Thrace Group — Resilient business model in a challenging market

Thrace Group (ASE: PLAT)

Last close As at 22/02/2024

5.40

−0.04 (−0.74%)

Market capitalisation

EUR238m

More on this equity

Research: Industrials

Thrace Group — Resilient business model in a challenging market

Thrace Group’s Q123 results highlight continued growth in underlying adjusted EBITDA (excluding personal protective equipment (PPE) related products), as it increased by 4% and 22% compared to Q122 and Q120 (pre-PPE boost) respectively. Despite a modest drop in Q123 volumes of 4%, management anticipates sustained continuing profitability in Q223. Management expects H123 EBITDA from the traditional portfolio to be in line with previous years’ levels at around €25m, which is consistent with our forecasts, which remain unchanged. As mentioned in our recent note, we value the company at €8.23 per share, implying plenty of upside potential.

Natalya Davies

Written by

Natalya Davies

Analyst

Industrials

Thrace Group

Resilient business model in a challenging market

Q123 results

General industrials

21 June 2023

Price

€5.13

Market cap

€224m

€1.16/£

Net debt (€m) at 31 March

14.8

Shares in issue

43.7m

Free float

35.4%

Code

PLAT

Primary exchange

Athens

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

25.4

33.4

45.6

Rel (local)

12.3

8.4

(4.3)

52-week high/low

€5.40

€3.40

Business description

Thrace Group is an established international producer of technical fabrics (around two-thirds of Q123 revenue) and packaging (around one-third). Each division uses a number of manufacturing processes and produces a wide range of products from polymer materials, serving a diverse range of end-markets.

Next events

H123 results

September 2023

Analysts

Natalya Davies

+44 (0)20 3077 5700

Andy Chambers

+44 (0)20 3077 5700

Thrace Group is a research client of Edison Investment Research Limited

Thrace Group’s Q123 results highlight continued growth in underlying adjusted EBITDA (excluding personal protective equipment (PPE) related products), as it increased by 4% and 22% compared to Q122 and Q120 (pre-PPE boost) respectively. Despite a modest drop in Q123 volumes of 4%, management anticipates sustained continuing profitability in Q223. Management expects H123 EBITDA from the traditional portfolio to be in line with previous years’ levels at around €25m, which is consistent with our forecasts, which remain unchanged. As mentioned in our recent note, we value the company at €8.23 per share, implying plenty of upside potential.

Year
end

Revenue
(€m)

PBT*
(€m)

EPS*
(€)

DPS**
(€)

P/E
(x)

Yield
(%)

12/21

428.4

85.9

1.55

0.27

3.3

5.3

12/22***

394.4

27.5

0.50

0.26

10.3

5.1

12/23e

389.3

22.1

0.38

0.19

13.5

3.7

12/24e

415.3

25.4

0.44

0.20

11.7

3.9

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and sharebased payments. **Including special dividends in FY20, FY21 and FY22. *** FY22 PBT is 22.2m from traditional portfolio (excluding PPE) before non-recurring OAED financial income of €4.56m (already excluded).

Q123 EBITDA growth from traditional portfolio

Thrace reported robust Q123 results. Despite group turnover declining by 12.5% yoy, EBITDA from traditional products (excluding COVID-19 PPE products) increased by 4% to €11.7m. It should be noted that in Q122, raw material prices rose to historically high levels with sales prices following (particularly Technical Fabrics) with the relative downward correction seen in Q123. Compared to Q120, a period largely unaffected by COVID-19, adjusted EBITDA rose by 22%, showing tangible progress. Liquidity levels also improved with net debt declining to €14.8m, compared to the FY22 value of €21.5m, with a healthy leverage ratio of 0.3x (using our 2023e EBITDA).

Continuing focus on sustainability

Sustainable development is deeply ingrained in Thrace’s corporate strategy, as evidenced by the ongoing implementation of its comprehensive sustainability plan. This plan aligns with the United Nations’ goals and supports the transition to a circular economy. Thrace’s commitment to sustainability is evident as it recently attained the prestigious ‘Platinum’ rank on the Forbes Top 100 ESG Transparency Index in Greece, as well as achieving a noteworthy ‘B’ Carbon Disclosure Project (CDP) score.

Valuation: Remains unchanged at €8.23 per share

FY22 results were broadly in line with our forecasts and Q123 was aligned with our previous expectations. Consequently, our 2023 and 2024 forecasts remain unchanged, with continuing EBITDA of €46.2m and €49.4m respectively. Our valuation remains €8.23 per share, as discussed in our most recent note.

Q123 results show tangible progress

In Q123, Thrace demonstrated the strength in its core traditional products despite the challenging macroeconomic environment, although this was somewhat masked by the lack of PPE sales. Revenue of €93.0m was 12.5% lower than Q122. PBT fell from €10.7m to €5.4m, largely reflecting the lack of higher-margin PPE product sales (Q122 PBT contribution: €4.3m), combined with a reduction in demand and sales prices. In addition, there was a notable decline in demand in the construction and agricultural sectors, while the Packaging segment remained relatively steady. If we remove earnings from PPE-related products in Q122 to give an EBITDA for the traditional portfolio of €11.2m, Q123 delivered a modest increase of 4% to €11.7m. The performance highlights the stability of Thrace despite the challenging market conditions, which has enabled it to transform into an around €50m recurring EBITDA company (versus its historical track record of c €30m). We believe that this is sustainable; hence our 2023 and 2024 EBITDA forecasts are €46.2m and €49.4m.

Exhibit 1: Q123 vs Q122 results

€m (unless otherwise stated)

Q122

Q123

% change

Turnover

106.3

93.0

-12.5%

Gross profit

24.7

20.7

-16.3%

Gross profit margin

23.2%

22.2%

-

EBITDA (Traditional portfolio) – continuing reported

11.2

11.7

3.8%

EBITDA – continuing reported

15.5

11.7

-25.0%

EBITDA margin

14.6%

12.5%

-

Profit before tax (PBT)

10.7

5.4

-49.8%

PBT margin

10.1%

5.8%

-

EPS – continuing (€/share)

0.2

0.09

-56.0%

Net (debt)/cash

(12.4)

(14.8)

18.9%

Source: Thrace Group company reports

Segmental analysis: Improved margins in the Packaging division

Thrace’s Packaging division experienced year-on-year margin expansion, with a gross margin of 23.3% (Q122: 20.4%) and an EBITDA margin of 16.5% (Q122: 15.8%). The improvement is partially attributable to robust demand, as well as increases in packaging prices, and better product mix.

Exhibit 2: Q122 and Q123 results by division (continuing operations)

€m

Technical Fabrics

Packaging

Other

Inter-segment. eliminations

Group

Q122

Q123

% change

Q122

Q123

% change

Q122

Q123

Q122

Q123

Q122

Q123

% change

Turnover

75.6

64.7

-14.4%

34.4

31.6

-8.1%

1.4

1.4

(5.2)

(4.8)

106.3

93.0

-12.5%

Gross profit

17.5

13.1

-25.2%

7.0

7.4

5.0%

0.1

0.0

0.0

0.1

24.7

20.7

-16.3%

Gross profit margin

23.2%

20.3%

-

20.4%

23.3%

-

-

-

-

-

23.2%

22.2%

-

Underlying EBITDA (excl. PPE)*

6.9

6.6

-4.3%

4.3

5.2

20.9%

0.0

(0.2)

(0.0)

0.0

11.2

11.7

4.5%

EBITDA*

10.1

6.6

-34.1%

5.4

5.2

-3.9%

0.0

(0.2)

(0.0)

0.0

15.5

11.7

-25.0%

EBITDA* margin

13.3%

10.3%

-

15.8%

16.5%

-

-

-

-

-

14.6%

12.5%

-

Source: Thrace Group. Note: *Post-exceptional items.

As working capital continues to normalise back to historical low levels following the pandemic, cash flows are improving and net debt reduced from €21.5m at FY22 to €14.8m at Q123. Due to the seasonality of the business, Q2 and Q3 cash consumption is typically higher. We have slightly amended our net debt forecasts, from €17.2m to €17.3m in 2023 and from €10.9m to €14.2m in 2024. Combined with our EBITDA estimate of €46.2m, this implies a healthy FY23e leverage ratio of 0.37x.

Capital allocation: Increased FY23 capex estimates

In the eight-year period from 2015 to 2022, Thrace invested €232m in capital expenditure, allocating around 30% to maintenance and infrastructure projects and around 70% to capacity and efficiency increases (new business). We had previously forecast 2023 capex of €22.0m and this was broadly in line with the forecasted respective depreciation of €23.1m, which reflects Thrace’s medium-term strategy to invest in capex largely in line with depreciation. Q123 results suggest an expected FY23 nominal capex of around €30m, albeit this includes Greenhouse investments which are not fully consolidated. We have adjusted our capex forecasts accordingly, with 2023e and 2024e cash capex of €27m and €25m respectively (Exhibit 3). As part of the 2023 capex plan, Thrace has introduced a new line of recyclable paper cups to the catering, food and beverages market.

Exhibit 3: Capex and depreciation

Source: Thrace Group, Edison Investment Research

Thrace has announced that it has paid a FY22 gross total of €11.3m in dividends to its shareholders, corresponding to €0.26 per share; €0.069 per share of this was allocated as an interim dividend. With our FY22 adjusted EPS figure of €0.50 per share, this represents dividend cover of 1.9x, in line with a mature company. We expect Thrace’s dividend to reflect adjusted earnings progression, with a dividend payout ratio of between 50% and 55%; thus, we maintain our FY23 dividend estimate of €0.19 per share (2x covered by our FY23 adjusted EPS estimate of €0.38/share).

Outlook for 2023

Regarding the prospects for FY23, due to the seasonality of the business, the second and third quarters tend to outperform the others (with Q4 typically being the weakest). Management has guided for an H123 performance broadly in line with H122, excluding the profits from COVID-19 products (c €4.7m at the EBITDA level). Thus, we expect the first half of the year to report EBITDA of around €25m and, with the anticipated weaker Q4, our FY23 EBITDA forecast remains unchanged at €46.2m.

As mentioned in our previous note, our FY23 forecasts are indicative of the current macroeconomic uncertainty and continued challenges in terms of subdued demand and higher input costs. We expect core product revenues to remain relatively static compared to FY22 with a relatively immaterial contribution from PPE, which is being subsumed into the two operating segments of the business. At the PBT level, we expect the contribution from traditional core products to remain stable at €22.1m (FY22: €22.2m excluding PPE and OAED). However, FY23e still shows significant upside to pre-pandemic 2019, with anticipated normalised PBT and EPS increases of 84% and 124% to €22.1m and €0.38 per share, respectively.

We see the benefits of past and current investments providing the base for accelerating growth and positive cash flows as Thrace moves into FY24. The company’s extensive capex programme of c €237m from 2015 to 2022, focused on increasing capacity and improving operational efficiencies, has paved the way for this progress. On the back of that we predict 6.7% y-o-y revenue growth in 2024e, with continuing PBT and normalised EPS increasing 15% and 16%, respectively. This is further bolstered by increased demand emerging from higher-margin secondary processing products, which combine two or more of Thrace’s proprietary technologies.

Progressing with sustainable growth

A core part of the group’s corporate approach remains sustainable development, reflected in the implementation of its robust renewable plan in accordance with United Nations’ goals and in line with the move towards a circular economy. Thrace’s endeavours were highlighted by its recent attainment of the highest rank (Platinum) on the Forbes Top 100 ESG Transparency Index in Greece, alongside only 18 other companies. This complements the company’s ‘B’ rating for sustainability from the CDP, which is above the global average and indicates that an organisation has addressed and is proactively managing the environmental impacts of its business.

Exhibit 4: FY22 sustainability progress

Source: Thrace Group

As part of its sustainable initiatives, Thrace continues to implement policies consistent with its ‘In the Loop’ platform, a pioneering concept designed to help its customers, suppliers and partners collect, recycle and reuse plastic material for the manufacturing of new products. Thrace has also submitted a pledge to the EU to substitute more than 8,500 tonnes pa of virgin raw material with recycled material by 2025. To put this into context, on an annual basis, Thrace processes around 110,000 metric tonnes of polypropylene and polyethylene.

Valuation: Maintained at €8.23 per share

Thrace’s FY22 results (Exhibit 5) and Q123 results are consistent with what we previously anticipated, thus we maintain our DCF/peer multiple EV/EBITDA average valuation of €8.23 per share. This implies plenty of upside potential to the current share price. FY22 was a year of relatively subdued profitability compared to the inflated performance in the preceding two financial years, which is likely a factor behind the current low valuation levels. We believe that Thrace now has the capability to achieve far higher sustained recurring EBITDA of c €50m versus its historical annual EBITDA of around €30m. The prospect of Thrace converting its extensive capex programme into sustainable growth and higher profitability represents the key proposition to attract investors and enhance the company’s rating.

Exhibit 5: Prior FY22 forecasts versus actual results

€m (unless otherwise stated)

2022

% difference

Forecast

Actual

Turnover

391.4

394.4

0.7%

Gross profit

83.9

84.3

0.4%

Gross profit margin

21.4%

21.4%

-

EBITDA – adjusted/continuing reported, pre-exceptional

47.5

48.9

2.9%

Adjusted EBITDA margin

12.1%

12.4%

-

Profit before tax (PBT)

26.7

27.5

3.0%

PBT margin

6.8%

7.0%

-

EPS - continuing, reported (€/share)

0.44

0.50

13.6%

DPS (€/share)

0.18

0.26

44.4%

Net (debt)/cash

(22.3)

(21.5)

-3.6%

Source: Thrace Group, Edison Investment Research

Exhibit 6: Financial summary

 

 

 

2019

2020

2021

2022

2023e

2024e

31-December

 

 

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

 

 

 

 

 

 

 

 

Revenue

 

 

298.3

339.7

428.4

394.4

389.3

415.3

Cost of Sales

 

 

(236.8)

(233.8)

(288.3)

(310.1)

(305.7)

(328.5)

Gross Profit

 

 

61.5

106.0

140.1

84.3

83.6

86.9

EBITDA

 

 

30.8

72.5

103.8

48.9

46.2

49.4

Normalised operating profit

 

 

15.8

57.9

85.9

27.4

23.1

25.2

Amortisation of acquired intangibles

 

 

0.0

(1.6)

(2.0)

0.0

0.0

0.0

Exceptionals

 

 

0.0

(2.5)

0.8

0.0

0.0

0.0

Share-based payments

 

 

(0.2)

(0.0)

(0.8)

0.0

0.0

0.0

Reported operating profit

 

 

15.6

53.9

83.9

27.4

23.1

25.2

Net Interest

 

 

(4.9)

(3.6)

(2.8)

(2.4)

(2.9)

(2.8)

Joint ventures & associates (post tax)

 

 

1.2

1.8

2.8

2.5

1.9

3.0

Exceptionals

 

 

0.0

0.0

0.0

4.6

0.0

0.0

Profit Before Tax (norm)

 

 

12.0

56.2

85.9

27.5

22.1

25.4

Profit Before Tax (reported)

 

 

11.8

52.1

83.9

32.1

22.1

25.4

Reported tax

 

 

(4.3)

(10.8)

(18.1)

(5.8)

(4.9)

(5.6)

Profit After Tax (norm)

 

 

7.6

44.5

67.4

21.9

17.2

19.8

Profit After Tax (reported)

 

 

7.5

41.3

65.9

26.3

17.2

19.8

Minority interests

 

 

(0.3)

(0.6)

(0.4)

(0.5)

(0.6)

(0.6)

Discontinued operations

 

 

(3.5)

(3.1)

6.7

0.3

0.0

0.0

Net income (normalised)

 

 

7.3

43.9

67.0

21.4

16.6

19.2

Net income (reported)

 

 

3.7

37.5

72.1

26.0

16.6

19.2

Basic average number of shares outstanding (m)

 

 

44

44

43

43

44

44

EPS - basic normalised (€)

 

 

0.17

1.01

1.55

0.50

0.38

0.44

EPS - diluted normalised (€)

 

 

0.17

1.01

1.55

0.50

0.38

0.44

EPS - basic reported (€)

 

 

0.09

0.86

1.66

0.60

0.38

0.44

Dividend (€)

 

 

0.05

0.22

0.27

0.26

0.19

0.20

Revenue growth (%)

 

 

1.6%

13.9%

26.1%

-7.9%

-1.3%

6.7%

Gross Margin (%)

 

 

20.6

31.2

32.7

21.4

21.5

20.9

EBITDA Margin (%)

 

 

10.3

21.3

24.2

12.2

11.9

11.9

Normalised Operating Margin

 

 

5.3

17.1

20.1

6.9

5.9

6.1

BALANCE SHEET

 

 

 

 

 

 

 

 

Fixed Assets

 

 

170.1

175.9

190.9

209.8

212.7

211.9

Intangible Assets

 

 

11.4

10.7

10.5

10.4

10.4

10.4

Tangible Assets

 

 

143.3

149.7

161.9

179.0

181.9

181.2

Investments & other

 

 

15.5

15.5

18.5

20.4

20.4

20.4

Current Assets

 

 

153.2

166.0

214.3

195.0

202.0

214.6

Stocks

 

 

59.2

55.3

71.8

76.4

77.8

83.5

Debtors

 

 

65.3

64.1

78.9

76.7

78.1

81.9

Cash & cash equivalents

 

 

22.1

40.8

63.2

39.6

43.8

46.9

Other

 

 

6.7

5.8

0.3

2.3

2.3

2.3

Current Liabilities

 

 

(101.8)

(99.3)

(106.8)

(92.6)

(95.8)

(99.7)

Creditors

 

 

(36.2)

(29.7)

(55.4)

(40.6)

(46.7)

(51.9)

Tax and social security

 

 

(1.1)

(7.4)

(4.1)

(1.0)

(0.1)

(0.8)

Short term borrowings

 

 

(48.3)

(29.1)

(18.3)

(28.0)

(28.0)

(28.0)

Other

 

 

(16.3)

(33.1)

(29.0)

(23.0)

(21.0)

(19.0)

Long Term Liabilities

 

 

(75.2)

(66.5)

(46.1)

(44.3)

(44.3)

(44.3)

Long term borrowings

 

 

(57.3)

(49.9)

(35.7)

(33.1)

(33.1)

(33.1)

Other long term liabilities

 

 

(17.9)

(16.5)

(10.5)

(11.2)

(11.2)

(11.2)

Net Assets

 

 

146.3

176.1

252.3

267.9

274.6

282.5

Minority interests

 

 

(3.0)

(3.5)

(3.7)

(4.1)

(4.1)

(4.1)

Shareholders' equity

 

 

143.4

172.6

248.5

263.7

270.5

278.4

CASH FLOW

 

 

 

 

 

 

 

 

Op Cash Flow before WC and tax

 

 

31.0

76.6

105.8

48.3

46.2

49.4

Working capital

 

 

(3.0)

1.8

(0.4)

(26.4)

6.6

(3.8)

Exceptional & other

 

 

(0.6)

4.1

(5.2)

(6.7)

2.0

2.0

Tax

 

 

(2.6)

(3.6)

(17.5)

(9.2)

(5.8)

(4.9)

Net operating cash flow

 

 

24.8

78.8

82.7

5.9

49.0

42.8

Capex

 

 

(22.4)

(28.2)

(30.3)

(37.9)

(27.0)

(25.0)

Acquisitions/disposals

 

 

(0.8)

9.3

3.0

0.0

0.0

0.0

Net interest

 

 

(3.7)

(2.8)

(1.7)

(1.8)

(2.9)

(2.8)

Equity financing

 

 

0.0

0.0

0.0

0.0

0.0

0.0

Dividends

 

 

(1.9)

(4.5)

(11.6)

(7.1)

(11.3)

(8.3)

Other

 

 

(4.1)

(10.7)

2.7

8.3

(3.6)

(3.6)

Net Cash Flow

 

 

(8.1)

41.9

44.7

(32.5)

4.2

3.1

Opening net debt/(cash)

 

 

78.4

83.5

38.2

(9.3)

21.5

17.3

FX

 

 

0.6

2.1

2.3

2.5

0.0

0.0

Other non-cash movements

 

 

2.4

1.4

0.5

(0.7)

0.0

0.0

Closing net debt/(cash)

 

 

83.5

38.2

(9.3)

21.5

17.3

14.2

Source: Thrace Group, Edison Investment Research

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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.

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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.

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United Kingdom

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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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