Rekeep - Split Growth

All,

Please find our updated model here.

This is a short update but we have made an interesting observation on the growth rates in Italy and Poland derived from the Net Operating Working Capital data provided by the Company. We have sought some clarification from the Company, but our analysis shows LTM revenue in Poland growing 60% in the last 12 months, with a noticeable acceleration in the last two quarters. This is masked by a c.10% decline in the Italian business, even allowing for Tax Credit receipts which distorted FY22 and FY23 revenue numbers.

Investment Considerations:

- We maintain our 5% position in the Senior Secured Notes at 93%. With yields of c. 13% the bonds remain attractive, with the Company exploring options for asset sales and/or refinance the bonds. There is limited debt ahead of the bonds, and with the RCF falling due in August 2025, a full refinancing is required.

- We acknowledge that with the current level and trajectory, the business is unlikely to be able to refinance within 10-12%, hence the discussions concerning asset sales. On its current operational performance a full refinance is unlikely.

- However, with limited debt ahead of the bonds, and the reduction of off-balance sheet debt we retain the view that 13% return fully compensates for the risk within Rekeep.

Polish versus Italian segments:

- Rekeep does not provide geographical splits for its business. However, the Company shares the level of Net Operating Working Capital data for Poland and the wider Group. Using these figures, we can obtain the LTM Revenue for Poland and the LTM Revenue ex Poland (effectively Italy).

- This analysis, contained within the Excel model, results in substantial growth in Poland, which has masked the 10% decline in the Italian segment. The magnitude of the growth is larger than our expectations, and although we expected the Polish business to grow, we did not anticipate this actual level.