Foxtons Group — Strategic momentum and M&A adds to value

Foxtons Group (LSE: FOXT)

Last close As at 18/05/2024

GBP0.67

−1.20 (−1.75%)

Market capitalisation

GBP204m

More on this equity

Research: Real Estate

Foxtons Group — Strategic momentum and M&A adds to value

In Q323, all three of Foxtons’ divisions outperformed their respective markets, taking market share – the direct result of management action to avoid the same mistakes made during previous downcycles where costs were cut, a position from which it would subsequently struggle to recover. Foxtons’ new strategy focuses growth on non-cyclical revenue streams and decouples performance from sales market cycles. The latest value-enhancing acquisition leads to a net upgrade in estimates in FY24. We therefore raise our ‘base’ case valuation from 59p/share to 62p, which implies more than 60% upside, and our preferred ‘bull’ case valuation from 124p/share to 127p.

Andy Murphy

Written by

Andy Murphy

Director, Financials & Industrials

Male hand showing, offering a new dream house at the empty field with copy space

Real Estate

Foxtons Group

Strategic momentum and M&A adds to value

Q3 trading update

Real estate

9 November 2023

Price

38p

Market cap

£125m

Net debt (£m) at 30 June 2023

2.1

Shares in issue

330m

Free float

100%

Code

FOXT

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

9.0

2.5

18.7

Rel (local)

10.1

4.8

18.2

52-week high/low

42p

29p

Business description

Foxtons Group is London’s leading and most widely recognised estate agency. It operates from a network of 60 interconnected branches offering a range of residential-related services, which break down into three separate revenue streams: Lettings, Sales and Financial Services.

Next events

FY23 trading update

January 2024

Preliminary results

March 2024

Analyst

Andy Murphy

+44 (0)20 3077 5700

Foxtons Group is a research client of Edison Investment Research Limited

In Q323, all three of Foxtons’ divisions outperformed their respective markets, taking market share – the direct result of management action to avoid the same mistakes made during previous downcycles where costs were cut, a position from which it would subsequently struggle to recover. Foxtons’ new strategy focuses growth on non-cyclical revenue streams and decouples performance from sales market cycles. The latest value-enhancing acquisition leads to a net upgrade in estimates in FY24. We therefore raise our ‘base’ case valuation from 59p/share to 62p, which implies more than 60% upside, and our preferred ‘bull’ case valuation from 124p/share to 127p.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/21

126.5

10.0

2.0

0.5

19.2

1.2

12/22

140.3

13.7

3.0

0.9

12.7

2.4

12/23e

145.1

13.5

2.4

0.9

16.0

2.4

12/24e

157.6

19.0

3.5

1.2

10.8

3.2

Note: *PBT is normalised, excluding amortisation of acquired intangibles, exceptional items, discontinued business and share-based payments. EPS is similar but after charging for share-based payments and excluding deferred tax re-measurement attributable to the corporate tax charge (ie diluted company definition).

Market share gains for third quarter in a row

Foxtons’ Q3 trading update highlighted progress against its turnaround plan, with market outperformance and market share gains in all three divisions. The CEO noted that this is the third consecutive quarter of outperformance, highlighting the ongoing investment in fee earners, staff training, data suites and the Foxtons brand. The latter is evidenced by Foxtons regaining the title of being London’s largest estate agency brand after it gained significant market share. For the nine months to the end of September (9M23), it grew total revenue by 5% to £114.8m, while revenue grew marginally to £43.9m in Q3 versus a robust comparator.

Eighth value-enhancing deal announced

On 7 November 2023 Foxtons announced it had agreed to buy Ludlow Thompson from its founders for a total consideration of £10.0m in cash. Ludlow Thompson is described as a ‘high-quality lettings focused’ estate agency operating from a seven-branch network in predominantly Docklands, the City and South London. The deal implies a sales multiple of 1.4x, in line with the average of deals completed to date. The 1,700 tenancies in the portfolio bring the acquired number of tenancies since 2020 to nearly 10,000, and Foxtons’ total tenancy portfolio to c 28,200.

Valuation: FY23 profit unchanged, FY24 raised 8%

Following the Q3/9M23 results, we are maintaining our FY23 operating profit estimate but are paring back our underlying FY24 estimate by c 4% as inflation adds to costs. However, the M&A works in reverse and we raise FY24 operating profit by a net 8%. We also raise our ‘base’ case valuation from 59p/share to 62p and our preferred ‘bull’ case valuation, which attempts to reflect market share gains across all three divisions in line with the revised strategy, from 124p/share to 127p.

Q323 trading update highlights progress

Not surprisingly, Foxtons’ Letting division performed the strongest of the three divisions in Q323 as the underlying rental market remained robust. That said, all three divisions outperformed their respective markets and took market share – the direct result of management action to avoid the same mistakes made during previous downcycles where costs were cut, which included actively allowing fee earners to depart the operations, a position from which it would subsequently struggle to recover. This self-inflicted course of action is now consigned to the past and the new management is rapidly making progress.

Ytd revenue up 5.4%, reflecting market share gains

Foxtons’ Q323 trading update highlighted progress against its turnaround plan, with market outperformance and market share gains in all three divisions. For 9M23, the company grew total revenue by 5% to £114.8m, while revenue grew marginally to £43.9m in Q3 against a robust prior year comparator. The CEO commented that this is the third consecutive quarter of outperformance, highlighting the ongoing investment in fee earners, staff training, data suites and the Foxtons brand. The latter is evidenced by Foxtons regaining the title of being London’s largest estate agency brand after it gained significant market share.

In Lettings, revenue grew by 18.4% to £81.3m in 9M23 and by 8.2% or £2.4m in Q3. This included £0.5m of organic growth (flat volumes, modest rental growth), £0.6m of incremental growth from the acquisition of Atkinson McLeod in March 2023 and £1.3m from interest earned on c £120m of customer deposits. While interest rates remain at elevated levels, this income is a useful offset versus other inflationary pressures in the business.

Exhibit 1: 9M23 and Q323 revenue and growth rates by division and group

£m

9M19

9M20

9M21

9M22

9M23

Ytd FY23 vs
ytd FY19

Ytd FY23 vs
ytd FY20

Ytd FY23 vs
ytd FY21

Ytd FY23 vs
ytd FY22

Revenue

 

 

Lettings

53.7

45.2

57.7

68.6

81.3

51.5%

80.1%

41.0%

18.4%

Sales

23.8

18.0

33.5

32.7

26.9

12.7%

49.3%

(19.9%)

(17.7%)

Financial Services

6.0

5.8

7.2

7.6

6.6

9.6%

14.3%

(7.9%)

(12.2%)

Total revenue

83.5

69.0

98.4

108.9

114.8

37.4%

66.5%

16.7%

5.4%

Q319

Q320

Q321

Q322

Q323

Q323 vs Q319

Q323 vs Q320

Q323 vs Q321

Q323 vs Q322

Revenue

 

 

Lettings

21.3

19.5

24.8

29.2

31.6

48.5%

62.1%

27.6%

8.2%

Sales

8.4

6.9

8.3

11.9

9.9

18.5%

43.5%

19.8%

(16.8%)

Financial Services

2.1

2.2

2.0

2.8

2.4

15.2%

9.1%

19.8%

(12.8%)

Total revenue

31.7

28.6

35.0

43.8

43.9

38.4%

53.5%

25.3%

0.3%

Source: Foxtons, Edison Investment Research

In 9M23, revenue from Sales declined by 17.7% to £26.9m in weak markets. However, in Q3 revenue declined slightly less, by 16.8% to £9.9m, which should be viewed against a market that saw a 23% reduction in exchange volumes. Overall, property values declined 5%, but Foxtons’ average exchange price remained flat as it gained market share in higher-value properties. Reflecting operational improvements, viewings increased by 6% in Q3, while ‘under-offer’ volumes declined by only 4% despite market weakness due to the 2022 comparator, which was affected by the infamous mini-budget.

In Financial Services, revenue fell 12.2% to £6.6m in 9M23 and by 12.8% to £2.4m in Q3, reflecting lower new mortgage volumes as sales fell away. It also saw an increased proportion of lower-margin transfer mortgages (within a lender) as opposed to higher-margin remortgages to alternative lenders. That said, Foxtons again outperformed the market, reflecting its investment in fee earners.

Another acquisition bolsters strategic pathway

On 7 November 2023 Foxtons announced its latest acquisition of an estate agency, which follows a series of other deals since the start of 2020. In this move, Foxtons agreed to buy Ludlow Thompson from its founders for a total consideration of £10.0m in cash. Ludlow Thompson is described as a ‘high-quality lettings focused’ estate agency operating from a seven-branch network in predominantly Docklands, the City and South London. In the year to December 2022, the business generated revenue of £7.3m and profit before tax of £0.1m, implying a historical sales multiple of 1.4x. The multiple is in line with the average paid over the last four years, reflecting the c 70% of revenue generated from Lettings and the fact that Foxtons will be taking on all of the branches.

The 1,700 tenancies in the portfolio bring the acquired number of tenancies since 2020 to nearly 10,000, and Foxtons’ total tenancy portfolio to c 28,200. We expect Foxtons to de-emphasise the sales activity and that the remaining c £5m of lettings revenue will generate a post amortisation profit of c £2m pa in line with targets. Given the late timing of the deal in FY23, it is unlikely to have a meaningful impact on the income statement this year. However, in FY24, we believe it could add c £1.0m to £1.5m to operating profit, but at the same time it is likely to incur a similar amount of exceptional/restructuring charges before the full c £2.0m of profit is seen in FY25.

We believe that following the latest deals, Foxtons will end the current year with net debt of c £12.2m, which implies that it may ‘pause for breath’ before considering other deals in the short term. We believe that the three 2020 deals and the 2021 purchase of D&G collectively generated a return of c 34% in 2022, after synergies. Foxtons anticipates similar returns from the latest deals, shown below.

Exhibit 2: M&A activity since 1 January 2020

Target

Date

Consideration (£m)

Revenue (£m)

PBT (£m)

EBITDA (£m)

EBIT (£m)

Location

Sales multiple (x)

Tenancies acquired

London Stone

1 Mar 2020

2.0

1.5

0.7

-

-

Woolwich

1.3

687

Pillars Estates

Oct 2020

0.2

-

-

-

-

-

-

224

Aston Rowe

23 Nov 2020

2.0

1.1

0.5

-

-

Acton and Brook Green

1.8

689

2020 total

4.2

2.6

-

-

-

-

-

1,600

Douglas and Gordon

1 Mar 2021

15.3

16.5

-

0.6

-

Central, South and West

0.9

2,900

2021 total

15.3

16.5

-

-

-

-

-

2,900

Gordon and Co

May 2022

8.4

4.0

-

-

0.1

South London

2.1

2,000

Stones Residential

May 2022

2.2

1.3

-

-

-

Stanmore

1.7

500

2022 total

10.6

5.3

-

-

-

-

-

2,500

Atkinson McLeod

Mar 2023

7.4

3.1

0.9

East London

2.4

1,100

Ludlow Thompson

Nov 2023

10.0

7.3

0.1

-

-

City, Docklands, South London

1.4

1,700

17.4

10.4

2,800

Total since 1 January 2020

47.4

34.8

-

-

-

-

1.4

9,800

Source: Foxtons Group, Edison Investment Research

Further evidence of strategic success

Exhibit 3 below highlights the divisional revenue trends. Clearly, Lettings has grown steadily in each of the last three years in contrast to Sales and Financial Services, as the underlying markets have been quite volatile driven by outside influences. Despite the fact that both Sales and Financial Services declined year to date compared with FY22, it should be noted that the revenues of both divisions are comfortably higher than they were in 2019, which, arguably, reflects the active investment in fee earners, staff training, data suites and the Foxtons brand, especially in the most recent difficult period.

Exhibit 3: 9M revenue by division, last five years

Source: Foxtons

Exhibit 4 below shows the growth rates of the three divisions in Q323 versus the same period in 2019 and in 9M23 versus 9M19. While Lettings has shown consistently strong growth in both periods, at least partly driven by M&A, it is interesting to note that revenue grew faster in both Sales and Financial Services in Q3 versus the nine-month period, suggesting at least some acceleration in performance as a result of the management initiatives mentioned above.

Exhibit 4: Divisional growth rates – Q323 and 9M23 versus Q319 and 9M19

Revenue growth

Q323 versus Q319

9M23 versus 9M19

Lettings

48.5%

51.5%

Sales

18.5%

12.7%

Financial Services

15.2%

9.6%

Total revenue

38.4%

37.4%

Source: Foxtons, Edison Investment Research

FY23e operating profit unchanged, FY24e raised c 8%

Given the trading patterns this year, we have raised FY23 revenue estimates from £137.8m to £145.1m (see Exhibit 5) driven by better-than-expected trading in Lettings. However, we have retained the operating profit estimate at £11.9m as costs have risen.

Exhibit 5: Revenue, actual and estimated

£m

Q123

Q223

Q323

9M23

Q423e

FY23e

Lettings

22.8

27.0

31.6

81.4

20.2

101.6

Sales

8.1

8.8

9.9

26.8

8.0

34.9

Financial Services

2.0

2.2

2.4

6.6

2.0

8.6

Total revenue

32.9

38.0

43.9

114.8

30.2

145.1

Growth rate

10.0%

8.2%

0.1%

5.4%

(3.7%)

3.4%

Source: Foxtons, Edison Investment Research

In FY24, and excluding the Ludlow Thompson acquisition, the higher base year in FY23 feeds through to an increase in revenue, from £146.6m to £152.6m, but we have pared back operating profit from £16.1m to £15.5m to reflect higher underlying costs due to inflationary pressures and the cost of the strategic initiatives. We then add c £5m of revenue to FY24 to reflect the latest M&A, and raise the underlying operating profit from £15.5m to £17.4m, which implies c 8% growth. PBT, EPS (company definition) and DPS register a healthy increase. We previously anticipated net cash of c £5m at the end of FY24, but this moves to a net debt position of £3.6m post the deal.

Exhibit 6: Revised estimates

£m

FY22

FY23e (old)

FY23e (new)

Chg (%)

FY24e (old)

FY24e (new)

Chg (%)

Revenue

140.3

137.8

145.1

5.3%

146.5

157.6

7.6%

Y-o-y growth (%)

10.9%

-

3.4%

-

-

8.6%

-

Adjusted operating profit

13.9

11.9

11.9

0.1%

16.1

17.4

8.0%

Y-o-y growth (%)

55.6%

-

-14.3%

-

-

45.9%

-

Reported PBT

11.9

9.7

8.6

-11.6%

13.9

14.6

5.3%

Y-o-y growth (%)

115.1%

-

-28.2%

-

-

70.8%

-

EPS (company definition) (p)

3.0

2.4

2.4

-0.5%

3.3

3.5

6.5%

Y-o-y growth (%)

51.5%

-

-20.4%

-

-

47.2%

-

DPS (p)

0.9

0.8

0.9

12.5%

1.2

1.2

2.5%

Y-o-y growth (%)

100.0%

-

0.0%

-

-

36.7

-

Net cash/(debt) (pre-IFRS 16, ie ex-lease liabs)

12.0

(1.6)

(5.7)

256.9%

5.5

(3.6)

-165.0%

Y-o-y growth (%)

-47.9%

-

-147.5%

-

-

-37.4%

-

Source: Foxtons, Edison Investment Research

Due to the net increase in FY24 profit estimates, we have raised our ‘base’ case valuation from 59p/share to 62p and our preferred ‘bull’ case valuation is lifted from 124p/share to 127p, both indicating material upside from the current share price.


Exhibit 7: Financial summary

£'m

2019

2020

2021

2022

2023e

2024e

2025e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

106.9

93.6

126.5

140.3

145.1

157.6

163.9

EBITDA

 

 

13.5

15.7

25.1

27.8

26.7

31.7

34.4

Normalised operating profit

 

 

0.6

3.8

12.1

15.6

15.7

21.7

24.4

Amortisation of acquired intangibles

(0.6)

(0.8)

(1.7)

(1.6)

(1.8)

(2.4)

(2.4)

Share-based payments

(0.7)

(1.0)

(1.5)

(0.2)

(2.0)

(2.0)

(2.0)

Total adjusted operatng profit

(0.7)

1.9

8.9

13.9

11.9

17.4

20.0

Exceptionals

(5.7)

(1.1)

(1.4)

(0.1)

(1.1)

0.0

0.0

Reported operating profit

(6.3)

0.8

7.6

13.8

10.8

17.4

20.0

Net Interest

(2.4)

(2.2)

(2.0)

(1.9)

(2.2)

(2.7)

(2.5)

Exceptionals

(0.1)

(0.0)

(0.0)

(0.0)

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

(1.9)

1.6

10.0

13.7

13.5

19.0

21.9

Profit Before Tax (reported)

 

 

(8.8)

(1.4)

5.6

11.9

8.6

14.6

17.6

Reported tax

1.0

(1.8)

(6.9)

(2.4)

(2.0)

(3.7)

(4.4)

Discontinued operations

0.0

0.0

(4.8)

0.0

0.0

0.0

0.0

Net income (normalised)

(0.9)

(0.2)

(1.7)

11.4

11.5

15.3

17.5

Net income (reported)

(7.8)

(3.2)

(6.2)

9.6

6.6

11.0

13.2

Basic average number of shares outstanding (m)

275

314

324

308

308

308

308

EPS - basic normalised (p)

 

 

(0.32)

(0.08)

(0.52)

3.69

3.72

4.98

5.69

EPS - basic reported (p)

 

 

(2.83)

(1.02)

(1.90)

3.11

2.13

3.57

4.28

EPS - Continuing, diluted, and adjusted. Company definition

 

 

(1.06)

(0.16)

1.98

3.00

2.39

3.52

4.22

Dividend (p)

0.00

0.00

0.45

0.90

0.90

1.23

1.48

Revenue growth (%)

(-4.1)

(-12.5)

35.2

10.9

3.4

8.6

4.0

EBITDA Margin (%)

12.6

16.8

19.9

19.8

18.4

20.1

21.0

Normalised Operating Margin

0.5

4.1

9.5

11.1

10.8

13.8

14.9

BALANCE SHEET

Fixed Assets

 

 

178.7

173.4

184.4

191.7

195.9

189.5

181.7

Intangible Assets

101.0

103.5

107.3

109.3

110.4

111.5

112.6

Goodwill

9.3

11.4

17.7

26.1

26.1

26.1

26.1

Tangible Assets

13.0

10.5

9.7

10.7

24.8

27.4

28.5

Right of use assets

51.4

44.4

43.8

42.6

31.6

21.6

11.6

Contract assets

0.6

0.4

0.9

1.7

1.7

1.7

1.7

Investments & other

3.3

3.1

5.1

1.4

1.3

1.3

1.2

Current Assets

 

 

30.2

52.6

39.3

34.5

25.4

34.4

45.1

Contract assets

1.0

1.7

3.7

5.7

5.7

5.7

5.7

Debtors

13.4

13.9

16.0

16.0

24.7

31.5

32.8

Cash & cash equivalents

15.5

37.0

19.4

12.0

(5.7)

(3.6)

5.9

Other

0.3

0.1

0.3

0.7

0.7

0.7

0.7

Current Liabilities

 

 

(27.9)

(29.2)

(31.9)

(38.7)

(37.9)

(39.2)

(39.9)

Creditors

(10.5)

(10.3)

(14.5)

(16.7)

(16.0)

(17.3)

(18.0)

Lease liabilities

(9.7)

(10.8)

(8.8)

(10.7)

(10.7)

(10.7)

(10.7)

Contract liabilities

(6.3)

(7.7)

(8.2)

(9.7)

(9.7)

(9.7)

(9.7)

Other

(1.4)

(0.4)

(0.3)

(1.5)

(1.5)

(1.4)

(1.4)

Long Term Liabilities

 

 

(65.2)

(62.4)

(68.4)

(64.9)

(54.1)

(43.8)

(33.3)

Lease liabilities

(46.2)

(40.7)

(39.3)

(35.8)

(25.0)

(14.7)

(4.2)

Contract liabilities

(1.3)

(1.1)

(1.1)

(0.3)

(0.3)

(0.3)

(0.3)

Other long term liabilities

(17.8)

(20.6)

(28.0)

(28.8)

(28.8)

(28.8)

(28.8)

Shareholders' equity

 

 

115.8

134.5

123.5

122.7

129.3

140.8

153.6

CASH FLOW

Op Cash Flow before WC and tax

(2.6)

4.3

6.6

15.0

12.6

19.7

22.4

Depreciation - Right of use assets

9.8

9.4

10.6

12.2

11.0

10.0

10.0

Impairment of goodwill

0.0

0.0

3.2

0.0

0.0

0.0

0.0

Branch asset impairment

4.3

1.7

1.1

(0.3)

0.0

0.0

0.0

Gain on disposal of PPE etc

(0.4)

(0.5)

(1.4)

(0.3)

(0.5)

(0.5)

(0.5)

Working capital

(2.6)

(0.6)

1.7

(1.2)

(9.4)

(5.5)

(0.6)

Decrease in provisions

0.8

(0.8)

0.2

1.1

(1.0)

(1.0)

(1.0)

Share based payment charges

0.7

1.0

1.5

0.2

2.0

2.0

2.0

Cash settlement of share incentive plan

(0.4)

0.0

0.0

(0.0)

(0.5)

(0.5)

(0.5)

Tax

0.2

0.2

(0.2)

(2.7)

(2.0)

(3.7)

(4.4)

Net operating cash flow

 

 

9.8

14.7

23.5

23.9

12.2

20.6

27.4

Capex

(0.3)

(0.4)

(1.7)

(2.9)

(0.4)

(0.4)

(0.4)

Acquisitions/disposals

(0.2)

(3.9)

(14.5)

(9.6)

(13.8)

(2.3)

(0.8)

Dividends and net interest

0.0

0.0

(0.6)

(1.4)

(2.8)

(2.8)

(3.8)

Repayment of lease liabilities

(12.0)

(10.0)

(15.2)

(12.7)

(13.0)

(13.0)

(13.0)

Purchase of own shares

(0.1)

(0.3)

(5.7)

(4.9)

(0.3)

(0.3)

(0.3)

Net proceeds from issue of ord. Shares

0.0

21.1

0.0

0.0

0.0

0.0

0.0

Other

0.3

0.3

0.3

(3.4)

0.3

0.3

0.3

Net Cash Flow

(2.4)

21.5

(13.9)

(11.1)

(17.7)

2.1

9.5

Opening net debt/(cash)

 

 

(17.9)

(15.5)

(37.0)

(23.1)

(12.0)

5.7

3.6

Closing net debt/(cash) (ex lease liabilities)

 

(15.5)

(37.0)

(23.1)

(12.0)

5.7

3.6

(5.9)

Source: Company reports, Edison Investment Research


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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 Foxtons Group and prepared and issued by Edison, in consideration of a fee payable by Foxtons Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

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

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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