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Today ’s Newsflow Equity Research 13 Apr 2021 08:29 BST Upcoming Events Select headline to navigate to article

First Derivatives FY21 Trading Statement - lower net debt Company Events 13-Apr Givaudan; Q121 Results Draper Esprit UiPath IPO Prospectus points to c$22bn - 14-Apr easyJet; Q221 Trading Update £26bn valuation Hammerson; Shareholder Engagement Session Tesco; FY21 Results Kerry Group Givaudan Q1 sales beat, incremental 15-Apr Entain; Q121 Trading Update improvement in foodservice positive for Kerry Travis Perkins; Q121 Trading Update 20-Apr Associated British Foods; Q221 Results Derwent Rent collection update for current IRES REIT; Div Payment quarter UK Economic View UK aggregates reflect lockdown; but the future is brighter

Economic Events Ireland 15-Apr Trade Balance Feb21

United Kingdom 13-Apr BRC Retail Sales Mar21 Construction Output Feb21 GDP Feb21 Industrial Production Feb21 Production Feb21 Trade Balance Feb21 20-Apr ILO Unemployment Rate Feb21

United States

Europe

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First Derivatives FY21 Trading Statement - lower net debt

An update from First Derivatives this morning ahead of the release of results for the year to Recommendation: Buy February on May 18th points to FY21 revenue of £238m, adj. EBITDA of £40m and net debt Closing Price: £28.40 (ex. leases) of £10m. While guided revenue and adj. EBITDA are directly in line with our projections, net debt at year-end is lower than the £52m (incl. leases) forecast in our model. Gerry Hennigan +353-1-641 9274 Excluding leases, our year-end net debt estimate would fall to c.£24m, the primary variance [email protected] to the guided £10m outturn being the £11m realised from the partial sale of Quantile Technologies outlined in February. Excluding leases, Group net debt stood at £49m entering

FY21.

Separately, it was announced this morning that the Kx platform has been included in a Q2 2021 report by Forrester - Now Tech: Streaming Data Platforms. The report, which categorises providers for inclusion by market presence and functionality, segments companies into Large, Medium and Small entities based on annual streaming data platform revenue. Kx is one of the thirty-four vendors included in the report and is listed in the Large category.

Having successfully negotiated the headwinds associated with pandemic induced contract delays in FY21 and exited the year with minimal debt, market demand for the real-time data analytical capability of the Kx platform, and its positioning in the sector as outlined by Forrester, suggests a positive outlook for the Group in FY22.

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Draper Esprit UiPath IPO Prospectus points to c$22bn - £26bn valuation

Post the filing last month of an S-1 with the US Security and Exchange Commission ahead of Recommendation: Buy a UiPath listing on the NYSE as early as this month, detail in terms of pricing and valuation Closing Price: £8.20 emerged from the IPO prospectus released yesterday. Gerry Hennigan +353-1-641 9274 While the amount to be raised, c.$1.1bn, is in line with prior reports, the guided share price [email protected] range would suggest a listing valuation between $22.2bn - $25.8bn. That compares to a value attributed to UiPath of $35bn in a funding round in February, when it raised $750m, a

considerable uplift from a value of c.$10bn guided in the prior round. In the wake of that $750m UiPath funding round, Draper Esprit guided a gross fair value (before carry

deductions) of c.£115m, representing an uplift of £78m on the £37m UiPath fair value This document is intended for the sole use of Goodbody Investment Banking and its affiliates recorded against its holding in September

Assuming the detail in the prospectus released yesterday represents a more realistic assessment of current UiPath valuation, based on the lower end of the listing range, we would see the UiPath gross fair value post IPO at c.£81m, rather than the £115m outlined in February. That would still represent a gross uplift of c.£44m to Draper or c.32p per share on the value attributed to the asset in September.

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Kerry Group Givaudan Q1 sales beat, incremental improvement in foodservice positive for Kerry

Givaudan reported Q1 sales this morning of CHF 1,67bn, above consensus of CHF 1,62bn. Recommendation: Buy Sales increased by 7.7% on a LFL basis, split between the Fragrance & Beauty division at Closing Price: €110.40 9.9% and Taste & Wellbeing division at 5.8%, with strong growth achieved in the high growth markets (+14.5% lfl). The Fragrance & Beauty segment saw strength in household, Jason Molins +353-1-641 9141 health, personal care and Active Beauty segments, while Taste & Wellbeing segment saw [email protected] growth driven by packaged foods, savoury, snacks, beverages and nutraceuticals segment. Givaudan reiterated its 2025 guidance of 4-5% lfl organic sales growth and at least 12%

FCF, both measured as an average over the five-year strategy cycle.

Within the Taste & Wellbeing division, which is the key read-across for Kerry, Givaudan highlighted that most channels were back to growth except the foodservice segment, which continued to remain under pressure due to the COVID-19 pandemic. That said, the foodservice channel has shown improvement from 2020 as out of home restrictions are eased in some markets. Strongest growth was seen in Asia Pacific (+8.2% lfl) driven by China, Malaysia and Vietnam, with South Asia, Africa and the Middle East up 6.9% lfl. Within the more developed markets, North America delivered 4.0% LFL growth whereas Europe was more muted at just 0.7%.

Overall, this a very resilient performance for Givaudan with the 2025 strategy being unchanged and the business showing incremental improvement despite ongoing challenges associated with Covid-19. Kerry will report its Q1 results on April 29th and we anticipate that the Taste & Nutrition segment will deliver volume growth of flat to slightly positive, with some continued pressure on the Foodservice channel (c.25% of T&N volumes) due to Covid-19 restrictions in many markets.

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Derwent London Rent collection update for current quarter

Derwent London (DLN:LN) released a rent collection update this morning. The update noted Recommendation: Hold that collection for Q2-21 (March gale date) is so far stronger than in recent quarters at 87% Closing Price: £33.26 paid overall, while a further 5% is expected over the remainder of the quarter. Colm Lauder +353-1-641 6042 Offices represent 91% of DLN's total rental income and to date it has received 91% of [email protected] current quarter rent. The office collection rate compares to 78% reported for the corresponding period last year. Retail and leisure has remained challenged, despite the UK

re-opening yesterday, with only 24% of rent collected for the current quarter, although an additional 13% is expected to be collected over the coming weeks. There is also an encouraging update on arrears from DLN, with the company noting it has now collected 91% of rent due from Q1-21 and 92% due from Q4-20.

Land Securities (LAND:LN) also released a rent collection update this morning noting that is has collected 67% of rents due for the current quarter, up marginally (by 2%) from the equivalent period in 2020. The office sector was, again, the strongest portfolio segment, with 87% of rents collected, with regional retail at 38%, again up marginally from 2020. London retail deteriorated however, with only 29% of rents collected for the current quarter compared to 47% at the same point in 2020.

These rent collection updates have become the norm across the property market as landlords, especially those exposed to retail and leisure, look to monitor performance in as close to real time as possible. So far, updates have yet to see marked improvements as a consequence of the UK’s re-opening plans.

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UK Economic View UK aggregates reflect lockdown; but the future is brighter

UK GDP rose 0.4% mom in February but contracted in the three months to February by Shaun McDonnell 1.6% and is down 7.8% yoy. While the high-level figures are not much of a surprise given +353-1-641 9167 [email protected] the restrictions in place in the UK in February, sectoral data point toward a more encouraging picture for the UK economy.

Output in the production sector increased 1% in February, driven mostly by growth in the manufacturing sub-sector of 1.3%. Of the thirteen manufacturing sub-sectors, the largest contributors were the transport equipment sector and computer, electronic and optical products.

Meanwhile, the construction sector also posted encouraging output growth in February of 1.6%. This was driven by a recovery in new work and repair and maintenance which grew by 1.5% and 1.9%, respectively. New work was led by growth in public housing construction of 13.5% and private commercial growth of 4%. These figures imply the construction sector is now 4.3% below its pre-pandemic levels. Finally, the services sector exhibited trivial growth of only 0.2% in February.

Moving to the forward looking outlook, results from the Business Insights and Conditions Survey (BICS) for March found that 40% of businesses reported negative turnover implications as a result of Covid-19 versus 44% in February’s edition. Restrictions were in place for most of March also so one would expect the business outlook to improve further through April as the UK will have reopened significantly more than in March.

Emerging from the harsh lockdown since Christmas, we should expect to see improvement in headline economic aggregates in the UK over the coming months. In fact, the latest BRC survey shows an improvement in March. UK retail sales grew by 13.9% yoy in March, reflecting the weak base effects of the start of the pandemic in 2020. Sales were 8.3% higher than March 2019 but is probably flattered by timing of Easter. Nevertheless, sales will bounce further in April and May after yesterday's reopening of non-essential retail and the further reopening that is pencilled in over the coming weeks.

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