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Glenveagh Properties Orderbook momentum continues Company Events despite the lockdown 26-Feb FBD Holdings; FY20 Results Glenveagh Properties; FY20 Results FBD Holdings FY20 Results better than expected, though LafargeHolcim; FY20 Results prior year dividend accrual removed 02-Mar ; FY Results ; FY20 results IAG In line loss of €6.9bn for 2020 Supermarket Income REIT; HY Results Travis Perkins; FY20 results 04-Mar Entain; FY20 Results Building Materials Another strong close to the year with LafargeHolcim 7% ahead on Q4 Bunzl FY20 Preview – Timing a return to ‘normal’ Greencoat Renewables Further addition onshore Ireland Irish Banks Poor start to card spending data in January, trends better February UK Economic View Sunak to lay out a path to normality in next week’s Budget Economic Events Ireland 01-Mar Retail Sales Jan21 03-Mar ILO Unemployment Rate Feb21 05-Mar Foreign Direct Investment Q4

United Kingdom 26-Feb Nationwide House Prices Feb21 01-Mar BoE Mortgage Approvals Jan21 CIPS Manufacturing PMI Feb21 03-Mar CIPS Services PMI Feb21 04-Mar CIPS Constuction PMI Feb21

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Glenveagh Properties Orderbook momentum continues despite the lockdown

Glenveagh Properties released FY20 results this morning. Management highlights that Recommendation: Buy demand for housing “continues to be strong” and “market fundamentals are in the Group’s Closing Price: €0.82 favour”. The key takeaways for us are: i) Guidance maintained - Despite the ongoing level 5 lockdown in Ireland, Glenveagh is maintaining guidance for a total of 1,150 completions in Dudley Shanley +353-1-641 9174 2021 (1,000 core and 150 non-core), and; ii) The strength of the orderbook – The orderbook [email protected] now stands at 950 units sold, signed or reserved (including the majority of the remaining 150 noncore units), up strongly from the 687 units at the end of December. This includes 85

reservations for cost rental units from an AHB this year and strong uptake from private buyers. It leaves Glenveagh c.83% forward sold for FY21.

Following the FY20 update in January there are no surprises in the numbers. Total units of 700 (655 core & 35 non-core) delivered revenue of €232m with core ASP of €311k and core revenue of €208.7m. Gross profit of €9.5m (4.1% gross margin) was after the non-core impairment of €20.3m. The underlying gross profit was €29.8m and the underlying gross margin was 14.1%. As expected, there was an operating loss of €13m in FY20. Net cash of €36m is as per the January update.

In the statement management call out HPI in the starter homes segment increasing from marginally positive in H1 to +3% in H2. Given the length of the current orderbook, it will be 2022 before this impact is truly felt. It is positive to see HPI starting to come through although it is pretty much in line with our current forecast for underlying HPI of 0% in 2021 and 3% in 2022. Management also guides towards 3% CPI in 2021 which is also broadly in line with our forecast. On gross margin, Glenveagh expects it to be in excess of 16% in 2021 and continued progression in 2022 towards 17%. Again, this is broadly in line with our current forecasts therefore we expect no material changes to our forecasts.

The refinancing has been completed with the signing of a new five-year €250m financing deal comprising of a €100m term component and a €150m committed RCF. €54m of non- core cash proceeds have been received to date with a further €42m contracted for 2021 and Glenveagh’s ambition remains to scale the business to 3,000 units by 2024. At the AGM on the 27th of May, management plan to give shareholders updated guidance on capital allocation, the leverage policy and medium-term ROE targets for the group.

Overall, given the circumstances this is a very solid update from Glenveagh and we

continue to believe the significant discount to NAV is unjustified. This document is intended for the sole use of Goodbody Stockbrokers and its affiliates

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FBD Holdings FY20 Results better than expected, though prior year dividend accrual removed

FBD reported a FY20 pretax profit of €4.8m, much better than our €14m loss expectation. Recommendation: Buy GWP of €358.2m was in line, however, claims of €231.1m were much lower than our €255m Closing Price: €7.36 estimate, partly due to a lower than expected BI provision and a prior year reserve release of €23m. FBD has made a provision of €65.3m relating to its BI court judgement (€70m Eamonn Hughes +353-1-641 9442 expected). Elsewhere, operating costs were in line, whilst investment income was better. As [email protected] a result, NAV per share of 1095c is c.8% higher than forecast. The SCR at 197% is much better than the 177% expected, partly from the better P&L, but mainly because the unpaid

2019 dividend is no longer accrued (adds c.14-15ppts) “given the continuing uncertainty prevailing”. In terms of outlook, FBD guides a current year COR of “approximately 90% absent exceptional weather”.

Overall, the FY20 outcome is much better than anticipated down through the P&L, with lower claims costs than expected, only a small underwriting loss, better investment income and the higher SCR. Also, COR guidance for FY21 of c.90% vs our 92.4% estimate could add c.15% to our FY21 net profit. However, we think investors may be disappointed by the un-accrual of the FY19 dividend.

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IAG In line loss of €6.9bn for 2020

FY20 results came in with an operating profit loss of €4,365m vs consensus of €4.45bn and Recommendation: Hold GBY €4.43bn, so a very small beat. With exceptional charges coming in at €3.06bn, the net Closing Price: £1.86 loss for the year was €6.92bn. Mark Simpson

+353-1-641 0478 Net debt at the end of the year was €9.7bn, with liquidity of €8.1bn. This was a better [email protected] performance than we had forecast, helped in part by €600m higher ‘deferred revenue on ticket sales’ on the balance sheet than we expected at €5.13bn. The liquidity position has

also been improved into this financial year with the UKEF loan of €2.2bn. This document is intended for the sole use of Goodbody Stockbrokers and its affiliates

Cash burn estimates for Q121 are given as €185m a week, down from the €215m a week outrun for Q420, with the company making the statement that it 'has sufficient liquidity for the going concern assessment period to March 31, 2022'.

This alleviates concerns over the shorter-term that investors will be tapped for a second time, although with further losses expected this year (GBY operating profit loss forecast of €744m), shareholders funds at end FY20 at only €1.3bn and cash flow positive not expected until 2022, another rights issue can't be ruled out in the medium term.

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Building Materials Another strong close to the year with LafargeHolcim 7% ahead on Q4

LafargeHolcim released FY20 results this morning. Q420 sales of CHF 5,994m (2% ahead of David O’Brien consensus), reflected a return to growth with lfl of 1.5% yoy (Q320: -2.6% yoy, Q220: -17% +353-1-641 9230 yoy, Q120: -3.3%% yoy). This translated into an EBIT of CHF 1,037m, up 14.1% on a lfl david.a.o’[email protected] basis (compares to +10% yoy in Q320, -26% yoy in Q220, and -2.6% yoy in Q120) and is a Robert Eason c.7% beat on consensus, driven by all divisions. From a regional perspective, Latin America +353-1-641 9271 was the stand-out performer in Q4 with lfl sales up 20% yoy and an EBIT lfl increase of 42% [email protected] yoy. Indeed, the only region that didn't report strong double-digit profit growth in the fourth quarter was Asia Pacific. Net debt decreased by c.CHF 1.6bn leaving leverage at 1.4x, Shane Carberry +353-1-6419118 slightly ahead of the group’s target. [email protected]

In the outlook, it is noted that in 2021 the group expects; 1). Recurring EBIT growth of at Dudley Shanley least 7% lfl in line with Strategy 2022; 2). Cash conversion of >40% & net debt leverage +353-1-641 9174 below 2x; and 3). Capex less than CHF 1.4bn. [email protected]

Other takeaways from the release; (i) Softening of the tailwinds seen from price cost from €288m in Q220 and €267m in Q320 to €102m in Q4; and (ii) Growth in the European region in Q4 with Western Europe rebounding the strongest. Pricing trends were strong and volumes recovered albeit the UK was more heavily impacted by strict lockdown measures, lfl sales in this region were up 2% yoy whilst EBIT was up 13% yoy.

Looking ahead management noted “LafargeHolcim expects good demand momentum in 2021, with positive trends in all regions. Extra demand is expected in H221 from stimulus programs, as governments announce measures to support the economic recovery with a focus on infrastructure”. This is another heavyside company that had reported a strong finish to FY20 and has a positive read across for CRH as it reports FY20 results next week.

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Page 4 26 Feb. 21 Goodbody Morning Wrap

Bunzl FY20 Preview – Timing a return to ‘normal’

Having guided ongoing momentum in COVID related orders in the Trading Update on Dec. Recommendation: Buy 16th as a driver of annual revenue growth of c.8% (+9% on a constant currency basis), we Closing Price: £22.73 expect the focus of attention in the Bunzl FY20 results statement on March 1st to be on: (i) the stated prospects for both COVID and non-COVID related demand for the months ahead; Gerry Hennigan +353-1-641 9274 and (ii) the development pipeline in the wake of a year that saw Bunzl announce eight [email protected] acquisitions.

For the year to December we estimate sales of £10.0bn, adj. operating profit of £762m and adj. EPS of 155.5p. An increase in underlying revenue growth from higher margin divisions, and above normal growth in own product sales, points to an FY20 operating margin in our model of 7.6%. Relative to a historic margin of c.7%, commentary on the anticipated balance between those sectors that benefited from COVID-related demand (Safety, Clean & Hygiene, Healthcare) and those that struggled (Food Services, Retail) will undoubtedly have a bearing on FY21 growth, EBITA (£685m est.) margin (7% est.) and market sentiment as the transition to a post pandemic environment unfolds.

Our base case remains that the slower pace of vaccination ex-UK will sustain COVID-demand into H1’21, albeit tempered from the outturn in FY20, with a return to a more normalised pattern in H2. That is reflected in our assumed sales and EBITA declines of 2% and 10% for FY21. As such, specific or implied commentary on the outlook is likely, in our view, to be the primary driver of the share price in the aftermath of the result statement on Monday.

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Greencoat Renewables Further addition onshore Ireland

Greencoat announced this morning an agreement to acquire Cordal wind farm in County Recommendation: Hold Kerry with a capacity of 89.6MW. No detail was provided on the consideration bar an Closing Price: €1.19 indication that “following the acquisition, Greencoat Renewables’ total borrowings will represent c.46% of Gross Asset Value”. Gerry Hennigan +353-1-641 9274

[email protected] The transaction marks the fourth asset to be added to a portfolio since the Placing in December, post which the installed capacity will increase to 650MW. Having outlined a

pipeline of development opportunities in excess of €500m in the Placing document on This document is intended for the sole use of Goodbody Stockbrokers and its affiliates December 8th, aside from the deal announced this morning, management has clearly delivered on some of that potential with the forward sale of two assets onshore Ireland (Cloghan (37.8MW) in County Offaly, and Taghart (25.2MW) in County Cavan) and its first venture into Scandinavia via an agreement to procure the Kokkoneva wind farm (43.2MW) in Finland. The combined value of the former is €123m, the latter €60m, for which payment will be made on completion - 2022 in the case of all three assets.

Greencoat is due to release results for the twelve months to December on Monday having guided a period end NAV per share of 101c in a statement on January 28th.

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Irish Banks Poor start to card spending data in January, trends better February

The Central Bank published sector spending behaviour data through the most recent phase Eamonn Hughes of the pandemic, showing card spend up until mid-February. As such, it includes a good early +353-1-641 9442 sign of card trends in the new year for investors ahead of bank results next week. The data [email protected] captures over 90% of the card payments market and looks at the trends from the L5 Barry Egan restrictions in October/November and again in January/February. +353-1-641 6059 [email protected] The latest data up to mid-February, show that spending has broadly reverted to levels seen in October’s Level 5 period for all sectors, except for ‘other retail’, which is lower than

October as this included the build up to Christmas for retail spending. The data shows a

sharp drop just after Christmas (-45% for week of December 31st), but the Central Bank suggests that this was driven by a number of factors in addition to the introduction of public health measures. These are seasonal factors, the impact of weekends, and the impact of public holidays; all of which contribute to lower spending. It looks to us that spending in January, excluding the initial drop in the first week, largely operated in a -10% to -20% tramline yoy but it looks to us that spending moving into February is back into the 0 to -10% yoy tramline that it largely operated within over the July to October period.

The data is particularly weak in the first week or so of January, but reverts back to “norm” it looks like as we move into February. All the same, it still shows it down yoy for the time being and this is a likely trend until mid-March when the yoy comps should start to improve materially (you know why!!). Anyway, the banks will have plenty of opportunity next week to fill us in on what they think themselves about 2021. BOI kicks if off with FY20 results on Monday, PTSB on Wednesday and AIB on Friday. We published a detailed preview note yesterday, so have a look for our views on each of the banks.

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UK Economic View Sunak to lay out a path to normality in next week’s Budget

The UK Chancellor will continue the theme of setting out the path of a return to normality in Dermot O’Leary his Budget speech next week, with pledges to balance the books once the worst of the +353-1-641 9167 [email protected] pandemic has passed. We have been here before; in the lead up to the November statement last year, there was speculation that the Chancellor would signal increases in business taxes and CGT, and reductions in personal tax reliefs. The second wave of the pandemic put paid to that, but judging from the leaks of recent days, the Chancellor looks intent on making a strong signal on fiscal prudence next week.

Starting from a deficit of £300bn, all options must be on the table. However, a mooted increase in the corporation tax from 19% to 25% over the course of this Parliament is surprising from a Conservative government. Reductions in tax reliefs on pensions is also not something that you would traditionally expect. While there is clearly a bill to pay for the policies that have been implemented during the pandemic, many of these are temporary, and tax revenues will bounce once the economy reopens. However, the UK went into the crisis with a structural deficit and will see weaker growth over the medium-term due to Brexit. Additionally, they pledged spending increases in many areas in the last General Election that must be paid for somehow.

While the Chancellor is expected to announce an extension of the furlough scheme, the stamp duty cut, and business and VAT relief until the end of June (in line with the reopening plan announced earlier this week), the lending schemes look set to be closed for new applications by the end of next month. These will be replaced by a much less generous government guaranteed loan scheme. Chancellor Rishi Sunak has been rightly hailed for his actions to save businesses and households during the worst economic downturn in the UK in 300 years. In some ways, that was the easy part. Removing these temporary supports will be more difficult.

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Other disclosures

We would like to inform you that Eamonn Hughes holds shares in AIB Group We would like to inform you that Dudley Shanley holds shares in CRH We would like to inform you that Dudley Shanley holds shares in Glenveagh Properties We would like to inform you that Robert Eason and Dudley Shanley hold shares in Kingspan

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