Checkit — Signposting the path to profitability

Checkit (AIM: CKT)

Last close As at 22/05/2024

GBP0.26

0.00 (0.00%)

Market capitalisation

GBP30m

More on this equity

Research: TMT

Checkit — Signposting the path to profitability

In a tough trading environment, Checkit managed to grow FY24 revenue by 17% and reduce EBITDA losses by nearly half. The company has had a positive start to FY25 with new contract wins and the launch of a new module. Focus on growth from its existing customer base combined with strict cost control is helping Checkit to make steady progress towards its target of positive EBITDA and cash generation in FY27.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

Checkit

Signposting the path to profitability

FY24 results

Software and comp services

25 April 2024

Price

21p

Market cap

£23m

Net cash (£m) at end FY24

9.0

Shares in issue

108.0m

Free float

56%

Code

CKT

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(2.3)

(12.5)

(25.0)

Rel (local)

(3.5)

(17.6)

(26.3)

52-week high/low

31p

19p

Business description

Checkit optimises the performance of people, processes and physical assets with its intelligent operations software. It is headquartered in Cambridge, UK, and has operations centres in Fleet, UK, and Tampa, US.

Next events

AGM

6 June

H125 trading update

15 August

Analyst

Katherine Thompson

+44 (0)20 3077 5700

Checkit is a research client of Edison Investment Research Limited

In a tough trading environment, Checkit managed to grow FY24 revenue by 17% and reduce EBITDA losses by nearly half. The company has had a positive start to FY25 with new contract wins and the launch of a new module. Focus on growth from its existing customer base combined with strict cost control is helping Checkit to make steady progress towards its target of positive EBITDA and cash generation in FY27.

Year
end

Revenue
(£m)

ARR
(£m)

PBT*
(p)

EPS*
(p)

DPS
(p)

EV/sales
(x)

01/23**

10.3

11.5

(7.3)

(6.9)

0.0

1.3

01/24

12.0

13.3

(4.2)

(4.0)

0.0

1.1

01/25e

14.2

15.3

(3.4)

(3.1)

0.0

1.0

01/26e

16.9

17.5

(2.5)

(2.3)

0.0

0.8

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

Progress made towards profitability in FY24

Checkit grew annual recurring revenue (ARR) by 16% y-o-y and revenue by 17% while nearly halving the EBITDA loss to £3.4m. Cash burn was reduced by 23% with year-end net cash of £9.0m. Net revenue retention (NRR) of 111% highlights Checkit’s ability to land and expand, which is crucial in the current tough economic climate. Management is optimistic of meeting market expectations for FY25 and we have introduced forecasts for FY26 and FY27 that show the company meeting its target of achieving positive EBITDA and cash generation in FY27.

Evolving the offering

Checkit’s software integrates digital workflows, internet of things (IoT) sensors and artificial intelligence (AI) to help customers move from manual processes to automated digital workflows. The recently launched Asset Intelligence module analyses the data generated on Checkit’s platform to produce actionable insights for customers to improve efficiency, reduce energy use and support predictive maintenance. The module provides upsell potential for the existing customer base as well as making its platform more attractive to potential customers.

Valuation: ARR growth to reduce the discount

On an EV/sales multiple of 1.0x for FY25e and 0.8x for FY26e, Checkit trades at a material discount to the UK software sector (2.5x current year sales, 2.3x next year sales) and US SaaS peers (5.7x current year, 4.9x next year). If Checkit were to trade on the UK average for FY25, it would be worth 41p per share and moving to trade in line with US SaaS peers would imply a valuation of 83p. We would expect the shares to re-rate as the company approaches break-even. Sustained ARR growth will be the key trigger for Checkit to attract a multiple more in line with SaaS peers, evidenced by customers signing up to use its software and existing customers expanding their usage.

Review of FY24 results

Checkit reported headline FY24 financial data in its February trading update. Revenue and ARR were in line and the EBITDA loss was slightly smaller than we expected due to a higher-than-expected reduction in operating expenses; this flowed through to normalised and reported operating profit. Recurring revenue made up 93% of total revenue, unchanged from FY23.

Through the combination of 17% revenue growth, increasing gross margins and reduced opex (down 11% y-o-y), the EBITDA loss nearly halved, down 47% y-o-y. Gross margin improvements came from using third-party providers for project delivery and the full-year effect of procurement savings relating to platform costs. Sales and marketing expenses were down 12% y-o-y, with a focus on existing customers and identifying opportunities in adjacent markets and geographies. New product development spend was down 7% y-o-y to £3.9m (of which £2.0m was capitalised vs £1.8m in FY23). Introducing automated call handling and offshoring some of the customer support team in H2 also reduced costs.

Net cash at year-end reduced to £9.0m, slightly lower than our forecast due to higher investment in strategic inventory. The company expects this to unwind over the next 12 to 18 months. Net cash burn in FY24 of £6.6m was 23% lower than £8.6m in FY23.

Exhibit 1: FY24 results highlights

£m

FY23a

FY24e

FY24a

Diff

y-o-y

Revenues

10.3

12.0

12.0

0.2%

16.5%

Gross profit

6.5

8.4

8.0

-4.2%

23.1%

Gross margin

63.1%

69.8%

66.7%

-3.1%

3.6%

EBITDA

(6.4)

(3.6)

(3.4)

-5.3%

-46.9%

EBITDA margin

-62.1%

-30.0%

-28.3%

1.7%

33.8%

Normalised operating profit

(7.4)

(5.1)

(4.7)

-7.7%

-36.5%

Normalised operating margin

-71.8%

-42.5%

-39.2%

3.4%

32.7%

Reported operating profit

(12.4)

(5.6)

(5.1)

-8.8%

-58.9%

Reported operating margin

-120.4%

-46.7%

-42.5%

4.2%

77.9%

Normalised PBT

(7.3)

(4.7)

(4.2)

-9.8%

-42.1%

Reported PBT

(12.3)

(5.2)

(4.6)

-10.8%

-62.4%

Normalised net income

(7.5)

(4.7)

(4.3)

-7.7%

-42.3%

Reported net income

(12.3)

(5.1)

(4.5)

-11..0%

-63.2%

Normalised basic & diluted EPS (p)

(6.9)

(4.3)

(4.0)

-7.7%

-42.3%

Reported basic EPS (p)

(11.4)

(4.7)

(4.2)

-11.0%

-63.2%

Net debt/(cash)

(15.6)

(9.5)

(9.0)

-5.2%

-42.3%

ARR

11.5

13.3

13.3

0.0%

15.7%

Source: Checkit, Edison Investment Research

Business update

Land and expand the main driver of ARR growth

The company noted that NRR was 111% in FY24, confirming its ability to land and expand, while gross retention was 99%. With ARR increasing by £1.8m over the year, we estimate that cross- and upselling generated more than three-quarters of ARR growth.

The company continues to focus on expansion in the US market, growing ARR by 21% in the year to £3.4m (26% of group ARR).

During FY24, the company renewed its contract with John Lewis for another three years, worth c £2m per year. The company also signed a master service agreement with Compass Contract Services (UK) to provide connected automated monitoring and connected workflow management to its end users, mainly in the food services sector. Since signing, Checkit has entered several new contracts with Compass.

Since the end of FY24, Checkit has also signed a contract with an existing customer, an integrated energy company (we believe BP), worth £252k over three years. This will provide real-time operations management capability to 50 franchisees in the UK and will be installed in tranches over FY25. Franchises for this customer represent double the opportunity compared to owned locations globally and Checkit expects further business expansion with this customer during FY25.

Focus on key verticals

The company targets customers in the retail, healthcare, facilities management, franchise and biopharma verticals. In the US, the new customer pipeline features a number of multi-site organisations in the healthcare, food retail, hospitality and biopharma sectors.

Launch of new Asset Intelligence module

The recently launched Asset Intelligence module applies advanced analytics and machine learning to IoT data to analyse the condition of monitored appliances to predict issues before they escalate, identify operational inefficiencies and provide greater visibility of asset performance. For example, the software could analyse the performance of fridges and identify when one is showing signs of temperature instability, which could indicate it is about to break down, or when a fridge is operating at a lower than required temperature and wasting energy.

Pre-launch customer trials indicated that customers should expect at least a 50% improvement in the return on investment of Checkit’s IoT sensors and substantial reductions in CO2. The module provides upselling opportunities with existing customers and makes Checkit’s overall offering more attractive to potential customers.

Outlook and changes to forecasts

Trading so far in FY25 has seen continued momentum in line with the board’s expectations. The board expects to reach EBITDA break-even in FY27 (CY26) and is confident the company has sufficient resources to achieve this.

We have revised our forecasts to reflect FY24 results and introduce forecasts for FY26 and FY27. We forecast ARR growth of 15.0% in FY25, 14.5% in FY26 and 14.5% in FY27. With gradual expansion of gross margins and tight control of operating expenses, we expect EBITDA to reduce to a loss of £2.2m in FY25 and a loss of £0.9m in FY26, before moving to positive EBITDA of £0.8m in FY27. We expect net cash to reduce to £4.0m by the end of FY26 before the company turns cash flow positive in FY27, increasing net cash to £4.6m, helped by further unwind of the inventory position and more customers paying upfront for their subscription.

Exhibit 2: Changes to forecasts

£m

FY25e

FY25e

FY26e

FY27e

Old

New

Change

y-o-y

New

y-o-y

New

y-o-y

Revenues

14.2

14.2

-0.6%

18.0%

16.9

19.2%

19.0

12.3%

Gross profit

10.0

9.7

-2.7%

21.3%

11.7

20.1%

13.6

16.4%

Gross margin

70.0%

68.5%

-1.5%

1.9%

69.0%

0.5%

71.5%

2.5%

EBITDA

(2.3)

(2.3)

-1.9%

-32.8%

(0.9)

-59.0%

0.8

-190.0%

EBITDA margin

-16.4%

-16.1%

0.2%

12.2%

-5.6%

10.6%

4.5%

10.0%

Normalised operating profit

(3.8)

(3.8)

-1.1%

-19.4%

(2.7)

-27.7%

(1.2)

-57.8%

Normalised operating margin

-26.9%

-26.7%

0.2%

12.4%

-16.2%

10.5%

-6.1%

10.1%

Reported operating profit

(4.2)

(4.0)

-5.8%

-21.8%

(2.9)

-26.3%

(1.4)

-53.9%

Reported operating margin

-29.7%

-28.1%

1.6%

14.4%

-17.4%

10.7%

-7.1%

10.3%

Normalised PBT

(3.6)

(3.4)

-6.7%

-20.0%

(2.5)

-25.0%

(1.0)

-62.4%

Reported PBT

(4.0)

(3.6)

-11.0%

-22.6%

(2.7)

-23.6%

(1.2)

-57.8%

Normalised net income

(3.6)

(3.4)

-6.7%

-21.8%

(2.5)

-25.0%

(1.0)

-62.4%

Reported net income

(4.0)

(3.6)

-11.0%

-20.8%

(2.7)

-23.6%

(1.2)

-57.8%

Normalised basic & diluted EPS (p)

(3.4)

(3.1)

-6.7%

-21.8%

(2.3)

-25.0%

(0.9)

-62.4%

Reported basic EPS (p)

(3.7)

(3.3)

-11.0%

-20.8%

(2.5)

-23.6%

(1.1)

-57.8%

Net debt/(cash)

(6.2)

(5.5)

-10.6%

-38.7%

(4.0)

-27.1%

(4.6)

15.5%

ARR

15.9

15.3

-3.6%

15.0%

17.5

14.5%

20.1

14.5%

Source: Edison Investment Research

Valuation

Exhibit 3: Peer sales multiples

EV/Sales (x)

Revenue growth (%)

CY

NY

CY

NY

Checkit

1.0

0.8

18.0

19.2

UK software - average

2.5

2.3

10.1

12.1

UK software - median

2.2

2.0

8.4

8.8

US SaaS software - average

5.7

4.9

12.8

14.0

US SaaS software - median

5.1

4.5

14.0

14.0

Source: Edison Investment Research, LSEG (at 22 April)

In the table above, we summarise the EV/sales multiples for the UK software sector and US SaaS software companies. Checkit continues to trade at a discount to both groups. In our view, consistent growth in ARR combined with progress towards profitability should reduce this discount.

Once Checkit reaches EBITDA break-even, operational leverage should support rapid margin expansion. If Checkit were to trade at the average sales multiple for the UK software sector, this would imply a share price of 41p. We have performed a reverse discounted cash flow analysis to ascertain what growth/profitability would be required to reach the 41p. Using a WACC of 8%, a long-term growth rate of 3% and our forecasts to FY27, we estimate that trending down revenue growth from FY28 to FY33 (CAGR 8.0% FY27-34e) and growing EBITDA margins to 20.3% by FY34 would be required to reach a valuation of 41p per share. If the company could maintain revenue growth at the same level as FY27, we estimate that EBITDA margins could increase to 32% by FY34 and EBIT margins to 22%, resulting in per share value of 88p.

Exhibit 4: Financial summary

£m

2019

2020

2021

2022

2023

2024

2025e

2026e

2027e

31-January

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

1.0

9.8

13.2

8.4

10.3

12.0

14.2

16.9

19.0

Cost of Sales

(1.0)

(7.2)

(6.7)

(3.8)

(3.8)

(4.0)

(4.5)

(5.2)

(5.4)

Gross Profit

0.0

2.6

6.5

4.6

6.5

8.0

9.7

11.7

13.6

EBITDA

 

 

(2.3)

(4.9)

(2.5)

(5.6)

(6.4)

(3.4)

(2.3)

(0.9)

0.8

Normalised operating profit

 

 

(4.4)

(6.5)

(3.1)

(6.1)

(7.4)

(4.7)

(3.8)

(2.7)

(1.2)

Amortisation of acquired intangibles

(0.1)

(1.0)

(1.3)

(1.4)

(0.5)

(0.1)

0.0

0.0

0.0

Exceptionals

0.0

(1.7)

(0.9)

(1.0)

(4.3)

(0.1)

0.0

0.0

0.0

Share-based payments

0.0

0.0

0.0

0.0

(0.2)

(0.2)

(0.2)

(0.2)

(0.2)

Reported operating profit

(4.5)

(9.2)

(5.3)

(8.5)

(12.4)

(5.1)

(4.0)

(2.9)

(1.4)

Net Interest

0.0

0.1

0.0

0.0

0.1

0.5

0.4

0.2

0.2

Joint ventures & associates

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

(4.4)

(6.4)

(3.1)

(6.1)

(7.3)

(4.2)

(3.4)

(2.5)

(1.0)

Profit Before Tax (reported)

 

 

(4.5)

(9.1)

(5.3)

(8.5)

(12.3)

(4.6)

(3.6)

(2.7)

(1.2)

Reported tax

0.0

0.1

0.3

0.3

0.3

0.1

0.0

0.0

0.0

Profit After Tax (norm)

(4.4)

(6.4)

(3.1)

(6.1)

(7.5)

(4.3)

(3.4)

(2.5)

(1.0)

Profit After Tax (reported)

(4.5)

(9.0)

(5.0)

(8.2)

(12.0)

(4.5)

(3.6)

(2.7)

(1.2)

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Discontinued operations

8.6

89.8

0.6

1.4

(0.3)

0.0

0.0

0.0

0.0

Net income (normalised)

(4.4)

(6.4)

(3.1)

(6.1)

(7.5)

(4.3)

(3.4)

(2.5)

(1.0)

Net income (reported)

4.1

80.8

(4.4)

(6.8)

(12.3)

(4.5)

(3.6)

(2.7)

(1.2)

Basic ave. number of shares outstanding (m)

178

161

62

68

108

108

108

108

108

EPS - basic normalised (p)

 

 

(2.5)

(4.0)

(5.2)

(9.0)

(6.9)

(4.0)

(3.1)

(2.3)

(0.9)

EPS - diluted normalised (p)

 

 

(2.5)

(4.0)

(5.2)

(9.0)

(6.9)

(4.0)

(3.1)

(2.3)

(0.9)

EPS - basic reported (p)

 

 

2.3

50.2

(7.2)

(10.0)

(11.4)

(4.2)

(3.3)

(2.5)

(1.1)

Dividend (p)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

N/A

880.0

34.7

(-36.4)

22.6

16.5

18.0

19.2

0.0

Gross Margin (%)

0.0

26.5

49.2

54.8

63.1

66.7

68.5

69.0

71.5

EBITDA Margin (%)

(230.0)

(50.0)

(18.9)

(66.7)

(62.1)

(28.3)

(16.1)

(5.6)

4.5

Normalised Operating Margin

(440.0)

(66.3)

(23.5)

(72.6)

(71.8)

(39.2)

(26.7)

(16.2)

(6.1)

BALANCE SHEET

Fixed Assets

 

 

5.0

8.5

6.8

8.3

4.9

5.8

6.4

6.7

6.8

Intangible Assets

2.9

7.3

6.0

7.3

4.0

5.0

5.6

5.9

6.0

Tangible Assets

1.7

1.2

0.8

1.0

0.9

0.8

0.8

0.8

0.8

Investments & other

0.4

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Current Assets

 

 

19.5

19.8

17.5

29.0

22.5

17.3

13.6

11.5

11.8

Stocks

4.3

1.7

1.1

1.8

2.4

3.8

3.4

2.7

1.9

Debtors

5.1

3.4

4.4

2.9

4.5

4.5

4.7

4.9

5.2

Cash & cash equivalents

10.1

14.3

11.5

24.2

15.6

9.0

5.5

4.0

4.6

Other

0.0

0.4

0.5

0.1

0.0

0.0

0.0

0.0

0.0

Current Liabilities

 

 

(7.9)

(5.6)

(5.9)

(5.7)

(7.8)

(8.0)

(8.3)

(9.1)

(10.4)

Creditors

(7.6)

(5.1)

(5.6)

(5.2)

(7.5)

(7.8)

(8.1)

(8.9)

(10.2)

Tax and social security

(0.3)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Short term borrowings

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

0.0

(0.5)

(0.3)

(0.5)

(0.3)

(0.2)

(0.2)

(0.2)

(0.2)

Long Term Liabilities

 

 

(0.3)

(1.3)

(0.8)

(0.6)

(0.7)

(0.5)

(0.5)

(0.5)

(0.5)

Long term borrowings

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other long term liabilities

(0.3)

(1.3)

(0.8)

(0.6)

(0.7)

(0.5)

(0.5)

(0.5)

(0.5)

Net Assets

 

 

16.3

21.4

17.6

31.0

18.9

14.6

11.2

8.6

7.7

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

16.3

21.4

17.6

31.0

18.9

14.6

11.2

8.6

7.7

CASH FLOW

Op Cash Flow before WC and tax

(2.3)

(4.9)

(2.5)

(5.6)

(6.4)

(3.4)

(2.3)

(0.9)

0.8

Working capital

(0.5)

(1.0)

0.3

0.2

0.1

(1.2)

0.5

1.3

1.7

Exceptional & other

9.1

5.3

(0.7)

0.4

(0.2)

(0.1)

0.0

0.0

0.0

Tax

(0.5)

(0.5)

0.0

0.1

0.1

0.0

0.0

0.0

0.0

Net operating cash flow

 

 

5.8

(1.1)

(2.9)

(4.9)

(6.4)

(4.7)

(1.8)

0.4

2.5

Capex

(2.2)

(0.3)

(0.3)

(2.3)

(2.2)

(2.1)

(1.8)

(1.8)

(1.8)

Acquisitions/disposals

1.3

84.2

0.3

0.0

0.2

0.0

0.0

0.0

0.0

Net interest

0.0

0.1

0.0

0.0

0.1

0.5

0.4

0.2

0.2

Equity financing

0.0

(77.9)

0.5

20.2

0.0

0.0

0.0

0.0

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

0.0

(0.8)

(0.4)

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

Net Cash Flow

4.9

4.2

(2.8)

12.7

(8.6)

(6.6)

(3.5)

(1.5)

0.6

Opening net debt/(cash)

 

 

(5.2)

(10.1)

(14.3)

(11.5)

(24.2)

(15.6)

(9.0)

(5.5)

(4.0)

FX

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other non-cash movements

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Closing net debt/(cash)

 

 

(10.1)

(14.3)

(11.5)

(24.2)

(15.6)

(9.0)

(5.5)

(4.0)

(4.6)

Source: Checkit, Edison Investment Research

General disclaimer and copyright

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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.

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

Copyright: Copyright 2024 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 Checkit and prepared and issued by Edison, in consideration of a fee payable by Checkit. 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 2024 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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