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Rank Group Trading and liquidity update for Q3 broadly in Company Events line with expectations 22-Apr Domino's Pizza Group; Q121 Trading Update ; Trading Update SEGRO A busy start to 2021 ; Q121 Trading Update 27-Apr HSBC; Q121 Results Taylor Wimpey Trading in line with expectations, FY Whitbread; FY21 Results guidance re-iterated 28-Apr Kindred Group; Q121 Results ; Q121 IMS Ibstock Encouraging start to year, 2-3% upgrades Persimmon; Q121 Trading Update Sainsburys; FY21 Results Keywords Studios Acquisition of Climax Studios Limited 29-Apr Howden Joinery; Q121 Trading Update Lufthansa; Q121 Results Domino’s Pizza Group – Strong Q1 helped by lockdown NatWest Group; Q121 Results

Irish Banks Earth Day sees progress on lower emissions targets Economic View Is big government only temporary?

Economic Events Ireland 22-Apr PPI Mar21 Wholesale Price Index Mar21 28-Apr Retail Sales Mar21

United Kingdom 22-Apr CBI Ind Trends Orders Apr21 23-Apr Retails Sales Mar21

United States

Europe

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Rank Group Trading and liquidity update for Q3 broadly in line with expectations

Rank has this morning released a liquidity and trading update for the quarter to March 31st. Recommendation: Buy On trading, Q3 LFL NGR declined by 76% (total NGR -72%), with Venues -98% YoY and Closing Price: £1.90 Digital -3% YoY. All UK venues were closed in Q3, while in Spain, 9 venues were open by the end of the quarter and were noted as experiencing strong customer demand but under strict Gavin Kelleher +353-1-641 0423 capacity restrictions. Digital grew QoQ by 3% on a LFL basis and by 4% including Stride. In [email protected] Q3, Grosvenor Digital NGR declined by -2% versus Q2, with Mecca +4%, Stride +7% and Yo +10%. YoY growth is expected to return in Digital in Q1 21/22.

On liquidity, the group ended the quarter with cash and available facilities of £89.8m (Q2: £128.3m). In terms of moving parts in the quarter, Rank received a refund of £13.4m following the Supreme Court decision on the treatment of free gaming chips, while the amount of deferred rent has reduced to £13.9m from £17.3m at 31st December. Since the quarter end, the sale of its Blankenberge casino in Belgium has completed, and Rank has received the £25m of sale proceeds. The group expects to make a scheduled loan amortisation payment of £19.7m on May 31st. Based on the current timetable for venues reopening, it expects to continue to meet its banking covenants (minimum liquidity of £50m). Given the ongoing closure of its venues business, the Q3 performance should come as no surprise. The cash burn the group experienced is in line with expectations. With the majority of its venues due to reopen on May 17 (still waiting on an exact timeline for & Scotland), the cash burn will reduce significantly during Q4. We expect year-end cash and available resources of £70-75m. The Digital business has started to see improvements; and management is confident of a return to YoY growth in Q1 FY22. There are no doubts that Rank continues to face headwinds but with the reopening of its venues on the horizon, we believe it is well placed to benefit from a strong recovery in UK leisure over the next 12 months.

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SEGRO A busy start to 2021

SEGRO (SGRO:LN) released a trading update this morning covering performance during Q1 Recommendation: Hold 2021. The update notes that “2021 has started well” for SGRO with continued strong Closing Price: £9.94 occupier demand and portfolio growth. Developments are the focus of the update, with SGRO noting considerable progress in de-risking its pipeline and highly accretive yields on cost Colm Lauder +353-1-641 6042 being achieved. [email protected]

Despite the impact of lockdowns in most of its focus markets, SGRO managed to sign £18m

of new headline rent during Q1 by capturing reversionary potential on the existing portfolio, alongside securing new pre-lets on development. Impressively, new headline rents on review and renewal were an average of 12% higher than the previous passing rent as ongoing asset management continued to capture reversionary potential.

The rent roll will be further supplemented by developments with almost 12m sq.ft of space under construction, equating to potential future headline rent of £67m of which 71% has been secured through pre-lets. Once complete and fully let, the pipeline is expected to generate a yield on total development cost of ~6.5% for SGRO, well above equivalent yields in the dry asset investment market.

Overall, this was another strong update from SGRO as it continues to capture rental growth in a sector benefiting from structural tailwinds. This should support further earnings, and dividend, growth in FY21.

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Taylor Wimpey Trading in line with expectations, FY guidance re-iterated

Taylor Wimpey issued a trading update this morning for the period from the 1st of January to Recommendation: Buy date. The UK housing market has remained healthy and Taylor Wimpey’s net private sales Closing Price: £1.83 rate ytd has been particularly strong at 1.0 (0.9 in 2020). The sales rate has increased since the update in March when the sales rate stood at 0.89. The orderbook now stands at £2.8bn Shane Carberry +353-1-6419118 (+5% yoy) or 10,995 homes (+1% yoy) which is the same level as it was on the 21st of [email protected] February. The strength of demand in the market is in line with our SiteWorks propriety data (see here). As per the March update, management highlight that it has achieved “growth” in

sales prices in 2021 although no quantum is given. There is no specific mention of additional cost inflation in the statement which suggests it is still manageable and likely being offset

against the buoyant HPI backdrop. Management had guided in March for overall build cost This document is intended for the sole use of Goodbody Investment Banking and its affiliates inflation in 2021 to be “marginally lower” than in 2020 (c.2-3%). Overall trading is described as “in line with expectations” and Taylor Wimpey remains on track to deliver against the guidance given with full year results in early March.

Overall a solid update from Taylor Wimpey. The UK housing market remains strong and management has re-iterated FY guidance. We continue to forecast volumes at 86% of 2019 levels (guiding 85-90%) and an operating margin (incl JVs) of 18.8% (guidance 18.5-19%). This puts our FY21 operating profit (incl JVs) at £761m with consensus at £769m.

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Ibstock Encouraging start to year, 2-3% upgrades

Ibstock has released a trading update indicating the performance is “modestly ahead of Recommendation: Buy expectations”. Sales volumes in Clay were ahead of internal expectations, while concrete Closing Price: £2.21 volumes were in line. Management reported with the FY results that clay volumes had been trending at c.85-90% of prior year activity levels which appears to have moved above 90% David O'Brien +353-1-641 9230 towards the end of the quarter. Demand is described as robust across both new residential david.a.o'[email protected] and rmi markets.

With the buoyant backdrop management has decided to recommence the investment in the Atlas manufacturing site. This is a £60m investment from 2021-2023 which will add a net 75m bricks and generate £12m of incremental EBITDA in FY25. Management has also flagged the potential for additional organic investment opportunities which we expect some more colour on during the call at 8.30am.

We will upgrade our forecasts by 2-3% reflecting the good performance in Q121 which still leaves the risk bias to forecasts to the upside given the momentum in the market. Overall, this is an encouraging update and we remain positive on the stock.

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Keywords Studios Acquisition of Climax Studios Limited

Keywords Studios has announced this morning the acquisition of Climax Studios, a UK based Recommendation: Buy provider of game development services to the video games industry, for a total consideration Closing Price: £28.80 of up to £43m. This will include an upfront payment of £20.2m in cash, with the equivalent of £6.8m being paid in shares. The residual £16m will be paid out depending on Climax Patrick O'Donnell +353-1-641 6013 hitting certain growth targets over the next 12 months. Climax earned £4.3m in adjusted [email protected] EBITDA in 2020, suggesting a multiple of 10x.

Based in the UK, Climax is a games development business with 109 employees. It has achieved impressive growth over the past number of years, working with some of the largest

publishers including Sony, Microsoft, EA and 2K. Their product offering includes full game This document is intended for the sole use of Goodbody Investment Banking and its affiliates development, co-development, porting and technical consulting services. Recently. It has worked on several high-profile titles, namely Silent Hill: Shattered Memories, Crackdown 3 and Returnal PS5. Keywords notes that the deal will bring additional scale to its Games Development business line, furthering the objective to become the “go-to” technical and creative platform for global publishers.

This deal is in line with other recent Keywords acquisitions and maintains momentum into the second quarter of the year. It confirms management’s focus on bolstering Games Development, Art and Marketing and we expect to see more deals like this in the coming months.

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Domino’s Pizza Group – Strong Q1 helped by lockdown

Domino's reported Q121 results this morning for the 13-week period to the 28th of March. Recommendation: Hold Like for like sales growth in the quarter was +18.5% excluding split stores, and total Closing Price: £3.67 systems sales growth was +18.7% to £371.3m. The statement highlights that delivery was "particularly good" with order count growth of +6.8%. This more than offset the decline in Paul Ruddy +353 1 641 6024 collection, which has now recovered to 65% of 2019 levels. We currently forecast 15.5% LFL [email protected] (ex-splits) in H121, but the comparatives become more difficult from Q2 onwards.

Today's update is broadly in line with our expectations, we had flagged that Q1 LFL's would be high coming into the update given an easy comparative and the pricing benefit from the VAT cut from 20% to 5%. Furthermore, the dine-in restaurant sector was closed. We upgraded Domino’s to HOLD recently owing to the improved cash generation of the business. Domino’s currently trades on 15.2x current year EV/EBITDA and 14.4x FY22 (IAS 17). Although Q121 LFL’s were strong, the group will start to face more difficult comparatives, particularly in H2. Owing to the increasing competition from the delivery aggregators and the margin risk from a potential franchisee agreement, we were not inclined to increase our valuation multiple when we last updated in March. We value the group on 13x FY22 EBITDA (IAS 17) and blend with a DCF which yields a PT of 330p.

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Irish Banks Earth Day sees progress on lower emissions targets

Around 40 global leaders will take part today in a climate summit convened by the US Eamonn Hughes President, with the online event kicking off on the 51st International Earth Day. The FT +353-1-641 9442 reports that the US will use the summit to pledge to reduce US emissions by as much as [email protected] 50% by 2030, an acceleration of the prior Obama administration’s pledge to cut emissions by Barry Egan 26-28% by 2025. Ahead of the summit, the Biden administration has launched several new +353-1-641 6059 climate policies including efforts to integrate climate-related risk into the financial system. [email protected]

Europe hasn’t been idle either ahead of the summit (nothing like a deadline!!). Firstly, EU

governments yesterday agreed the region’s landmark climate law, which commits the EU to

a legally binding goal of a 55% reduction in emissions by 2030 and net zero by 2050. In addition, the European Commission yesterday published its new Taxonomy rules, launched by Ireland’s European Commissioner, Mairead McGuinness. The taxonomy is a classification system that identifies environmentally sustainable activities as an incentive to shift economic activity towards sustainability. It creates a green list of investments that cover sectors responsible for c.80% of direct greenhouse gas emissions in Europe, however, it leaves out agriculture, nuclear energy and natural gas until later in the year given opposition from a number of countries struggling to make the transition. The Commission also called for a significant expansion of climate reporting requirements to cover some 50,000 companies in the continent. The taxonomy reporting rules will apply to all listed and non-listed companies with at least 250 employees and a balance sheet of €20m or net turnover of €40m. The EU has suggested that around €350bn in new investments will be required each year to meet the 2030 climate goals.

Bringing it closer to home, the new Climate Bill had its first Irish parliament (Dail) debate yesterday. The bill, if enacted, will commit a legal obligation on Ireland to achieve net zero emissions by 2050 with a 2030 target of a 51% reduction. Also, An Post (post office network) published its sustainability report to coincide with Earth Day in which they brought forward its target of achieving net zero emissions to 2030 and noted it is on track to halve them by 2025.

So, plenty of activity on the sustainability front in the past 24 hours and we are likely to see additional commitments arising from the global summit. Estimates put Ireland’s low carbon infrastructure transition cost at €50bn to 2030. Also, the residential housing stock will have to be upgraded, a potential €12-18bn retrofitting cost over 10 years. Incentives will be needed, but the main Irish banks

are well positioned on any debt requirements. The main banks have also committed This document is intended for the sole use of Goodbody Investment Banking and its affiliates to be net zero by 2030. AIB also recently set a target of 70% of new lending to be green by 2030 (the flow), but also set a net zero ambition in its customer portfolio lending (the stock) by 2040 (and 2050 for the agri book). BOI has also committed to adopting science-based targets on emissions from its loan book as well.

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Economic View Is big government only temporary?

Aggressive counter-cyclical fiscal policy has had its day in the sun since the pandemic began, Dermot O’Leary with governments all over the world embarking on large deficit-financed spending +353-1-641 9167 [email protected] programmes. In that, Ireland has been among the most aggressive in the EU. With the pandemic still raging, governments have not yet moved to focus on how these extraordinary spending increases will be reversed, but that will come. Separating the temporary from the permanent will thus become a major focus to returning the public finances to a sustainable footing.

Data published by the CSO yesterday helps to separate temporary versus permanent effects of the pandemic on the public finances. It shows that total general government expenditure increased by €16.7bn (19%) in 2020. Of this increase, 78% (€13.1bn) was due to spending on COVID-19 measures, predominately the wage subsidy schemes (€3.8bn) and the pandemic unemployment payment (€5.0bn). COVID-related health spending increased by €2bn in 2020. The Irish government has already committed to a higher level of spending on health even after the pandemic ends, so it is likely that the extra €2bn introduced in 2020 will become permanent. This means that the underlying growth in spending in 2020 was over 6%. That is high, but not alarmingly so given the potential growth of the Irish economy and the increased focus on health that has been triggered by the pandemic.

The challenge for the government will be to ensure that the majority of the temporary spending is just that. In Budget 2021, the Department of Finance deliberately separated core spending. That does not mean that there won’t be battles between the Minister for Public Expenditure and other Ministers when the time comes. If the temporary supports are reversed successfully a lot of the heavy lifting on returning the public finances will be done.

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