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Claranova — PlanetArt back on a growth path

Claranova (PAR: CLA)

Last close As at 20/12/2024

EUR1.17

▲ −0.10 (−8.03%)

Market capitalisation

EUR67m

More on this equity

Research: TMT

Claranova — PlanetArt back on a growth path

Claranova reported revenue growth of 12% for H123, with a return to underlying revenue growth in PlanetArt, the group’s largest business. Adjusted EBITDA was affected by the inflationary environment and increased investment in marketing. Management expects revenue growth of c 10% and adjusted EBITDA growth of 25–30% for FY23. We have revised our FY23 forecasts to reflect the lower end of EBITDA guidance and factor in higher finance costs for both years.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

Claranova

PlanetArt back on a growth path

H123 results

Software and comp services

3 April 2023

Price

€2.09

Market cap

€95m

$1.085/€

Net debt (€m) at end H123

64.8

Shares in issue

45.5m

Free float

84%

Code

CLA

Primary exchange

Euronext Paris

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

0.3

(23.9)

(49.9)

Rel (local)

0.0

(32.3)

(53.7)

52-week high/low

€4.48

€1.87

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, France, and it has operations in Europe, the United States and Canada.

Next events

Q323 revenue update

10 May

Analyst

Katherine Thompson

+44 (0)20 3077 5700

Claranova is a research client of Edison Investment Research Limited

Claranova reported revenue growth of 12% for H123, with a return to underlying revenue growth in PlanetArt, the group’s largest business. Adjusted EBITDA was affected by the inflationary environment and increased investment in marketing. Management expects revenue growth of c 10% and adjusted EBITDA growth of 25–30% for FY23. We have revised our FY23 forecasts to reflect the lower end of EBITDA guidance and factor in higher finance costs for both years.

Year end

Revenue
(€m)

EBITDA*
(€m)

PBT**
(€m)

Diluted EPS**
(€)

DPS
(€)

P/E
(x)

06/21

470.6

32.9

24.2

0.37

0

5.6

06/22

473.7

25.5

7.2

0.11

0

19.5

06/23e

526.5

31.8

9.8

0.17

0

12.7

06/24e

552.6

43.8

22.3

0.34

0

6.2

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

Inflation offsets underlying revenue growth in H123

For H123, Claranova reported 1% growth in revenue on an organic, constant currency basis, with a 1% contribution from acquisitions and a 10% exchange rate benefit resulting in reported growth of 12%. PlanetArt returned to underlying growth for the first time since Q321 as the business diversified its customer acquisition channels to counter the effects of Apple’s privacy policy. Cost inflation (labour, raw materials and transport) and increased marketing investment to reduce the effects of seasonality resulted in a 22% decline in adjusted EBITDA to €13m (5.5% margin).

Profitability expected to improve in H223

With the expectation that group EBITDA profitability will improve in H223 as a result of the increased marketing spend in H123 and a reduction in FreePrints customer acquisition costs (on a per customer basis), management expects FY23 revenue growth of c 10% and adjusted EBITDA growth of 25–30%. We have revised our EBITDA forecasts to reflect relatively flat profitability in PlanetArt, strong growth for Avanquest and a smaller loss for myDevices, resulting in a 7.6% cut to our FY23 forecast. We have increased our FY24 EBITDA forecasts reflecting the improving profitability trend expected from H223. Management believes it can reach its FY24 targets (revenue €700m, EBITDA margin 10%) through acquisitions it has already identified and is currently negotiating, subject to obtaining financing.

Valuation: Sustained profitable growth is key

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, we maintain our €7.4 per share valuation. In our view, consistent growth in revenues and margins towards Claranova’s FY24 targets will be fundamental to reducing the discount to peers. In the near term, sustained growth in PlanetArt (while balancing profitability) will be the key trigger.

Review of H123 results

Exhibit 1: H123 results highlights

€m

H123

H122

y-o-y

Revenues

314.6

279.8

12.4%

EBITDA

19.5

24.5

-20.4%

Lease payments (IFRS 16)

(2.1)

(2.2)

Adjusted EBITDA

17.4

22.3

-21.9%

D&A

(3.0)

(3.4)

Normalised EBIT

16.5

21.1

-22.0%

Share-based payments

(0.5)

(0.4)

Exceptional items

(2.2)

0.3

Acquired amortisation

(2.2)

(1.6)

Reported EBIT

11.6

19.5

-40.5%

Net finance cost

(12.4)

(10.5)

Reported PBT

(0.8)

9.0

-109.4%

Tax

(3.6)

(5.4)

Profit after tax

(4.5)

3.6

-223.7%

Minority interest (MI)

0.6

(1.3)

Net income after MI

(3.9)

2.3

-267.0%

Net debt/(cash)

64.8

(1.8)

N/A

Source: Claranova

Claranova reported H123 revenues in February. We discuss divisional performance in more detail below. Group adjusted EBITDA (pre-IFRS 16 accounting) of €17m declined 22% y-o-y reflecting inflationary effects (labour, transport and raw material costs) and higher marketing costs. Normalised operating profit also declined 22%. Exceptional costs of €2.2m included retention bonuses in PlanetArt (€1.8m) and restructuring charges (€0.2m) and compared to an exceptional credit in the prior period. Higher amortisation of acquired intangibles, slightly higher share-based payment costs and the exceptional charges resulted in a 41% decline in reported operating profit. Net finance costs of €12.4m included a €7m charge for the amortisation of the OCEANE convertible bonds and €3.6m in borrowing costs. The company incurred a tax charge as profits could not be offset by losses in other parts of the business.

The company closed the period with net debt of €64.8m, down from €71.2m at the end of FY22. This was made up of cash of €121.2m and debt totalling €186.0m. During H123, the company generated operating cash flow of €48m (which included the seasonal working capital inflow of €37m) and spent €25m on the acquisitions of pdfforge and Scanner App.

Divisional performance

The table below summarises H123 performance at a divisional level.

Exhibit 2: Divisional half-yearly performance

Revenue (€m)

H123

H122

y-o-y

y-o-y cc

y-o-y organic

y-o-y organic, cc

PlanetArt

255

227

12%

1%

12%

1%

Avanquest

57

50

13%

6%

8%

1%

myDevices

3

2

27%

13%

27%

13%

Total

315

280

12%

2%

12%

1%

EBITDA (€m)

EBITDA margin

H123

H122

H123

H122

PlanetArt

12.7

17.2

5.0%

7.6%

Avanquest

6.3

6.7

11.1%

13.5%

myDevices

(1.6)

(1.6)

Nm

Nm

Total

17.4

22.3

5.5%

8.0%

Source: Claranova

PlanetArt customer acquisition costs moderating

PlanetArt returned to organic constant currency revenue growth for the first time since Q321. Through its efforts to diversify its customer acquisition channels since Apple’s app tracking transparency (ATT) policy was introduced in 2021, the business has now managed to halve the cost of customer acquisition from its peak and it is now back at pre-ATT levels. Customer channels now include TikTok, Instagram and YouTube, with marketing spend on Facebook now at less than a 10th of previous levels. The business was affected by inflation across most of the cost base – labour, raw materials, transport – which resulted in adjusted EBITDA declining 26% y-o-y to €12.7m. Management noted that it deliberately increased marketing investment in H123 to mitigate the effect of seasonality on the business (the web-based part of the business, which is US-centric, has a large spike in volume in Q2 of each fiscal year), focusing on FreePrints and the European side of the business, which tend to make up a greater proportion of business in H2 of each fiscal year. Management expects this to result in improved profitability in H223 compared to H222.

Avanquest integrating recent acquisitions

Avanquest saw organic constant currency revenue growth of 1% in H123, with acquisitions adding 5% and currency adding 7% to give reported revenue growth of 13%. Recurring revenue made up 62% of H123 revenue. Avanquest acquired two businesses in H123 to bolster its PDF business: pdfforge, which has a business-to-business focus, and Scanner App, which is mobile-focused. Both businesses are profitable. Management provided further detail on the revenue breakdown within Avanquest.

Exhibit 3: Avanquest product break-down

H123 revenue (€m)

H123 EBITDA margin

PDF (includes Soda pdf & recent acquisitions)

17

28%

Utilities (includes Adaware)

21

24%

Photo (includes InPixio)

5

Loss-making

Other

7

N/A

Non-core (third-party software)

7

Loss-making

Total

57

11%

Source: Claranova, Edison Investment Research

Since shifting its three main product lines (PDF, Utilities, Photo) to a SaaS business model, it believes it has reached critical mass in the first two, where it is generating EBITDA margins of 24–28%. The Photo business is currently much smaller, but management believes it is more differentiated in the market. The intention is to grow this product line organically via product development and management expects that it should ultimately be able to generate EBITDA margins similar to the other two product lines. Management noted that its third-party software distribution business is declining at c 10% per annum and is now loss-making. It intends to divest this business.

Divisional adjusted EBITDA declined 6% y-o-y, mainly due to the company increasing marketing investment in H123 to drive growth in H223 and FY24.

myDevices ARR up 36% y-o-y

myDevices grew H123 revenue 13% y-o-y on a constant currency basis and maintained an EBITDA loss of €1.6m. At the end of H123, annual recurring revenue (ARR) was €2.6m, up 36% y-o-y on a reported basis. The distribution network includes 190 partners (up from 143 a year ago) and deployments in key accounts (eg Sodexo, T-Mobile, Engie) accelerated during H123.

Outlook and changes to forecasts

The company expects to generate revenue growth of c 10% for FY23 and to grow adjusted EBITDA by 25–30% y-o-y. It expects adjusted EBITDA profitability in PlanetArt to be relatively flat year-on-year (which implies H223 adjusted EBITDA of c €4m compared to a loss of €0.9m in H222) and to grow in Avanquest. We have revised our forecasts to reflect the bottom end of the EBITDA guidance for FY23 and higher net finance costs in both years. We have revised up our EBITDA forecasts for FY24, as we expect the improving profitability trend for H223 to continue in FY24, particularly for Avanquest.

The company noted that the ORNANEs issued in June 2018 (€29.4m at the end of H123) are due to be repaid by 1 July 2023 and it expects to settle them using existing cash.

Management was previously targeting revenue of €700m and an EBITDA margin of 10% by FY24; it believes that this could still be achievable but would require several acquisitions, subject to the availability of funding. It is currently in discussions with several potential targets and noted that the pricing environment had improved as economic conditions have become tougher.

Exhibit 4: Changes to forecasts

€m

FY23e

FY23e

FY24e

FY24e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Revenues

526.5

526.5

0.0%

11.2%

552.3

552.6

0.0%

4.9%

EBITDA

38.0

36.0

(5.4%)

27.4%

43.2

48.0

11.1%

33.5%

EBITDA margin

7.2%

6.8%

(0.4%)

0.9%

7.8%

8.7%

0.9%

1.9%

EBITDA - pre IFRS 16

34.4

31.8

(7.6%)

24.5%

39.5

43.8

11.0%

38.0%

EBITDA margin - pre IFRS 16

6.5%

6.0%

(0.5%)

0.6%

7.2%

7.9%

0.8%

1.9%

Normalised operating profit

33.0

31.0

(6.2%)

31.0%

38.2

43.0

12.6%

38.9%

Normalised operating margin

6.3%

5.9%

(0.4%)

0.9%

6.9%

7.8%

0.9%

1.9%

Reported operating profit

28.5

23.8

(16.6%)

32.6%

33.5

38.3

14.3%

61.2%

Reported operating margin

5.4%

4.5%

(0.9%)

0.7%

6.1%

6.9%

0.9%

2.4%

Normalised PBT

15.5

9.8

(37.0%)

36.6%

20.7

22.3

7.5%

128.0%

Reported PBT

11.0

2.6

(76.7%)

(160.4%)

16.0

17.6

9.7%

584.6%

Normalised net income

11.9

8.2

(30.8%)

64.3%

15.8

16.8

6.0%

104.0%

Reported net income

8.4

(1.2)

(113.7%)

(89.0%)

12.2

13.2

7.8%

N/A

Normalised basic EPS (€)

0.26

0.18

(30.8%)

53.5%

0.35

0.37

6.0%

104.2%

Normalised diluted EPS (€)

0.24

0.17

(30.8%)

54.4%

0.32

0.34

6.0%

104.2%

Reported basic EPS (€)

0.18

(0.03)

(113.7%)

(89.8%)

0.27

0.29

7.8%

N/A

Net debt/(cash)

87.9

90.7

3.3%

27.4%

76.2

84.0

10.3%

(7.4%)

Net debt/EBITDA (x)

2.6

2.9

1.9

1.9

Divisional revenues

PlanetArt

400.6

400.6

0.0%

9.4%

412.3

412.3

0.0%

2.9%

Avanquest

119.8

119.8

0.0%

17.2%

133.4

133.4

0.0%

11.3%

myDevices

6.1

6.2

0.8%

18.6%

6.7

6.9

3.4%

12.4%

Total

526.5

526.5

0.0%

11.2%

552.3

552.6

0.0%

4.9%

Divisional EBITDA

PlanetArt

21.0

17.0

(19.0%)

4.4%

23.4

21.8

(6.8%)

28.2%

Avanquest

15.0

16.8

12.0%

44.3%

17.5

22.5

28.6%

33.9%

myDevices

(1.6)

(2.1)

25.5%

(15.3%)

(1.4)

(0.5)

(66.4%)

(77.1%)

Total EBITDA - pre IFRS 16

34.4

31.8

(7.6%)

24.5%

39.5

43.8

11.0%

38.0%

Source: Edison Investment Research

Exhibit 5: Financial summary

€'m

2017

2018

2019

2020

2021

2022

2023e

2024e

30-June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

130.2

161.5

262.3

409.1

470.6

473.7

526.5

552.6

EBITDA

 

 

(5.0)

3.9

16.0

20.6

36.5

28.3

36.0

48.0

Company adjusted EBITDA

 

 

(5.0)

3.9

16.0

17.4

32.9

25.5

31.8

43.8

Normalised operating profit

 

 

(5.8)

3.4

15.5

15.8

31.0

23.7

31.0

43.0

Amortisation of acquired intangibles

0.0

0.0

(1.5)

(2.4)

(3.1)

(3.8)

(4.5)

(4.7)

Exceptionals

0.4

(2.4)

(2.9)

(5.6)

(4.4)

(0.7)

(2.2)

0.0

Share-based payments

(4.8)

(7.1)

0.3

0.0

0.0

(1.2)

(0.5)

0.0

Reported operating profit

(10.1)

(6.1)

11.4

7.8

23.5

18.0

23.8

38.3

Net Interest

(0.9)

(0.3)

(3.5)

(4.5)

(6.8)

(16.5)

(21.2)

(20.8)

Joint ventures & associates (post tax)

0.0

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

(5.7)

0.0

0.0

Profit Before Tax (norm)

 

 

(6.6)

3.1

12.0

11.3

24.2

7.2

9.8

22.3

Profit Before Tax (reported)

 

 

(11.0)

(6.4)

(37.7)

3.3

16.7

(4.2)

2.6

17.6

Reported tax

(0.4)

(1.8)

(3.7)

(2.1)

(3.5)

(5.7)

(4.4)

(4.0)

Profit After Tax (norm)

(7.0)

2.4

9.2

8.7

18.6

5.5

7.5

17.1

Profit After Tax (reported)

(11.4)

(8.2)

(41.4)

1.2

13.2

(10.0)

(1.9)

13.5

Minority interests

0.3

0.2

0.6

(0.7)

(3.7)

(0.5)

0.7

(0.4)

Discontinued operations

0.0

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

14.9

5.0

8.2

16.8

Net income (reported)

(11.0)

(7.9)

(40.8)

0.5

9.5

(10.5)

(1.2)

13.2

Basic ave. number of shares outstanding (m)

38

39

39

39

39

43

46

46

EPS - basic normalised (€)

 

 

(0.18)

0.07

0.25

0.20

0.38

0.12

0.18

0.37

EPS - diluted normalised (€)

 

 

(0.18)

0.06

0.25

0.20

0.37

0.11

0.17

0.34

EPS - basic reported (€)

 

 

(0.29)

(0.20)

(1.04)

0.01

0.24

(0.25)

(0.03)

0.29

Dividend (€)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

10.9

24.0

62.4

56.0

15.0

0.7

11.2

4.9

EBITDA Margin (%)

-3.8

2.4

6.1

5.0

7.7

6.0

6.8

8.7

Company adjusted EBITDA margin (%)

-3.8

2.4

6.1

4.3

7.0

5.4

6.0

7.9

Normalised Operating Margin

-4.4

2.1

5.9

3.9

6.6

5.0

5.9

7.8

BALANCE SHEET

Fixed Assets

 

 

2.0

1.3

75.1

93.7

96.6

123.3

147.9

143.8

Intangible Assets

0.9

0.5

69.9

70.5

77.5

96.6

120.6

115.9

Tangible Assets

0.3

0.2

1.4

15.7

12.2

18.2

18.8

19.4

Investments & other

0.7

0.6

3.8

7.5

6.9

8.5

8.5

8.5

Current Assets

 

 

28.1

79.1

100.9

116.3

128.4

146.7

154.6

147.5

Stocks

3.7

3.7

4.8

14.4

16.1

22.0

24.5

25.7

Debtors

4.3

4.9

11.6

9.9

9.2

8.3

9.2

9.7

Cash & cash equivalents

17.1

65.7

75.4

82.8

90.4

100.3

104.8

96.1

Other

2.9

4.8

9.1

9.2

12.7

16.1

16.1

16.1

Current Liabilities

 

 

(28.1)

(37.2)

(60.5)

(74.6)

(76.7)

(106.0)

(114.1)

(116.6)

Creditors

(26.6)

(35.4)

(54.8)

(64.3)

(63.8)

(78.1)

(86.2)

(88.7)

Tax and social security

(0.3)

(1.7)

(3.0)

(1.2)

(2.0)

(1.9)

(1.9)

(1.9)

Short term borrowings

(1.1)

(0.1)

(2.7)

(6.1)

(7.7)

(22.6)

(22.6)

(22.6)

Other

0.0

0.0

0.0

(3.0)

(3.2)

(3.4)

(3.4)

(3.4)

Long Term Liabilities

 

 

(0.7)

(29.0)

(52.0)

(73.1)

(66.1)

(162.3)

(186.3)

(170.9)

Long term borrowings

0.0

(28.1)

(49.1)

(62.8)

(57.4)

(148.9)

(172.9)

(157.5)

Other long term liabilities

(0.7)

(0.9)

(2.9)

(10.3)

(8.7)

(13.4)

(13.4)

(13.4)

Net Assets

 

 

1.3

14.2

63.6

62.3

82.2

1.7

2.0

3.9

Minority interests

(0.1)

(1.8)

(11.0)

(11.7)

(16.2)

(3.3)

1.2

7.0

Shareholders' equity

 

 

1.2

12.5

52.6

50.6

66.0

(1.6)

3.2

10.9

CASH FLOW

Op Cash Flow before WC and tax

(5.0)

3.9

16.0

20.6

36.5

28.3

36.0

48.0

Working capital

6.8

7.9

(4.1)

22.5

(3.1)

3.2

4.7

0.8

Exceptional & other

(2.2)

(5.7)

(5.2)

(6.3)

(8.9)

(4.2)

(2.2)

0.0

Tax

(0.0)

(1.2)

(3.8)

(6.8)

(5.1)

(9.4)

(4.4)

(4.0)

Net operating cash flow

 

 

(0.4)

5.0

3.0

30.0

19.4

17.9

34.1

44.8

Capex

(0.2)

(0.1)

(2.5)

(1.2)

(3.8)

(2.2)

(2.0)

(2.0)

Acquisitions/disposals

3.6

14.2

(13.3)

(31.9)

(3.8)

(73.3)

(26.8)

(11.7)

Net interest

(0.0)

(0.3)

0.0

(0.5)

(0.7)

(1.7)

(7.2)

(6.8)

Equity financing

1.9

2.0

(1.4)

0.0

2.4

13.3

0.0

0.0

Dividends

0.0

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)

1.9

(3.6)

(3.6)

Net Cash Flow

5.0

20.1

(14.2)

(3.2)

11.0

(44.1)

(5.5)

20.7

Opening net debt/(cash)

 

 

(9.8)

(16.0)

(37.5)

(23.6)

(13.9)

(25.3)

71.2

90.7

FX

(0.6)

0.4

0.3

(0.8)

1.8

2.1

0.0

0.0

Other non-cash movements

1.8

1.1

0.0

(5.7)

(1.3)

(54.5)

(14.0)

(14.0)

Closing net debt/(cash)

 

 

(16.0)

(37.5)

(23.6)

(13.9)

(25.3)

71.2

90.7

84.0

Source: Claranova, 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 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

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 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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