OPAP — Significant new dividend commitment

OPAP (ASE: OPAP)

Last close As at 18/05/2024

EUR15.54

0.00 (0.00%)

Market capitalisation

EUR5,751m

More on this equity

Research: Consumer

OPAP — Significant new dividend commitment

OPAP’s Q221 results showed a strong revenue recovery after the end of COVID-related lockdowns. Following the recent award of new online gaming licences to both OPAP and Stoiximan (fully consolidated from end FY20), management seeks to enhance its revenue opportunities by developing games that attract new players in underserved (younger and more female) demographics, whilst also increasing existing customer loyalty and engagement. The new commitment to pay an annual dividend that exceeds net profit with a minimum of €1/share (27% increase versus our prior FY21 estimate) highlights OPAP’s shareholder friendliness with respect to cash returns. Our DCF-based valuation remains at €16.6/share.

Russell Pointon

Written by

Russell Pointon

Director of Content, Consumer and Media

Consumer

OPAP

Significant new dividend commitment

Q221 results

Travel & leisure

12 October 2021

Price

€13.4

Market cap

€4,706m

Net debt/cash (€m) at 30 June 2021 post IFRS 16 (net debt pre IFRS 16 €427m)

481

Shares in issue

351.2m

Free float

53.75%

Code

OPAP

Primary exchange

ASE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

3.1

7.5

56.4

Rel (local)

5.1

6.4

15.2

52-week high/low

€13.8

€6.9

Business description

OPAP was founded in 1958 as the Greek national lottery and is the exclusive licensed operator of all numerical lotteries, sports betting, instant and passives, VLTs and horse racing. It was listed in 2001 and fully privatised in 2013. Sazka Group has a 46.25% stake and significant board representation.

Next events

Q321 results

23 November 2021

FY21 results

March 2022

Analysts

Russell Pointon

+44 (0)20 3077 5700

Sara Welford

+44 (0)20 3077 5700

OPAP is a research client of Edison Investment Research Limited

OPAP’s Q221 results showed a strong revenue recovery after the end of COVID-related lockdowns. Following the recent award of new online gaming licences to both OPAP and Stoiximan (fully consolidated from end FY20), management seeks to enhance its revenue opportunities by developing games that attract new players in underserved (younger and more female) demographics, whilst also increasing existing customer loyalty and engagement. The new commitment to pay an annual dividend that exceeds net profit with a minimum of €1/share (27% increase versus our prior FY21 estimate) highlights OPAP’s shareholder friendliness with respect to cash returns. Our DCF-based valuation remains at €16.6/share.

Year end

GGR*
(€m)

EBITDA**
(€m)

EPS**
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/19

1,619.9

411.2

0.68

1.30

19.7

9.7

12/20

1,129.8

263.6

0.32

0.55

41.9

4.1

12/21e

1,581.6

567.6

0.83

1.00

16.1

7.5

12/22e

2,042.2

739.4

1.19

1.19

11.3

8.9

12/23e

2,071.7

740.0

1.19

1.18

11.3

8.8

Note: GGR = gross gaming revenue. **EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Revenue (GGR) recovering quickly

On an underlying basis, excluding the consolidation of Stoiximan, OPAP’s Q221 revenue increased by c 170% to €306m, and H121 declined by 26% to c €376m, which reflects the differing number of trading days between Q1 and Q2 in both periods due to COVID-19 related trading restrictions. For H121, OPAP’s underlying EBITDA increased by 66% to €166m. Management has committed to distributing dividends that exceed net profit of at least €1/share per annum by drawing down accumulated share premium and retained profits, equivalent to €1.15/share at end H121. The higher Q221 profitability led to an improved net debt position of €481m at H121 (Q121 €612m).

FY22: EBITDA forecast reduced by 4%

Our forecasts for OPAP’s gaming activities in FY21 are unchanged but we trim our FY22 EBITDA forecasts by 4% due to a combination of modestly lower revenue growth for land-based Lotteries and Sports Betting and an increase in personnel and marketing costs as OPAP invests in developing its online offering. In both FY21 and FY22 we trim our forecasts for lower other operating income. We introduce forecasts for FY23 with 1% revenue growth (a combination of strong online growth and modest land-based declines) and a broadly flat EBITDA versus FY22. We conservatively estimate a dividend payout ratio of 100% from FY22.

Valuation: DCF value of €16.6/share unchanged

Our DCF-based valuation of €16.6/share is unchanged reflecting a combination of modestly lower EBITDA forecasts and more shares in issue to satisfy the scrip dividend, offset by the improved net debt position and a lower than expected corporation tax rate due to the retrospective introduction of a lower standard tax rate. The dividend yield of 8.8% remains attractive versus its peers.

Q221 results: Welcoming back revenue

The first-time consolidation of Stoiximan’s results from December 2020 complicates a straight comparison of OPAP’s Q221 reported results versus the prior year, as it was previously accounted for as an associate. In addition, comparison of the underlying results is affected by the differing level of COVID-19 related store closures and operating restrictions in the respective periods: Q220 was in the eye of the storm following the initial outbreak of the COVID-19 pandemic and during Q221, OPAP’s main assets, the retail network and street vendors, began to open/trade from 12 April 2021, followed by the Video Lottery Terminals (VLTs) on 24 May. Across the whole of H121, there were c 40% fewer trading days versus the prior year, with more closed days in Q121 than Q120, and vice versa for Q2.

On a reported basis (ie not adjusting for Stoiximan consolidation) Q221 revenue increased by 120% y-o-y to €396m, gross profit from gaming operations by 152% to €173m, and EBITDA (OPAP’s definition) almost eightfold to €143m (Q220 €16m). Note, OPAP’s definition of EBITDA includes associate profits (€0.7m in Q221) and exceptional items (negative €0.8m), which we typically exclude from EBITDA. While the items broadly offset each other in Q221, in Q220 they reduced OPAP’s EBITDA definition by €5.7m to €16.2m.

Exhibit 1: Summary financials

€m

Q120

Q220

H120

Q121

Q221

H121

Lotteries

154.5

103.0

257.5

36.6

150.3

186.9

Growth y-o-y

(19%)

(45%)

(32%)

(76%)

46%

(27%)

Sports Betting

88.0

40.4

128.4

12.0

77.7

89.7

Growth y-o-y

(14%)

(55%)

(33%)

(86%)

92%

(30%)

Instants & Passives

19.2

14.4

33.6

7.9

29.2

37.1

Growth y-o-y

(43%)

(59%)

(51%)

(59%)

103%

10%

VLTs

66.6

21.8

88.4

0.0

36.1

36.1

Growth y-o-y

(3%)

(69%)

(37%)

(100%)

66%

(59%)

Online Betting

70.4

53.9

124.2

Growth y-o-y

N/A

N/A

N/A

Other Online

47.3

48.6

96.0

Growth y-o-y

0.0

0.0

0.0

GGR

328.3

179.6

507.9

174.2

395.9

570.1

Growth y-o-y

(17%)

(53%)

(35%)

(47%)

120%

12%

NGR*

217.4

117.9

335.2

105.6

268.0

373.7

Growth y-o-y

(19%)

(54%)

(36%)

(51%)

127%

11%

Gross profit from gaming

122.4

68.8

191.1

75.6

173.2

248.8

Gross margin

37.3%

38.3%

37.6%

43.4%

43.8%

43.6%

Payroll

(19.8)

(20.1)

(39.9)

(18.6)

(20.3)

(38.9)

As % of GGR

6.0%

11.2%

7.9%

10.7%

5.1%

6.8%

Marketing

(12.6)

(10.8)

(23.4)

(16.0)

(28.3)

(44.4)

As % of GGR

3.8%

6.0%

4.6%

9.2%

7.2%

7.8%

Other operating expenses

(25.2)

(28.8)

(53.9)

(42.0)

(49.7)

(91.7)

As % of GGR

7.7%

16.0%

10.6%

24.1%

12.6%

16.1%

Total operating expenses

(57.6)

(59.7)

(117.3)

(76.6)

(98.3)

(174.9)

As % of GGR

17.5%

33.2%

23.1%

44.0%

24.8%

30.7%

Other income

45.5

55.3

100.8

EBITDA (OPAP definition)

86.4

16.2

102.5

61.3

143.5

204.8

Margin

26.3%

9.0%

20.2%

35.2%

36.2%

35.9%

Source: OPAP. Note: *Net gaming revenue.

Excluding Stoiximan’s contribution, OPAP’s Q221 revenue increased by c 170% to €306m and H121 declined by 26% to c €376m. For H121, OPAP’s underlying EBITDA increased by 66% to €166m, the margin increased from 19.7% in the prior year to 44.0%.

It is apparent revenue has recovered relatively quickly post the end of lockdowns, given current revenue (from 1 June through 12 September) for land-based Lotteries and Sports Betting are marginally down (negative 0.9%) versus the same dates in FY19, whereas VLTs are just over 24% ahead of FY19 levels. Management attributes the recovery, in part, to its CRM and loyalty programmes.

OPAP’s online revenue, excluding Stoiximan, increased by c 60% y-o-y to €16m in Q221, but both OPAP and Stoiximan generated lower revenue in Q2 than Q1 due to the re-opening of land-based activities and lower betting margins below long-term averages. Management believes the declines from Q1 to Q2 were in line with the overall online market.

Exhibit 2: Revenue

€m

Q120

Q220

Q320

Q420

Q121

Q221

GGR

328

180

508

174

396

570

- Land-based

324

170

493

52

290

341

- Online

5

10

15

122

106

229

- o/w OPAP

5

10

15

19

16

35

- o/w Stoiximan

0

0

0

103

90

194

Source: OPAP

Stoiximan’s active (online) monthly players were broadly stable from Q1 (203k) to Q2 (202k), but OPAP saw more of a reduction, from Q1 (163k) to Q2 (145k), albeit the latter still represented y-o-y growth of five thousand customers, due to its land-based exposure.

Cost control: Where possible

With respect to levies and commissions, all ratios were as expected however the profitability of Instant & Passives remained burdened with a €25m (€50m annual pro rata) levy rather than the variable 30% (€11.1m Edison estimate), which remains subject to arbitration given OPAP’s lower revenue was due to mandatory government closures and restrictions because of COVID-19.

The higher absolute levels of revenue coupled with continued good control of costs and the new ‘other income’ accounting entry for the licence extension (€55.3m in Q221 and €100.8m in H121) delivered the improved EBITDA margin from Q1 to Q2. There were underlying declines of 11% for payroll expenses and c 6% for other operating costs, but marketing was ramped up as land-based activities re-opened and ahead of the UEFA European Championship. In aggregate, total operating costs increased by c 25%, due mainly to the consolidation of Stoiximan.

Dividend: Committing to minimum distribution of €1 pa

Following the payment of the dividend declared for FY20 of €0.55 per share, an interim dividend for FY21 of €0.1 per share has been declared, the first interim dividend declared since H118, at a level consistent with levels prior to COVID-19. The record date for the dividend is 20 October 2021, and there is a scrip alternative.

Management has updated its dividend policy, committing to dividend distributions that exceed net profit with a minimum dividend of €1 per share. The payout in excess of net profit, to reach the minimum €1 dividend per share or to pay special dividends, can be funded from the share premium account, which has consistently increased due to OPAP’s ‘attractive’ scrip dividend, and retained earnings. At H121 share premium and retained earnings at the company (ie not group) level were equal to €219m and €185m, respectively, a combined €404m, or €1.15 per share. Our prior DPS forecasts were based on distributions equivalent to the majority of underlying free cash flow and 50% of enhanced cash flow from lower licence payments. For FY21, we assume a dividend of €1 per share versus our prior estimate of €0.79 per share (a payout ratio of 120% on our EPS estimate of €0.83). For future years, we conservatively estimate a payout ratio of 100%.

Exhibit 3: OPAP’s dividend

Source: OPAP, Edison Investment Research

Cash flow and balance sheet: Free cash flow, lower net debt

The higher level of profitability fed through to a significant increase in operating cash flow (post interest and tax paid) to €161m from €37m in the comparative quarter. There was a broadly consistent level of working capital inflow on an absolute basis (€27m in Q221 versus €24m in Q220) despite the significantly higher revenues earned in Q221. The total investment in tangible and intangible assets in Q221 of €13m is consistent with our FY21 forecast of €45m, following minimal investment (less than €1m) in Q121. Therefore, the free cash flow generation led to an improvement in OPAP’s cash position, €617m at end H121 from €486m (Q121) and €507m (FY20). OPAP’s gross debt excluding IFRS 16 of €1,044m, and including IFRS 16 of €1,097m were practically unchanged from Q121 therefore the improved cash position led to net debt excluding/including IFRS 16 of €427m/€481m respectively. The company’s definition of net debt (€477m under IFRS 16) includes €4m of short-term investments.

Overview of Greek online gaming market

Accompanying the results, management provided an update on the outlook for the Greek online gaming market following the recent award of licences and their aspirations for OPAP’s activities as it seeks to develop more online revenue.

The Greek online gaming market is expected to grow from €588m in 2020 to €1,182m in 2026, a CAGR of 12.3% versus 18.2% from 2013 to 2020 (Source: H2GC).

The Hellenic Gaming Commission has awarded seven-year online gaming licences to 15 operators (12 pre-existing operators and three new entrants), with go-live dates from August 2021. OPAP and Stoiximan both have a new casino and sports betting licence. The licences include a betting limit of €2 per click in online casino random number generator (RNG) games versus no limit previously, and there are no monthly betting or deposit limits as have been introduced in other countries. At the time of the results there was limited information as to how the betting limit is affecting customer behaviour. The online operators have requested the betting limit per click should be lifted to prevent customers moving from the regulated online market to illegal operators.

OPAP’s total online market share, including Stoiximan, is estimated to be 49% in FY20. Management doesn’t expect a significant increase in competition but over time it expects, as market leader, to cede some modest market share. In the long term it anticipates online revenue will represent a c mid-30’s percentage of OPAP’s total group revenue, from an estimated c 29% in FY21.

Management believes it has significant scope to further penetrate the online market by:

Attracting a younger audience: more Millennials versus its current 70% of online customers aged over 35 years;

Attracting more females: only 30% of OPAP’s online customers are female, it seeks a more equal split;

Improve customer loyalty: only 15% of OPAP’s online Pame Stoixima customers are exclusive to the brand so they would like to increase its share of wallet from existing customers.

Increase the number of games played by customers: 50% of offline customers play more than one of OPAP’s game but in online the percentage is much lower.

To achieve these aims, there will be a significant amount of product innovation to enhance and expand the games offer across sports, casino and lottery. As customers move online, management expects to gain more insight into customer behaviour and envisages better customer relationship management (CRM) and marketing to stimulate demand.

Forecasts: Minor downgrade to FY22, introducing FY23

We trim our revenue and EBITDA forecasts for FY21 and FY22 and introduce forecasts for FY23.

Exhibit 4: Changes to estimates

Revenue (€m)

EBITDA (€m)

DPS (€)

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

2021e

1,581.6

1,581.6

0.0

575.0

567.7

(1.3)

0.79

1.00

26.6

2022e

2.074.6

2,042.2

(1.6)

772.4

739.4

(4.3)

1.24

1.19

(4.0)

2023e

N/A

2.071.7

N/A

N/A

740.0

N/A

N/A

1.18

N/A

Source: Edison Investment Research

For FY21 our forecasts for OPAP’s gaming activities and operating costs are unchanged but we reduce other operating income (telephony and e-money services) by 7m, which flows straight through to a reduction to our EBITDA forecast from 575m to €568m.

In FY22 we trim our revenue forecast by less than 2% (from €2,075m to €2,042m) due to modest reductions for Lotteries and Sports Betting, reduce other operating income as above in FY21 and increase personnel expenses and marketing expenses by a combined 6% to reflect the increased development of online games noted above. These lead to a reduction in our EBITDA forecast of c 4%, from €772m to €739m.

Our new forecast for FY23 includes revenue growth of 1% to €2,072m and relatively flat EBITDA versus FY22 of €740m. The key drivers of the growth in revenue are modest declines for land-based Lotteries and Sports Betting of c 1%, offset by further growth for online revenue of 10%.

Further down the P&L, we reduced the corporation tax rate by two percentage points (from 26% to 24%) to reflect the recent retrospective reduction in the Greek corporation tax rate to 22%. OPAP’s effective tax rate is typically two percentage points above the standard tax rate. We also increase the number of shares in issue to reflect the scrip dividend.

As highlighted above, our DPS forecasts for FY22 and FY23 represent a conservative 100% payout ratio.

Valuation: DCF valuation of €16.6/share unchanged

The combination of the modest EBITDA downgrades and more shares in issue for the scrip dividend offsets the improved net debt position at H121 and lower expected tax rate to leave our DCF-based valuation of €16.6 per share unchanged.

Exhibit 5: Financial summary

€'m

2018

2019

2020

2021e

2022e

2023e

31-December

ISA

ISA

ISA

ISA

ISA

ISA

INCOME STATEMENT

Revenue

 

 

1,547.0

1,619.9

1,129.8

1,581.6

2,042.2

2,071.7

NGR

 

 

1,039.9

1,086.2

737.3

1,072.9

1,397.4

1,415.1

Cost of Sales

(912.0)

(946.9)

(662.4)

(859.8)

(1,131.1)

(1,142.1)

Gross Profit

635.0

673.0

467.4

721.7

911.1

929.5

Other Income

42.5

227.2

239.7

239.1

EBITDA

 

 

356.6

411.2

263.6

567.6

739.4

740.0

Operating Profit (before amort. and except.)

 

 

261.4

305.2

148.7

425.7

595.6

596.2

Impairments

(17.5)

(8.7)

(36.8)

0.0

0.0

0.0

Exceptionals

(3.0)

(7.1)

(21.5)

0.0

0.0

0.0

Share-based payments

(1.6)

(1.6)

(0.8)

(0.8)

(0.8)

(0.8)

Reported operating profit

239.3

287.8

89.6

424.8

594.7

595.4

Net Interest

(23.5)

(27.1)

(33.5)

(35.2)

(35.2)

(35.2)

Joint ventures & associates (post tax)

0.1

8.5

18.2

0.2

0.2

0.2

Profit Before Tax (norm)

 

 

238.0

286.6

133.4

390.7

560.6

561.3

Profit Before Tax (reported)

 

 

215.9

269.2

74.3

389.9

559.8

560.4

Reported tax

(70.6)

(67.1)

(17.6)

(93.8)

(134.5)

(134.7)

Profit After Tax (norm)

169.0

217.8

101.4

296.9

426.1

426.6

Profit After Tax (reported)

145.3

202.1

56.7

296.1

425.2

425.7

Minority interests

(2.0)

0.3

6.0

(8.5)

(9.9)

(10.7)

Net income (normalised)

167.0

218.1

107.4

288.5

416.2

416.9

Net income (reported)

143.3

202.4

62.7

287.6

415.4

415.0

Average Number of Shares Outstanding (m)

318

318

334

346

351

351

EPS - normalised (€)

 

 

0.53

0.68

0.32

0.83

1.19

1.19

EPS - normalised fully diluted (€)

 

 

0.53

0.68

0.32

0.83

1.19

1.19

EPS - basic reported (€)

 

 

0.45

0.64

0.19

0.83

1.18

1.18

Dividend (€)

0.70

1.30

0.55

1.00

1.19

1.18

Revenue growth (%)

6.3

4.7

(30.3)

40.0

29.1

1.4

Gross Margin (%)

41.0

41.5

41.4

45.6

44.6

44.9

EBITDA Margin (%)

23.1

25.4

23.3

35.9

36.2

35.7

Normalised Operating Margin

16.9

18.8

13.2

26.9

29.2

28.8

BALANCE SHEET

Fixed Assets

 

 

1,384.8

1,370.1

1,691.1

1,653.3

1,583.7

1,464.0

Intangible Assets

1,157.2

1,096.0

1,464.1

1,446.3

1,396.6

1,296.9

Tangible Assets

111.5

162.3

127.5

107.5

87.6

67.6

Investments & other

116.1

111.7

99.5

99.5

99.5

99.5

Current Assets

 

 

388.6

869.9

629.1

822.0

1,004.1

1,128.0

Stocks

10.7

7.0

6.2

8.6

11.2

11.3

Debtors

140.2

161.2

68.5

126.5

183.8

207.2

Cash & cash equivalents

182.0

633.8

506.9

639.2

761.5

862.0

Other

55.7

67.9

47.6

47.6

47.6

47.6

Current Liabilities

 

 

(314.0)

(326.4)

(366.1)

(406.4)

(441.3)

(444.5)

Creditors

(177.5)

(184.1)

(149.4)

(189.8)

(224.6)

(227.9)

Tax and social security

(12.8)

(1.8)

(27.8)

(27.8)

(27.8)

(27.8)

Short term borrowings

(0.2)

(13.9)

(40.7)

(40.7)

(40.7)

(40.7)

Other

(123.6)

(126.7)

(148.2)

(148.2)

(148.2)

(148.2)

Long Term Liabilities

 

 

(699.8)

(1,141.6)

(1,199.3)

(1,194.8)

(1,188.6)

(1,180.1)

Long term borrowings

(650.3)

(1,103.2)

(1,057.9)

(1,059.7)

(1,009.7)

(959.7)

Other long term liabilities

(49.5)

(38.4)

(141.3)

(135.1)

(178.9)

(220.4)

Net Assets

 

 

759.5

771.9

754.9

874.1

957.9

967.4

Minority interests

(36.8)

(18.1)

(15.3)

(23.7)

(33.6)

(44.3)

Shareholders' equity

 

 

722.8

753.8

739.6

850.4

924.3

923.1

CASH FLOW

Op Cash Flow before WC and tax

358.2

412.9

264.4

568.5

740.2

740.9

Working capital

(25.0)

(16.5)

(34.8)

(20.2)

(24.9)

(20.3)

Exceptional & other

(1.9)

(13.8)

4.0

(7.1)

43.0

40.7

Tax

(51.7)

(78.9)

(12.1)

(93.8)

(134.5)

(134.7)

Operating cash flow

 

 

279.7

303.6

221.4

447.5

623.7

626.6

Net interest

(24.6)

(22.3)

(32.5)

(35.2)

(35.2)

(35.2)

Capex

(52.1)

(34.7)

(18.9)

(25.0)

(25.0)

(25.0)

Acquisitions/disposals

(48.0)

(22.0)

(90.2)

(80.0)

(50.0)

0.0

Equity financing

(12.1)

(0.1)

(0.1)

0.0

0.0

0.0

Dividends

(130.7)

(168.4)

(214.7)

(176.9)

(341.4)

(416.2)

Net new borrowings

(32.3)

399.7

(12.1)

1.8

(50.0)

(50.0)

Other

(34.6)

(4.0)

20.0

0.2

0.2

0.2

Net Cash Flow

(54.8)

451.8

(126.9)

132.4

122.3

100.4

Opening cash

 

 

236.8

182.0

633.8

506.9

639.3

761.6

Closing cash

 

 

182.0

633.8

506.9

639.3

761.6

862.0

Closing net debt/(cash)

 

 

468.5

483.3

591.7

461.1

288.9

138.4

Source: OPAP accounts, Edison Investment Research

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Frankfurt +49 (0)69 78 8076 960

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60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

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United States of America

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General disclaimer and copyright

This report has been commissioned by OPAP and prepared and issued by Edison, in consideration of a fee payable by OPAP. Edison Investment Research standard fees are £49,500 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 2021 Edison Investment Research Limited (Edison).

Australia

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

New Zealand

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

United Kingdom

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

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

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

United States

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

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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