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Claranova — Stable performance year to date

Claranova (PAR: CLA)

Last close As at 26/12/2024

EUR1.19

▲ 0.02 (1.71%)

Market capitalisation

EUR68m

More on this equity

Research: TMT

Claranova — Stable performance year to date

Claranova reported a revenue decline of 1% for the nine months to 31 March 2022 (9M22), reflecting a strong performance in Avanquest offset by a tougher period for PlanetArt. The slowdown in PlanetArt’s activities has pushed out the company’s target to achieve €700m in revenue from FY23 to FY24 but the EBITDA margin target of 10% for FY23 still stands. We have revised our forecasts to reflect H1 results and Q322 revenue; we cut our PlanetArt growth forecasts for Q422/FY23 and factor in a contribution from pdfforge from FY23, resulting in reduced EBITDA forecasts for both years.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

Claranova

Stable performance year to date

Q322 revenue update
and H122 results

Software and comp services

20 May 2022

Price

€2.94

Market cap

€134m

$1.04:€1

Net cash (€m) at end H122

1.8

Shares in issue

45.6m

Free float

80%

Code

CLA

Primary exchange

Euronext Paris

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(18.6)

(38.0)

(58.6)

Rel (local)

(15.4)

(31.9)

(58.3)

52-week high/low

€7.90

€3.46

Business description

Claranova consists of three businesses focused on mobile and internet technologies: PlanetArt (digital photo printing; personalised gifts), Avanquest (consumer-focused software) and myDevices (internet of things/IoT). Its headquarters are in Paris and it has operations in Europe, the United States and Canada.

Next events

Q422 revenue update

3 August

Analyst

Katherine Thompson

+44 (0)20 3077 5730

Claranova is a research client of Edison Investment Research Limited

Claranova reported a revenue decline of 1% for the nine months to 31 March 2022 (9M22), reflecting a strong performance in Avanquest offset by a tougher period for PlanetArt. The slowdown in PlanetArt’s activities has pushed out the company’s target to achieve €700m in revenue from FY23 to FY24 but the EBITDA margin target of 10% for FY23 still stands. We have revised our forecasts to reflect H1 results and Q322 revenue; we cut our PlanetArt growth forecasts for Q422/FY23 and factor in a contribution from pdfforge from FY23, resulting in reduced EBITDA forecasts for both years.

Year end

Revenue (€m)

EBITDA*
(€m)

PBT**
(€m)

Diluted EPS**
(€)

DPS
(€)

P/E
(x)

06/20

409.1

17.4

11.3

0.20

0.0

15.0

06/21

471.9

34.2

25.5

0.40

0.0

7.5

06/22e

474.7

33.6

23.6

0.38

0.0

7.8

06/23e

530.6

44.5

34.6

0.58

0.0

5.2

Note: *Pre-IFRS 16. **PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

H122 EBITDA margin 8.2%

For 9M22/Q322, Claranova reported a 1%/5% y-o-y revenue decline, with PlanetArt down 5%/12%, Avanquest up 19%/13% and myDevices up 16%/45%. In H122, Claranova reported 1% revenue growth y-o-y and flat EBITDA (margin 8.2% vs 8.3% in H121). Higher finance costs (related to the buyout of Avanquest minority interests) and higher than expected tax resulted in a 65% decline in net income after minority interests. These factors, as well as the July 2021 acquisition of I See Me!, resulted in net cash declining from €25.3m at end FY21 to €1.8m at end H122.

Revising outlook to reflect challenges for PlanetArt

For several years, the company has been targeting revenue of €700m by FY23 through a combination of organic growth and acquisition, with an EBITDA margin (pre-IFRS 16) of 10%. The slowdown in PlanetArt caused by various factors means that it will be difficult to achieve this target. The company has therefore pushed the target out by one year to FY24 but is still aiming to reach the EBITDA margin target in FY23. Our forecasts have been revised to reflect H122 and Q322 performance, reducing FY22 EBITDA by 13.9% and FY23 by 4.1%. In FY23 this equates to a margin of 8.4%, more conservative than the company target as it is not yet clear how the use of new customer acquisition channels for PlanetArt will affect margins.

Valuation: PlanetArt growth the main driver

Reflecting the different business models for each division, we continue to use a sum-of-the-parts approach to valuation. Using EV/sales multiples that reflect our views on divisional growth and profitability and are conservative compared to the peer group averages, and reflecting the reduced revenue and EBITDA forecasts for FY22/23, we reduce our valuation from €10.46 to €7.90 per share. In our view, consistent growth in revenues and margins towards the company’s FY23/24 targets will be key to reducing the discount to peers. In the near term, resumption of growth in PlanetArt will be the key trigger.

Review of Q322 revenue update

On 10 May, the company reported Q322/9M22 revenues (Exhibit 1).

Exhibit 1: Divisional revenues for Q322 and 9M22

Revenues (€m)

9M22

9M21

y-o-y

y-o-y

y-o-y

y-o-y

Reported

Constant currency

Organic

Constant currency organic

PlanetArt

291

306

(5%)

(9%)

(9%)

(12%)

Avanquest

77

65

19%

14%

19%

14%

myDevices

4

3

16%

12%

16%

12%

Total

371

373

(1%)

(5%)

(4%)

(8%)

Q322

Q321

PlanetArt

64

72

(12%)

(19%)

(14%)

(21%)

Avanquest

26

23

13%

7%

13%

7%

myDevices

1

1

45%

36%

45%

36%

Total

91

96

(5%)

(12%)

(7%)

(14%)

Source: Claranova

In Q322, PlanetArt revenue contracted 12% y-o-y on a reported basis (19% in constant currency) and 21% on a constant currency, organic basis. For 9M22, the division reported a 5% decline, or a 12% decline on a constant currency, organic basis. The business continues to test different marketing channels, with the aim of keeping the cost of customer acquisition at a similar level to what it was before Apple introduced its App Tracking Transparency (ATT) policy. The business is also working with Facebook as it trials new algorithms. PlanetArt’s US activities are less reliant on Facebook (which was heavily impacted by the ATT policy) and revenue generated from its US websites saw double-digit growth y-o-y. The company expects a return to growth for the division in Q422. Avanquest saw a 13% increase in revenue y-o-y (7% constant currency organic) and recurring revenue increased to 63% of revenue (Q321: 60%). In April the company announced the planned acquisition of German software company pdfforge. pdfforge’s PDFCreator is used by businesses to create pdf documents. pdfforge also sells Soda PDF as PDF Architect for pdf editing. Claranova is paying €19m upfront and a further €5.5m one year after the completion date, all in cash. The company has not disclosed any financial details. myDevices reported 45% y-o-y revenue growth, from €0.8m to €1.2m, helped by growth in new corporate subscribers of 167 q-o-q. Annual recurring revenue reached €2.2m by end of March (+87% y-o-y constant currency).

Review of H122 results

We summarise H122 results in Exhibit 2 and divisional performance in Exhibit 3. The company reported H122 revenues in February and we discussed performance by division in detail then (Gradual return to growth). Although PlanetArt saw a 3% decline in reported revenue year-on-year, the division modified its marketing spend and this helped contain the margin decline to only 0.7pp. The company continues to trial different marketing channels to ascertain which methods are best able to scale at a reasonable cost. Growth in Avanquest revenue helped margin expansion of 3.1pp y-o-y to 14.7%. Recurring revenue was 60% in H122, up from 58% for FY21. Its three main products showed growth above the divisional average: SodaPDF +33%, Adaware +38% and inPixio +26%. myDevices has seen volumes pick up again now that partners are able to access facilities to set up IoT systems. The business signed a global partnership with Sodexo in November 2021, which will enable Sodexo to provide the wide variety of myDevices IoT solutions to its end-customers. In H121, the division cut costs due to the pandemic; these have reverted to more normal levels, resulting in a wider EBITDA loss. Overall, the group reported a 1% increase in revenue y-o-y and flat EBITDA.

Exhibit 2: H122 results highlights

€m

H121

H122

y-o-y

Revenues

277.8

280.5

1.0%

EBITDA

24.9

25.2

0.9%

Lease payments

(1.8)

(2.0)

Adjusted EBITDA (pre-IFRS 16)

23.1

23.1

-0.1%

D&A

(3.6)

(3.4)

Normalised EBIT

21.3

21.8

2.3%

Share-based payments

0.0

(0.4)

Exceptional items

(3.3)

0.3

Acquired amortisation

(0.5)

(1.6)

Reported EBIT

17.5

20.2

15.0%

Net finance cost

(3.5)

(10.5)

Reported PBT

14.0

9.7

-30.9%

Tax

(3.5)

(5.4)

Profit after tax

10.5

4.3

-59.2%

MI

(2.0)

(1.3)

Net income after MI

8.5

3.0

-64.9%

Net cash

46.7

1.8

-96.1%

Source: Claranova

Exhibit 3: Divisional performance

€m

Revenues

H121

H122

y-o-y

y-o-y constant currency (cc)

y-o-y organic

y-o-y organic, cc

PlanetArt

233.7

227.0

(3%)

(6%)

(7%)

(10%)

Avanquest

41.9

51.2

22%

17%

22%

17%

myDevices

2.2

2.3

5%

3%

5%

3%

Total

277.8

280.5

1%

(2%)

(3%)

(6%)

EBITDA (pre-IFRS 16)

EBITDA margin

H121

H122

H121

H122

PlanetArt

19.3

17.2

8.3%

7.6%

Avanquest

4.8

7.5

11.5%

14.7%

myDevices

(1.0)

(1.6)

N/M

N/M

Total

23.1

23.1

8.3%

8.2%

Source: Claranova

Net finance costs of €10.5m include a one-off loss of €4.1m on the demerger of LastCard (this was linked to the Avanquest minority interest buyout); Claranova now owns 35.9% of LastCard so now reports it as an associate. The company increased debt by €85m over the half, including:

■

the €50m convertible bond issued in August 2021;

■

the promissory notes worth $27.7m/€23.6m issued to the Avanquest minority shareholders in October 2021; and

■

an $11m/€9.7m loan taken out by PlanetArt to fund the acquisition of I See Me! In July 2021.

This higher level of debt has resulted in higher interest expense during H122 and ongoing. The company reported a tax charge of €5.4m, or 56% of PBT. This resulted in net income of €4.3m or €3.0m after the minority interest deduction of €1.3m. Net cash at year-end reduced to €1.8m from €25.3m at the end of FY21, with gross cash of €152.0m. We note that in H122 Claranova paid €47.7m in cash for the minority interests in Avanquest and €12.6m to acquire I See Me!. Since the end of H122, it has paid down €8.3m of the promissory notes and €12.8m for the first payment to the PlanetArt minority shareholder (see Increasing stake in PlanetArt for further explanation).

Exposure to Ukraine/Russia war

The company noted that the Avanquest business has some sub-contracted developers and customer support agents located in Ukraine. It has provided transport to help them move from the east to the west of the country, opened an office in Krakow for those who want to relocate there and helped others move to alternative safe countries. It is no longer processing any transactions from Russia or Belarus, which were not material prior to the conflict. Management does not expect this to have a material impact on the division’s performance.

Outlook and changes to forecasts

For several years, the company has had the aspiration to achieve revenue of €700m by FY23 through a combination of organic growth and acquisition, and to reach an EBITDA margin (pre-IFRS 16) of 10%. The slowdown in PlanetArt caused by several factors (post-COVID decline in online activity, supply chain challenges at Christmas, higher input prices and the Apple iOS App Tracking Transparency policy) means that it will be difficult to achieve this target. The company has therefore pushed the target out by one year to FY24. It is still aiming to reach the EBITDA margin target for FY23.

We have revised our forecasts to reflect slower growth in PlanetArt and consequently lower EBITDA in FY22. We factor in the pdfforge acquisition in Q422. Overall, our FY22 revenue forecast declines by 5.5% and FY23 by 6.3%. Our adjusted EBITDA margin reduces from 7.8% to 7.1% in FY22 and increases from 8.2% to 8.4% in FY23 reflecting the increased proportion of business from Avanquest.

Factoring in higher finance costs and tax in FY22, our normalised diluted EPS forecast reduces by 22.7%. In FY23, our forecast reduces by 7.9%. Factoring in the cost of acquiring I See Me! (the first time the amount has been disclosed) in H122, pdfforge in Q422 and higher cash interest and tax paid, we increase our end-FY22 net debt forecast from €12.4m to €57.2m and we forecast net debt of €38.9m by the end of FY23 (from €14.5m net cash).

Exhibit 4: Changes to forecasts

€m

FY22e

FY23e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Revenues

502.1

474.7

(5.5%)

0.6%

566.6

530.6

(6.3%)

11.8%

EBITDA

42.6

37.6

(11.7%)

(0.5%)

50.0

48.5

(3.0%)

28.9%

EBITDA margin

8.5%

7.9%

(0.6%)

(0.1%)

8.8%

9.1%

0.3%

1.2%

EBITDA - pre IFRS 16

39.0

33.6

(13.9%)

(1.8%)

46.4

44.5

(4.1%)

32.5%

EBITDA margin - pre IFRS 16

7.8%

7.1%

(0.7%)

(0.2%)

8.2%

8.4%

0.2%

1.3%

Normalised operating profit

37.1

32.1

(13.5%)

(0.6%)

44.6

43.1

(3.3%)

34.2%

Normalised operating margin

7.4%

6.8%

(0.6%)

(0.1%)

7.9%

8.1%

0.3%

1.4%

Reported operating profit

34.0

28.9

(15.0%)

16.6%

41.5

40.0

(3.6%)

38.3%

Reported operating margin

6.8%

6.1%

(0.7%)

0.8%

7.3%

7.5%

0.2%

1.4%

Normalised PBT

31.3

23.6

(24.8%)

(7.6%)

37.6

34.6

(8.1%)

46.7%

Reported PBT

28.2

16.3

(42.4%)

(9.7%)

34.5

31.5

(8.8%)

93.5%

Normalised net income

22.5

17.4

(22.7%)

9.6%

29.0

26.7

(7.8%)

53.9%

Reported net income

20.1

8.6

(57.3%)

(17.7%)

26.6

24.3

(8.5%)

183.9%

Normalised basic EPS (€)

0.50

0.39

(22.7%)

(4.1%)

0.63

0.58

(7.9%)

51.3%

Normalised diluted EPS (€)

0.49

0.38

(22.7%)

(4.0%)

0.63

0.58

(7.9%)

51.3%

Reported basic EPS (€)

0.45

0.19

(57.3%)

(28.0%)

0.58

0.53

(8.6%)

179.1%

Net debt/(cash)

12.4

57.2

363.0%

(326.1%)

(14.5)

38.9

(369.0%)

(31.9%)

Divisional revenues

PlanetArt

393.7

366.9

(6.8%)

(3.5%)

441.9

400.2

(9.4%)

9.1%

Avanquest

103.3

103.0

(0.2%)

17.4%

118.2

123.9

4.8%

20.3%

myDevices

5.2

4.8

(7.8%)

23.5%

6.5

6.5

0.0%

36.7%

Total

502.1

474.7

(5.5%)

0.6%

566.6

530.6

(6.3%)

11.8%

Divisional EBITDA

PlanetArt

27.0

21.7

(19.7%)

(16.6%)

31.1

28.2

(9.3%)

30.1%

Avanquest

15.4

15.4

0.5%

41.7%

18.5

19.5

5.4%

26.3%

myDevices

(3.3)

(3.5)

5.9%

31.0%

(3.2)

(3.2)

0.0%

(9.5%)

Total EBITDA - pre IFRS 16

39.0

33.6

(13.9%)

(1.8%)

46.4

44.5

(4.1%)

32.5%

Source: Edison Investment Research

Exhibit 5: Financial Summary

€'m

2017

2018

2019

2020

2021

2022e

2023e

30-June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

130.2

161.5

262.3

409.1

471.9

474.7

530.6

EBITDA

 

 

(5.0)

3.9

16.0

20.6

37.8

37.6

48.5

Company adjusted EBITDA

 

 

(5.0)

3.9

16.0

17.4

34.2

33.6

44.5

Normalised operating profit

 

 

(5.8)

3.4

15.5

15.8

32.3

32.1

43.1

Amortisation of acquired intangibles

0.0

0.0

(1.5)

(2.4)

(3.1)

(3.1)

(3.1)

Exceptionals

0.4

(2.4)

(2.9)

(5.6)

(4.4)

0.3

0.0

Share-based payments

(4.8)

(7.1)

0.3

0.0

0.0

(0.4)

0.0

Reported operating profit

(10.1)

(6.1)

11.4

7.8

24.8

28.9

40.0

Net Interest

(0.9)

(0.3)

(3.5)

(4.5)

(6.8)

(8.6)

(8.5)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

(45.6)

0.0

0.0

(4.1)

0.0

Profit Before Tax (norm)

 

 

(6.6)

3.1

12.0

11.3

25.5

23.6

34.6

Profit Before Tax (reported)

 

 

(11.0)

(6.4)

(37.7)

3.3

18.0

16.3

31.5

Reported tax

(0.4)

(1.8)

(3.7)

(2.1)

(3.8)

(6.9)

(7.2)

Profit After Tax (norm)

(7.0)

2.4

9.2

8.7

19.6

18.1

26.6

Profit After Tax (reported)

(11.4)

(8.2)

(41.4)

1.2

14.2

9.3

24.2

Minority interests

0.3

0.2

0.6

(0.7)

(3.8)

(0.8)

0.1

Discontinued operations

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

(6.7)

2.6

9.8

8.0

15.8

17.4

26.7

Net income (reported)

(11.0)

(7.9)

(40.8)

0.5

10.4

8.6

24.3

Basic ave. number of shares outstanding (m)

38

39

39

39

39

45

46

EPS - basic normalised (€)

 

 

(0.18)

0.07

0.25

0.20

0.40

0.39

0.58

EPS - diluted normalised (€)

 

 

(0.18)

0.06

0.25

0.20

0.40

0.38

0.58

EPS - basic reported (€)

 

 

(0.29)

(0.20)

(1.04)

0.01

0.26

0.19

0.53

Dividend (€)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

10.9

24.0

62.4

56.0

15.4

0.6

11.8

EBITDA Margin (%)

-3.8

2.4

6.1

5.0

8.0

7.9

9.1

Company adjusted EBITDA margin (%)

-3.8

2.4

6.1

4.3

7.2

7.1

8.4

Normalised Operating Margin

-4.4

2.1

5.9

3.9

6.8

6.8

8.1

BALANCE SHEET

Fixed Assets

 

 

2.0

1.3

75.1

93.7

96.4

126.5

129.1

Intangible Assets

0.9

0.5

69.9

70.5

77.5

107.4

109.8

Tangible Assets

0.3

0.2

1.4

15.7

12.2

12.4

12.6

Investments & other

0.7

0.6

3.8

7.5

6.7

6.7

6.7

Current Assets

 

 

28.1

79.1

100.9

116.3

128.4

141.6

162.8

Stocks

3.7

3.7

4.8

14.4

16.1

16.2

18.1

Debtors

4.3

4.9

11.6

9.9

9.2

9.3

10.3

Cash & cash equivalents

17.1

65.7

75.4

82.8

90.4

103.4

121.7

Other

2.9

4.8

9.1

9.2

12.7

12.7

12.7

Current Liabilities

 

 

(28.1)

(37.2)

(60.5)

(74.6)

(75.4)

(79.4)

(86.1)

Creditors

(26.6)

(35.4)

(54.8)

(64.3)

(62.5)

(66.5)

(73.2)

Tax and social security

(0.3)

(1.7)

(3.0)

(1.2)

(2.0)

(2.0)

(2.0)

Short term borrowings

(1.1)

(0.1)

(2.7)

(6.1)

(7.7)

(7.7)

(7.7)

Other

0.0

0.0

0.0

(3.0)

(3.2)

(3.2)

(3.2)

Long Term Liabilities

 

 

(0.7)

(29.0)

(52.0)

(73.1)

(66.3)

(161.8)

(161.8)

Long term borrowings

0.0

(28.1)

(49.1)

(62.8)

(57.4)

(152.9)

(152.9)

Other long term liabilities

(0.7)

(0.9)

(2.9)

(10.3)

(8.9)

(8.9)

(8.9)

Net Assets

 

 

1.3

14.2

63.6

62.3

83.1

26.9

44.0

Minority interests

(0.1)

(1.8)

(11.0)

(11.7)

(16.2)

6.9

14.1

Shareholders' equity

 

 

1.2

12.5

52.6

50.6

66.9

33.8

58.1

CASH FLOW

Op Cash Flow before WC and tax

(5.0)

3.9

16.0

20.6

37.8

37.6

48.5

Working capital

6.8

7.9

(4.1)

22.5

(4.4)

3.8

3.8

Exceptional & other

(2.2)

(5.7)

(5.2)

(6.3)

(8.9)

(2.5)

0.0

Tax

(0.0)

(1.2)

(3.8)

(6.8)

(5.1)

(6.9)

(7.2)

Net operating cash flow

 

 

(0.4)

5.0

3.0

30.0

19.4

32.0

45.1

Capex

(0.2)

(0.1)

(2.5)

(1.2)

(3.8)

(2.0)

(2.0)

Acquisitions/disposals

3.6

14.2

(13.3)

(31.9)

(3.8)

(94.7)

(12.7)

Net interest

(0.0)

(0.3)

0.0

(0.5)

(0.7)

(5.8)

(8.5)

Equity financing

1.9

2.0

(1.4)

0.0

2.4

13.9

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

0.1

(0.6)

0.0

0.4

(2.6)

0.4

(3.6)

Net Cash Flow

5.0

20.1

(14.2)

(3.2)

11.1

(56.1)

18.3

Opening net debt/(cash)

 

 

(9.8)

(16.0)

(37.5)

(23.6)

(13.9)

(25.3)

57.2

FX

(0.6)

0.4

0.3

(0.8)

1.8

(2.8)

0.0

Other non-cash movements

1.8

1.1

0.0

(5.7)

(1.4)

(23.6)

0.0

Closing net debt/(cash)

 

 

(16.0)

(37.5)

(23.6)

(13.9)

(25.3)

57.2

38.9

Source: Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Claranova and prepared and issued by Edison, in consideration of a fee payable by Claranova. 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 2022 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

General disclaimer and copyright

This report has been commissioned by Claranova and prepared and issued by Edison, in consideration of a fee payable by Claranova. 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 2022 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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