and Mytilineos’s renewables/storage development. Energy pricing has helped earnings over the past year. The drivers of earnings growth will become more diverse in the next few years in our view. Organic growth in the Energy business, both from thermal and increasingly from renewables, will drive volumes of energy generated higher. Spark spreads could also expand if natural gas prices fall considerably and the contribution from more expensive lignite power generation begins to play a role in price setting at the EU target model returns. EBITDA surpassed the €1bn run rate in Q422 (€1.16bn annualised) and we see this level as sustainable from 2024.

Renewable power generation (M Renewables)

2022 EBITDA attributable to renewables generation was €60m, principally from 210MW, which was mainly wind. In 2023 we assume that an additional 150MW of solar capacity will be commissioned, although this will come on at the end of the year, so will likely only accrue to 2024 earnings. This will take total renewables capacity to a 400MW run rate. In 2024, we are assuming that an additional 400MW of solar capacity is added, taking total capacity to 800MW. Mytilineos has significant capabilities in solar construction, and we see this as the key enabler of it boosting its generating capacity in the currently favourable policy and investment environment.

This is clearly a growth business for Mytilineos, with the potential for 400MW of capacity to be added to capacity in 2025 and 2026. This would require funding at €0.7m/MW, requiring an annual growth capex of €280m/year and a total capex bill for the build out in solar in the region of €1.0–1.2bn over four years. The funding available under the EU’s Recovery and Resilience Fund (RRF) means that the cost of debt for these projects is very low. We believe up to 50% of Mytilineos’s solar capex can be funded at a coupon of 1.0–1.5% and with a 15-year at term capital payment. We see Mytilineos able to fund its organic growth; under our revised forecasts net debt reaches 1.3x EBITDA in 2023 and 1.2x EBITDA in 2024.

Mytilineos power generation

Mytilineos is the largest independent power generator in Greece, accounting for 10.7% of domestic power generation in 2022, with this expected to rise to around 20% in 2023 following the commissioning of its new combined cycle (CCGT) plant, which is in the hot commissioning phase and will soon move to commercial production. This new plant will double Mytilineos’s thermal power generating capacity to approximately 2.3GW. Mytilineos has four gas-fired thermal power plants:

A new 826MW natural gas CCGT plant, which has recently been completed and is in hot commissioning. This will double Mytilineos’s power generation capacity with additional highly efficient, low carbon gas capacity. This plant is a highly efficient ‘H-Type’ GE gas turbine with an expected thermal efficiency of 63%.

A 437MW CCGT located in Agioi Theodoroi (Korinthia), commissioned in 2011.

A 444MW gas-fired CCGT located at the Energy Complex of Agios Nikolaos (Viotia), commissioned in 2011.

A 334MW highly efficient electricity and heat co-generation station (SITHYA) at the Energy Centre of Agios Nikolaos, Boeotia (commissioned in 2008). This power station is adjacent to Mytilineos’s aluminium smelter.

Historically, energy supply in Greece was particularly dependent on lignite (low-quality coal) power generation owned by the Public Power Corporation. Government policy has been aimed at gradually phasing it out (in favour of natural gas and then renewables), but this has been paused due to the conflict in Ukraine and subsequent volatility in gas prices.

Natural gas supply in Greece is through pipeline imports (principally from Turkey) and the regassification of LNG on Revithoussa Island (Mytilineos is active in LNG imports into Revithoussa and gas supply). The Revithoussa LNG terminal has a nominal re-gasification capacity of up to 7bcm pa, which is enough to cover Greece’s entire natural gas supply. In addition, Greece is building another LNG terminal (FSRU) in Alexandroupolis, with a nominal regassification capacity of 5.5bcm pa. Mytilineos has dramatically increased the number of slots it has booked in the Revithoussa terminal. Mytilineos has secured 40–50% (or over 60TWh) of Revithoussa’s auctioned capacity over the next four years.

The high and volatile gas prices over the past 12 months have triggered policy changes aimed at limiting profits by fuel source (ie setting a price cap on lignite, hydro and renewable energy sources) and accelerating the licensing process for renewable energy projects.

The electricity price before then had been set by a marginal pricing cost-plus model, whereby the highest cost source of power (typically low-quality/high-cost coal (lignite)) set the price, and lower cost sources of supply benefited from their relative efficiency.

Since July 2022 Greece has adopted an interim pricing model to limit the profitability of power generated by hydro, RES and lignite plants that was caused by the high natural gas price. This involved a change to set prices by each technology, which means for power producers using natural gas, the price is set by a target pricing mechanism whereby the most expensive/least efficient gas plant was setting the price for other gas-based power producers.

Mytilineos’s margin under this new regime comes from two sources. Firstly, Mytilineos’s plants are typically more efficient than the average of the peer group (c 60% energy conversion efficiency from gas to power, rather than 50%). At a gas price of €60/MWh, this means an advantage in electricity pricing of €20/MWh (€100/MWh gas cost vs €120/MWh).

Secondly, Mytilineos has a significant share of the LNG and regassification market, which means it can buy gas at discount to the average of the peer group (15–20%). Mytilineos is a major consumer (both for power generation and aluminium smelting) and takes advantage of this scale in occasionally buying distressed cargos (sellers looking for storage space). As an example, a 15% difference adds an additional €15/MWh margin to the efficiency margin above. In addition, the relative efficiency of Mytilineos’s plants means lower CO2 costs in the region of €5/MWh. Overall, in a price environment in the region of €60/MWh for gas, this indicates a structural relative advantage in the region of up to €37–40/MWh (€20/MWh from relative efficiency, €15 from gas supply and €2–5/MWh from relative CO2 output).

Mytilineos’s domestic power generation will grow from 3.5TWh in 2022 to slightly below 6.0TWh in 2023 and 8TWh in 2024. We believe this, combined with the structural margin described above, should see EBITDA in the region of €200–210m in 2023 and c €280m in 2024. We expect the completion of the new CCGT plant as the last major non-renewable investment, and have allowed for further power generation to come principally from renewable sources. This expansion in capacity should peak at 8TWh/year in 2023 then plateau, with further growth beyond that level coming from renewables.

Wholesale gas and power prices have been volatile, and both have declined recently. As soon as the Greek government reintroduces the previous target model (which is possible in Q322 or later if the decision is taken to extend this interim measure) the former merit-order pricing is likely to be reintroduced with lignite as a price setter for some hours in the day (lignite power generation licences were extended to 2028 as part of the energy policy changes in 2022). If this were the case, as a gas-powered electricity generator, Mytilineos could see its margins protected or expand. Mytilineos therefore is levered to two ends of the potential energy price spectrum: a relative competitive advantage under high gas prices and a relative fuel/efficiency advantage under low gas prices.

Exhibit 3: Greece wholesale electricity price (€/MWh)

Exhibit 4: EU wholesale gas price (€/MWh)

Source: Ember. Note: Monthly average.

Source: Bloomberg. Note: Dutch Title Transfer Facility (TTF) virtual trading point.

Exhibit 3: Greece wholesale electricity price (€/MWh)

Source: Ember. Note: Monthly average.

Exhibit 4: EU wholesale gas price (€/MWh)

Source: Bloomberg. Note: Dutch Title Transfer Facility (TTF) virtual trading point.

Electricity supply

In addition to power generation, Mytilineos provides retail/industrial power into the Greek market to a wide variety of retail and industrial users. The margins in this business trend towards 5%, although this can vary cyclically due to working capital effects (caused by a lag in buying and selling pricing periods). We are assuming 3–4% margins over the next three years and annual EBITDA of €50m/year in supply.

Gas supply

Profits from natural gas supply have recently been €121m/year, with margins of 5–6%. We have assumed a continuation of this rate for the next two to three years. We understand that the regassification capacity has been secured until 2025 to support this.

Overall, we see a sustainable post 2024 run rate EBITDA from core gas-fired energy generation, supply and natural gas supply in the region of €400–410m/year.

Valuation: Should re-rate to €1bn EBITDA run rate

Our primary valuation metric is a 10-year discounted cash flow (DCF) analysis. Key assumptions include a WACC of 7.5% and a 1% terminal growth rate for Metallurgy, Power & Gas (P&G) and SES, and 2% for Renewables & Storage Development (RSD). We assume terminal capex (included in the terminal cash flow) for the P&G and Metallurgy divisions of 1.5x depreciation. Our DCF valuation on our revised earnings estimates yields a valuation of €36/share. This is a 29% increase on our previous valuation of €28.0/share and implies a 52% upside to the current stock price of €25.2.

We do not blend valuation approaches; however, we cross check with divisional based DCFs (sum-of-the-parts (SOTP) based; see Exhibit 6) and a peer-group multiple-based valuation on EV/EBITDA. These yield similar results (€36 and €37/share respectively).

Exhibit 6: DCF-based SOTP valuation

Components

Edison new EV (€m)

Per share
(€)

EBITDA 2023e (€m)

Implied EV/EBITDA (x)

Edison old EV (€m)

Per share (old) (€)

Difference old versus new (%)

Per share difference (€)

2022 Structure

P&G

2,732

19.6

430

6.4x

1,629

11.9

68%

7.8

Metallurgy

1,763

12.7

262

6.7x

1,801

13.2

(2%)

(0.5)

RSD

1,016

7.3

143

7.1x

1,123

8.2

(10%)

(0.9)

SES

481

3.5

100

4.8x

528

3.9

(9%)

(0.4)

Other*

(4)

Enterprise value

5,992

43.2

931

6.4x

5,081

37.2

18%

6.0

New Structure

Energy

4,079

29.4

648

6.3x

n/m

n/m

n/m

n/m

Of which M Renewables

1,804

13.0

203

8.9x

n/m

n/m

n/m

n/m

Metals

1,763

12.7

262

6.7x

1,801

13.2

(2%)

(0.5)

Construction/Concession

150

1.1

25

6.0x

n/m

n/m

n/m

n/m

Other

(4)

Enterprise value

5,992

43.2

931

6.4x

5,081

37.2

18%

6.0

Net cash/(debt)

(716)

(5.2)

(926)

(6.8)

(23%)

1.6

Other adjustments*

(223)

(1.6)

(339)

(2.5)

(34%)

0.9

Total equity value

5,053

36.4

3,816

28.0

32%

8.3

Number of shares (m)

138.7

136.5

2%

Value per share (€) (rounded)

36

28.0

29%

Current share price (€)

23.7

% upside/(downside)

52%

Source: Edison Investment Research. Note: *Includes associates, minority interests, employment benefits.

Exhibit 7: Sensitivities of DCF valuation (€/share) to WACC and terminal growth rate assumptions

WACC

6.00%

6.50%

7.00%

7.50%

8.00%

8.50%

9.00%

Terminal growth rate*

0.0%

44.0

39.2

35.1

31.5

28.5

25.8

23.4

0.5%

48.0

42.4

37.7

33.8

30.3

27.4

24.8

1.0%

52.9

46.3

40.9

36.4

32.5

29.2

26.3

1.5%

58.9

51.0

44.6

39.4

35.0

31.3

28.1

2.0%

66.6

56.8

49.1

43.0

37.9

33.7

30.1

2.5%

76.9

64.3

54.8

47.4

41.4

36.5

32.4

3.0%

91.2

74.2

62.0

52.8

45.7

39.9

35.2

Source: Edison Investment Research. Note: *Stated terminal growth rate (TGR) applies to all divisions, expect RSD; TGR for RSD is stated TGR + 1%.

Peer valuation: Divisional SOTP

We cross-check our valuation with the peer group's EV/EBITDA multiples (based on 2023 estimates).

Exhibit 8: Peer group multiple analysis

Implied EV
(€m)

EV/EBITDA
(x)

EBITDA
(€m)

EBITDA
(% CAGR)

EBITDA
(% margin)

2023

2023e

2020–23e

2022

Mytilineos:

CCGT plants & Natural Gas Supply

1,524

4.8

320

41%

20%

RES

523

8.8

60

20%

65%

Electricity Supply

225

4.5

50

71%

3%

Power & Gas

2,272

5.3

430

0%

12%

Metallurgy

1,195

4.6

262

1%

27%

RSD

1,618

11.3

143

30%

13%

SES

751

7.5

100

7%

20%

Total

5,836

Net debt and other adjustments

(966)

Equity value

4,870

Number of shares (m)

138.7

Value per share (€)

35.1

Fair value adjustment* (€)

2.5

Adjusted value per share (€)

37.6

Source: Edison Investment Research, Refinitiv. Note: Priced at 15 March 2023. *20% premium applied to some business areas to reflect relative competitiveness.


Exhibit 9: Financial summary

€m

2019

2020

2021

2022

2023e

2024e

Year end 31 December

PROFIT & LOSS

Revenue

 

 

2,256

1,899

2,664

6,306

5,953

5,575

Cost of Sales

(1,922)

(1,559)

(2,299)

(5,341)

(4,860)

(4,343)

Gross Profit

334

339

365

965

1,093

1,232

EBITDA

 

 

313

315

359

823

931

1,048

Operating Profit (before except.)

219

225

279

734

780

866

Exceptionals

Operating Profit

219

225

279

734

780

866

Other

(12)

(34)

1

(9)

1

1

Net Interest

(27)

(18)

(41)

(90)

(90)

(80)

Profit Before Tax (norm)

 

180

172

239

635

691

787

Profit Before Tax (reported)

 

180

172

239

635

691

787

Tax

(29)

(28)

(41)

(133)

(143)

(160)

Profit After Tax (norm)

150

144

198

507

549

627

Profit After Tax (FRS 3)

150

144

198

502

549

627

Minority interests

(3)

(14)

(18)

(34)

(26)

(29)

Discontinued activities

(3)

(1)

(1)

(3)

(2)

(2)

Average Number of Shares Outstanding (m)

142.9

141.2

136.0

138.7

138.7

138.7

Net income (normalised)

130

130

180

473

5522

598

Net income (FRS 3)

180

129

180

466

520

595

EPS - normalised (€)

 

 

1.03

0.92

1.33

3.41

3.77

4.31

EPS - normalised and fully diluted (€)

1.03

0.92

1.33

3.41

3.77

4.31

EPS - reported (€)

 

1.32

0.91

1.19

3.36

3.75

4.29

Final distributed dividend per share (€)*

0.36

0.38

0.42

1.20

1.32

1.51

Gross Margin (%)

14.8

17.9

13.7

15.3

18.4

22.1

EBITDA Margin (%)

13.9

16.6

13.5

13.1

15.6

18.8

Operating Margin (before GW and except.) (%)

9.7

11.8

10.5

11.6

13.1

15.5

BALANCE SHEET

Fixed Assets

 

 

1,824

1,881

2,188

2,480

3,401

3,934

Intangible Assets

446

446

446

461

478

491

Tangible Assets

1,121

1,161

1,429

1,686

2,590

3,110

Right of use assets

48

45

48

59

59

59

Investments/Other

209

227

266

274

274

274

Current Assets

 

 

2,334

2,111

2,901

4,422

4,845

4,901

Stocks

214

290

469

840

952

892

Debtors

1,405

1,319

1,818

2,427

2,738

2,853

Cash

713

493

603

1,060

1,060

1,062

Other

1

9

12

95

95

95

Current Liabilities

 

 

(1,148)

(1,117)

(1,786)

(2,726)

(3,370)

(3,519)

Creditors

(1,066)

(1,042)

(1,704)

(2,552)

(2,681)

(2,830)

Short term borrowings

(83)

(76)

(82)

(174)

(689)

(689)

Long Term Liabilities

 

(1,376)

(1,302)

(1,682)

(1,955)

(1,688)

(1,688)

Long term borrowings

(1,051)

(955)

(1,324)

(1,602)

(1,335)

(1,335)

Other long term liabilities

(325)

(348)

(358)

(353)

(353)

(353)

Net Assets (ex minority)

 

1,634

1,572

1,621

2,222

3,188

3,628

CASH FLOW

Operating Cash Flow

 

270

316

277

966

598

1,102

Net Interest

(27)

(27)

(23)

(31)

(80)

(70)

Tax

(36)

(36)

(33)

(43)

(133)

(138)

Capex

(155)

(155)

(380)

(716)

(734)

(706)

Acquisitions/disposals

(4)

(20)

8

(9)

(0)

0

Financing

(56)

(56)

(32)

2

0

0

Dividends

(50)

(50)

(52)

(70)

(166)

(183)

Other

(41)

(41)

20

50

0

0

Net Cash Flow

(69)

(69)

(214)

150

(514)

1

Opening net debt/(cash)

 

390

421

538

803

716

1,231

HP finance leases initiated

6

(48)

(51)

(63)

(0)

0

Other

0

0

0

(0)

0

0

Closing net debt/(cash)

 

421

538

803

716

1,231

1,230

Source: Edison Investment Research, Mytilineos accounts. Note: *Edison estimates for dividend distribution 2023–24.

General disclaimer and copyright

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

General disclaimer and copyright

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