Accelerating growth with Acuant acquisition

GB Group 24 November 2021 Update
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GB Group

Accelerating growth with Acuant acquisition

Acquisition and placing

Software & comp services

24 November 2021

Price

750p

Market cap

£1,883m

$1.35:£1

Net cash (£m) at end H122

39.5

Shares in issue, including placings and rollover shares

251.1m

Free float

94%

Code

GBG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(18.0)

(14.1)

(12.7)

Rel (local)

(18.7)

(15.2)

(24.5)

52-week high/low

954p

748p

Business description

GB Group is a specialist in identity data intelligence. Its products and services enable its customers to better understand and verify their customers and employees and are used across a range of fraud, risk management, compliance and customer on-boarding services. With headquarters in the UK, GB operates across 15 countries, has customers in more than 70 countries and generates more than 64% of revenues internationally.

Next events

H122 results

30 November

Analyst

Katherine Thompson

+44 (0)20 3077 5730

GB Group is a research client of Edison Investment Research Limited

GB Group (GBG) has announced a conditional agreement to acquire Acuant, a leading player in the US identity verification market. At an enterprise value of £547m, it marks GBG’s largest acquisition to date. The deal strengthens GBG’s position in the US, broadens its product offering and accelerates its technology roadmap. We have revised our forecasts to reflect the placing and the acquisition and our normalised EPS forecasts decline 3% in FY22, are flat in FY23 and increase 3% in FY24.

Year end

Revenue (£m)

Adj. operating profit* (£m)

PBT*
(£m)

Diluted EPS*
(p)

DPS
(p)

P/E
(x)

03/20

199.1

47.9

45.7

17.9

0.0

41.9

03/21

217.7

57.9

56.7

21.7

6.4

34.6

03/22e

233.6

55.1

53.5

18.6

3.5

40.2

03/23e

295.1

70.8

67.6

20.1

3.6

37.3

03/24e

332.0

79.5

76.9

22.4

3.7

33.5

Note: *Adjusted operating profit, PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Acquiring leading US identity verification player

Acuant provides digital identity verification (IDV) and fraud prevention solutions mainly in the US and like GBG, is a beneficiary of the COVID-accelerated shift to online commerce. Acuant’s product range complements GBG’s existing solutions, adding depth in document verification, new verticals for IDV and a SaaS-based fraud prevention solution. Acuant also has more exposure to dynamic (or ‘in-life’) verification. GBG believes the deal will accelerate its product roadmap by two years, providing immediate access to an orchestration layer and cloud-based solutions. The deal also increases GBG’s exposure to the fast-growing US market from 36% of revenue in FY21 to 43% on a pro-forma basis.

Deal funded by placing, equity and new debt

The $736m/£547m enterprise value is being paid for with £460m cash and £87m in equity issued to the vendors. A placing raised £305m at 725p per share and the remaining £155m will be drawn down from a new £175m revolving credit facility. Post-deal, the company estimates a net debt/EBITDA gearing ratio of 2x and expects the deal to be EPS neutral in FY23, after synergies of £5m.

Valuation: Not fully capturing growth potential

The placing was at a 17% discount to the closing share price of 875p on 18 November; the stock is now trading 3% above the placing price. On our revised estimates, including Acuant from 1 December, GBG is trading at a premium to identity management (IDM) peers but at a discount to higher growth, lower profitability identity access management (IAM) and cybersecurity (CS) peers. However, our reverse DCF calculates the share price is factoring in revenue growth of only 8% from FY25, well below the double-digit growth rate previously factored in by the market. Considering Acuant is expected to grow faster than the original GBG, this appears overly conservative. Using a 12% growth rate (the lower end of new management guidance) from FY25 would imply a per share value of 950p.

Acquisition of Acuant

GBG announced on 18 November that it had conditionally agreed to acquire Acuant, a US provider of identity verification and identity fraud prevention solutions. At the same time, it announced an institutional placing (on a cash box basis) and a retail placing to partially fund the acquisition.

Background on Acuant

Acuant was founded in the US in 1999 and is headquartered in Los Angeles. The company has 209 employees globally (c 130 in technology), with R&D functions in the US, the UK and Israel. The team has particular strength in data science, biometrics and platform design and build and the company holds more than 30 patents in the fields of digital identity and identity verification.

The company has more than 1,000 customers, with 84% of revenue from the US, and 42% via channel partners (a much higher proportion than GBG). These partners help Acuant serve some verticals that GBG is not very active in and are hard to target with direct sales, namely automotive and transport, healthcare and life sciences, and government and security (border control in particular). Acuant counts as customers six of the top 10 US banks, three of the top 10 US mobile network operators, more than 40% of auto dealers and the top three car rental companies.

The company operates in three areas: Acuant Compliance – know your customer (KYC), know your business (KYB), transaction monitoring and sanction screening services; Acuant Verify – document verification, biometric identity verification and data-centric identity verification; and Acuant Identity – provides eDNA, ProfileID and My Digital ID Verifiable Credential solutions that create digital identities to risk score individuals on an ongoing basis and to provide credentials that can be used across different organisations.

We understand Acuant Verify is the largest part of the business, with document verification the major revenue generator. Acuant has a substantial document library (c 6,000 documents covering 200 countries/territories) to support this business.

Rationale for the deal

GBG sees the following benefits from the deal:

Accelerates product, data and platform strategy

GBG typically acquires to get access to product, datasets, technology and international customers. This deal ticks all four boxes. Exhibit 1 shows the market context for the product areas addressed by GBG and Acuant. Looking at the black boxes which cover the different application areas:

GBG is more active in customer onboarding, with the bulk of revenue being generated by data-centric IDV (ID3global, IDology, GreenID solutions), followed by document and address verification (IDScan, Loqate) and then application/origination fraud screening (Instinct). It has a small presence in transaction fraud monitoring (Predator) and in-life fraud investigation (Investigate, UK only).

Acuant is more evenly balanced across customer onboarding and the ongoing customer relationship (‘in life’). It has a strong position in document verification and biometric authentication with a much smaller presence in data-centric IDV as well as presence in transaction fraud monitoring, in-life fraud investigation and ongoing AML screening/politically exposed persons and sanctions.

From a technology perspective, Acuant has developed various features that were on GBG’s roadmap, which should accelerate GBG’s product development by two years. It also gives GBG access to talent that is tough to find in the current market, for example in data science and mobile technology. Acuant has developed an orchestration layer that provides a single customer interface to all solutions. This means individual products do not need to be integrated on a single platform and customers can still access them all quickly and easily. Customers can define consumer journeys themselves, bringing together the solutions they require for each use case. Acuant has also developed a SaaS-based version of GBG’s on-premise fraud products. This opens up the addressable market for fraud products to customers looking for cloud-based deployment. AcuantGO has been developed as a no-code identity verification solution, making adoption easier for customers. Acuant’s 6,000-strong document library is substantially larger than that held by IDScan and should help accelerate growth of IDScan’s business.

Exhibit 1: Market positioning

Source: GB Group

Increases US presence and enhances platform for global expansion

With 84% of revenue generated in the US, Acuant will deliver additional scale in the US, which already made up 36% of revenue in FY21 due to the IDology acquisition in FY19. On a pro-forma basis, the company expects the US to contribute 43% of revenue.

Acuant and IDology already partner in the US and the company expects to bring the two businesses together. IDology is strong in data-driven identity verification whereas Acuant is stronger in document verification and fraud prevention. This gives GBG the ability to provide a more integrated service to US customers. Overall, combining GBG’s product portfolio with Acuant’s will give the group a more complete product range for expansion in Europe and APAC.

Acuant has a well-developed channel strategy that GBG can take advantage of. Acuant will also be able to take advantage of GBG’s global datasets.

Accelerates growth

There is the immediate opportunity in the US to cross-sell between GBG and Acuant customers. GBG’s sales team could also sell Acuant products in EMEA and APAC. With Acuant expected to be able to drive revenue growth of 25% per year, the combined group should see accelerated revenue growth. As highlighted above, the technology already developed by Acuant should allow GBG to focus on product enhancements as opposed to improving user interfaces or deployment methods, which in turn should help it to accelerate revenue growth.

Terms of the deal

GBG is buying Acuant for a cash-free, debt-free enterprise value of $736m/£547m. This will be funded as follows:

Institutional placing $404m/£300m: 41.4m shares at 725p per share were placed with institutional shareholders using a cash box process.

Retail placing $7m/£5m: 690k shares at 725p per share were placed with retail investors.

Equity issue $117m/£87m: 12.0m GBG shares to be issued to the private equity owners of Acuant in exchange for 19% of their 83% stake ($94m) and to key managers of Acuant in exchange for 28% of their 14% stake ($23m) (called the rollover shares).

New revolving credit facility (RCF) drawdown $210m/£155m: the company has arranged a new £175m RCF and intends to draw down £155m to pay for the deal. The company expects the combined group to have a net debt/EBITDA ratio of 2x once the deal completes.

The placing shares are expected to be admitted to AIM on 23 November and the rollover shares on 29 November.

The table below shows how the share capital splits out before and after the placing and acquisition.

Exhibit 2: Shareholder composition

% shares outstanding

Before

After

Existing shareholders

100%

78.5%

Institutional placing

16.5%

Retail placing

0.3%

Acuant PE owners

3.8%

Acuant management

0.9%

Source: GB Group

Financial performance of Acuant

In the tables below we show Acuant’s revenue profile and its profitability in recent years. Acuant’s year-end is 31 December and GBG has produced revenue data for the 12 months ended 30 September 2020 and 2021 to more closely match GBG’s reporting schedule (GBG’s H122 covers the six months to 30 September 2021). GBG has converted Acuant’s financials into IFRS from US GAAP and only has these data up to July 2021.

Exhibit 3: Revenue by type

$m

CY18

CY19

CY20

Y/E Sep-20

Y/E Sep-21

Growth CY19

Growth CY20

Growth Y/E Sep-21

Subscription/transaction

17.4

24.2

32.4

29.5

41.4

39.1%

33.9%

40.3%

On-premise

20.4

20.3

17.2

18.1

16.6

-0.5%

-15.3%

-8.3%

Total revenue

37.8

44.5

49.6

47.6

58.1

17.7%

11.5%

22.1%

Source: GB Group

Exhibit 4: Financial performance

$m

CY19

CY20

Y/E Jul-21

Revenue

44.5

49.6

57.3

Adjusted EBITDA

5.7

10.9

11.8

Adjusted operating profit

5.8

10.8

11.4

EBITDA margin

12.8%

22.0%

20.6%

Operating margin

13.0%

21.8%

19.9%

Source: GB Group

Acuant revenue grew 18% in CY19, 12% in CY20 (we assume growth was depressed by the pandemic) and 22% in the 12 months to September 2021 (LTM). This masks the growth in subscription/transaction revenues of 39% in CY19, 34% in CY20 and 40% LTM. On-premise revenue includes one-off licence fees and service and hardware revenue. GBG expects Acuant to generate revenue growth of 25% in the medium term.

GBG notes Acuant has a negative working capital profile and typically 100% cash conversion. The most recently available data (12 months to July 21) show Acuant had an operating margin of 19.9%, which compares to GBG’s operating margin of 26.6% in FY21 (inflated due to COVID-related cost savings) and forecast margin of 23.5% for FY22e.

Changes to forecasts

GBG expects to generate synergies worth an incremental £5m to operating profit in FY23. It expects the deal to be neutral to EPS in FY23 after these synergies. The company expects targeted group revenue growth to increase from its previous 10-12% range to 12-14% and for the adjusted operating margin target to increase from the previous 22–23% range to 23–24%. We have updated our forecasts to include Acuant from the start of December (all included in the Identity division) and to reflect the placing. While gearing post the deal is expected to be 2x, we expect this to reduce rapidly over the forecast period.

Exhibit 5: Changes to forecasts

£m

FY22e

FY22e

 

 

FY23e

FY23e

 

 

FY24e

FY24e

 

 

old

new

change

y-o-y

old

new

change

y-o-y

old

new

change

y-o-y

Revenues

218.6

233.6

6.8%

7.3%

238.1

295.1

23.9%

26.3%

261.6

332.0

26.9%

12.5%

Gross profit

157

168

6.8%

10.2%

171.4

212.4

23.9%

26.3%

188.3

239.1

26.9%

12.5%

Gross margin

72.0%

72.0%

0.0%

1.9%

72.0%

72.0%

0.0%

0.0%

72.0%

72.0%

0.0%

0.0%

EBITDA

55.1

58.8

6.7%

(4.2%)

57.8

74.7

29.3%

27.0%

64.3

83.6

30.0%

11.9%

EBITDA margin

25.2%

25.2%

(0.0%)

(3.0%)

24.3%

25.3%

1.1%

0.1%

24.6%

25.2%

0.6%

(0.1%)

EBITA

51.4

55.1

7.2%

(4.8%)

53.9

70.8

31.3%

28.5%

60.3

79.5

31.9%

12.3%

EBITA margin

23.5%

23.6%

0.1%

(3.0%)

22.6%

24.0%

1.4%

0.4%

23.0%

24.0%

0.9%

(0.0%)

PBT

50.8

53.5

5.2%

(5.6%)

53.3

67.6

26.8%

26.4%

59.7

76.9

28.8%

13.7%

EPS - normalised, diluted (p)

19.3

18.6

(3.5%)

(14.1%)

20.1

20.1

(0.0%)

7.9%

21.7

22.4

3.1%

11.5%

EPS - reported (p)

10.6

8.9

(16.5%)

(35.7%)

11.3

13.3

17.9%

50.2%

13.4

15.9

18.2%

19.4%

DPS (p)

3.5

3.5

0.0%

(45.3%)

3.6

3.6

0.0%

2.9%

3.7

3.7

0.0%

2.8%

Net debt/(cash)

(52.1)

109.3

N/A

N/A

(87.5)

61.8

N/A

(43.5%)

(125.3)

10.9

N/A

(82.4%)

Net debt/EBITDA (x)

N/A

1.9

N/A

0.8

N/A

0.1

Divisional forecasts

Revenue

Identity

116.5

131.5

12.9%

2.7%

128.2

185.2

44.5%

40.8%

141.4

211.8

49.8%

14.4%

Location

72.2

72.2

0.0%

21.0%

78.0

78.0

0.0%

8.0%

85.8

85.8

0.0%

10.0%

Fraud

29.9

29.9

0.0%

12.9%

31.9

31.9

0.0%

6.8%

34.5

34.5

0.0%

8.0%

Group

218.6

233.6

6.8%

7.3%

238.1

295.1

23.9%

26.3%

261.6

332.0

26.9%

12.5%

Adjusted operating profit

Identity

37.3

41.0

9.9%

-14.2%

38.8

55.2

42.2%

34.8%

43.1

62.4

44.7%

12.9%

Location

21.7

21.7

0.0%

11.2%

23.4

23.4

0.0%

8.0%

25.7

25.7

0.0%

10.0%

Fraud

6.3

6.3

0.0%

17.8%

7.2

7.2

0.0%

14.4%

7.9

7.9

0.0%

10.4%

Group

51.4

55.1

7.2%

-4.8%

53.9

70.8

31.3%

28.5%

60.3

79.5

31.9%

12.3%

Adjusted operating margin

Identity

32.0%

31.2%

30.3%

29.8%

30.5%

29.4%

Location

30.0%

30.0%

30.0%

30.0%

30.0%

30.0%

Fraud

21.0%

21.0%

22.5%

22.5%

23.0%

23.0%

Group

23.5%

23.6%

22.6%

24.0%

23.0%

24.0%

Source: Edison Investment Research

Valuation

The price paid values Acuant on an EV/sales multiple of 12.7x LTM revenues and 63.7x LTM EBIT (applying y/e July 2021 margin to y/e September 2021 revenue). This compares to GBG trading on an EV/sales multiple of 7.6x LTM revenues (H221+H122e) and 28.8x LTM EBIT before the placing. With Acuant expected to grow at c 25% per year in the medium term, we also compare the multiples on an FY23e basis:

Acuant: EV/Sales 9.6x, EV/EBIT 43.3x

GBG (prior to placing): EV/sales 7.2x, EV/EBIT 32.0x.

On our revised forecasts and using the current share price for GBG of 750p, Exhibit 6 shows GBG’s valuation versus IDM, IAM and CS peers. GBG is trading at a premium to its IDM peers on all metrics, but at a discount to the IAM and CS groups, which contain more companies in a faster growth phase and in many cases are not yet profitable.

We note there has been an active M&A market for identity technology companies over the last four years, with Relx’s Lexis Nexis Risk Solutions business buying four business (TruNarrative, at c 26x CY20 revenue, Emailage, IDAnalytics, ThreatMetrix, 4x CY18 revenue), TransUnion buying Neustar (5x FY21e revenue) and Iovation, and Mastercard buying Ekata (mid-teens revenue multiple). Valuation multiples have ranged widely, depending on the level of maturity, growth and profitability of the target. We note that venture capital funded businesses in this space (Jumio, Onfido, Socure, Trulioo) have been receiving increasing levels of funding. Only last week, US-based Socure raised $450m at a $4.5bn valuation, having raised $100m at a $1.3bn valuation only eight months earlier. The company reported that ARR grew 126% y-o-y in Q221 and H121 bookings were 220% higher year-on-year. Precise financial data are hard to come by, but in an interview earlier this year, Socure’s CEO stated the target was to hit annualised recurring revenue of $100m this year, valuing the business at 45x CY21e ARR.

Our reverse DCF (6.5% WACC, 3% perpetuity growth after 10 years, explicit forecasts to FY24), implies the share price is discounting organic revenue growth of approximately 8% from FY25–FY31, assuming a stable EBIT margin (in line with management’s policy). This growth rate is lower than the double-digit rate GBG has targeted for some time and considering that Acuant is expected to grow faster than the original GBG business, this appears low. Increasing the WACC by 1% to 7.5% would reduce the value to 563p per share. Increasing the revenue growth rate to 12% from FY25, the bottom of management’s new 12-14% range, would increase the value to 950p per share.

Exhibit 6: Peer financial and valuation metrics

Quoted

Market

Rev growth (%)

EBITDA margin (%)

EBIT margin (%)

EV/Revs

EV/ EBITDA

EV/ EBIT

P/E

ccy

cap (m)

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

GB Group

EUR

1883

7.3

26.3

25.2

25.3

23.6

24.0

8.6

6.8

34.0

26.8

36.3

28.2

40.2

37.3

Identity management software

Equifax Inc

USD

35282

19.2

8.3

34.0

36.2

24.4

27.4

7.9

7.3

23.2

20.1

32.2

26.5

38.0

32.9

Experian

GBp

31782

14.7

9.0

35.0

35.5

25.6

26.2

7.7

7.0

21.9

19.8

30.0

26.9

38.1

33.7

Fair Isaac Corp

USD

9651

5.3

9.8

44.1

45.5

39.4

40.7

7.8

7.1

17.6

15.5

19.7

17.4

24.7

21.7

Mitek Systems Inc

USD

789

15.4

14.0

29.9

32.1

28.5

28.0

5.3

4.6

17.7

14.4

18.5

16.6

20.1

16.7

Relx PLC

GBp

45243

3.0

8.7

36.6

37.5

30.6

31.7

7.1

6.5

19.3

17.3

23.1

20.5

26.8

23.7

TransUnion

USD

22777

13.8

9.5

40.3

40.4

31.5

31.5

8.3

7.5

20.5

18.7

26.2

23.9

31.4

28.3

Average

11.9

9.9

36.6

37.9

30.0

30.9

7.3

6.7

20.0

17.7

25.0

22.0

29.9

26.2

Median

 

 

14.2

9.3

35.8

36.8

29.5

29.7

7.7

7.1

19.9

18.0

24.6

22.2

29.1

26.0

Identity access management software

Cyberark Software

USD

7810

6.8

13.3

5.9

0.8

3.3

-1.1

14.8

13.1

251.9

1658.3

454.8

N/A

964.1

N/A

Okta

USD

40891

49.4

37.8

-6.2

-0.1

-9.1

-4.9

32.2

23.4

N/A

N/A

N/A

N/A

N/A

N/A

OneSpan

USD

739

-2.3

4.9

-3.3

-0.9

-6.7

-1.4

3.0

2.9

N/A

N/A

N/A

N/A

N/A

N/A

Ping Identity Holding Corp

USD

2270

21.2

12.0

10.1

11.1

8.9

9.2

7.9

7.1

78.5

63.9

88.8

76.8

112.9

81.7

SailPoint Technologies Holdings

USD

5367

14.2

16.7

0.5

0.3

-1.6

-1.7

12.8

11.0

2343.0

3833.3

N/A

N/A

N/A

N/A

Secunet Security Networks

EUR

2883

19.8

5.6

20.4

19.4

17.9

16.9

8.3

7.9

40.8

40.7

46.6

46.7

69.2

69.4

Wallix Group

EUR

188

32.0

35.8

-18.9

0.0

-9.8

6.7

6.4

4.7

N/A

N/A

N/A

70.4

N/A

164.1

Average

20.2

18.0

1.2

4.4

0.4

3.4

12.2

10.0

678.6

1119.2

196.7

64.7

382.0

105.1

Median

 

 

19.8

13.3

0.5

0.3

-1.6

-1.1

8.3

7.9

165.2

63.9

88.8

70.4

112.9

81.7

Cybersecurity software

Check Point Software

USD

15321

4.3

3.6

49.2

48.6

48.3

47.7

6.3

6.1

12.8

12.5

13.1

12.8

16.6

15.7

CrowdStrike Holdings

USD

60407

60.8

38.5

14.3

15.7

10.5

12.1

42.2

30.5

294.8

194.7

402.9

252.0

566.6

337.8

Darktrace

GBp

3663

37.9

31.7

3.4

5.5

-6.3

-3.1

11.9

9.1

351.5

164.3

N/A

N/A

N/A

N/A

F5

USD

14589

8.3

7.8

36.8

35.4

32.5

33.2

5.0

4.6

13.5

13.0

15.3

13.9

20.4

18.1

Fortinet

USD

56164

28.7

18.6

28.3

28.1

25.8

26.0

16.2

13.7

57.2

48.6

62.8

52.5

87.9

74.4

Mandiant

USD

4159

-48.1

17.3

-10.9

-5.4

-23.2

-14.2

8.9

7.6

N/A

N/A

N/A

N/A

N/A

N/A

Palo Alto Networks

USD

50969

26.1

21.2

21.9

21.9

18.8

19.5

9.6

7.9

43.6

36.0

50.9

40.4

71.9

58.3

Qualys

USD

5331

12.9

13.3

46.3

42.7

39.0

36.2

12.2

10.7

26.3

25.2

31.2

29.7

43.2

41.3

Rapid7

USD

7457

28.6

23.1

4.5

7.2

1.4

3.2

15.1

12.3

333.0

171.4

1113.3

387.1

N/A

984.6

SecureWorks

USD

1746

-4.3

2.8

0.2

0.4

-1.5

-1.8

2.9

2.8

1760.1

627.7

N/A

N/A

N/A

N/A

Average

15.5

17.8

19.4

20.0

14.5

15.9

13.0

10.5

321.4

143.7

241.4

112.6

134.4

218.6

Median

 

 

19.5

17.9

18.1

18.8

14.6

15.8

10.8

8.5

57.2

48.6

51.0

40.4

57.6

58.3

Source: Edison Investment Research, Refinitiv. Note: Priced at 19 November.

Exhibit 7: Financial summary

£'000s

2017

2018

2019

2020

2021

2022e

2023e

2024e

March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

87,468

119,702

143,504

199,101

217,659

233,592

295,061

332,027

Cost of Sales

(20,302)

(27,092)

(36,060)

(54,914)

(65,096)

(65,406)

(82,617)

(92,968)

Gross Profit

67,166

92,610

107,444

144,187

152,563

168,186

212,444

239,060

EBITDA

 

 

18,734

28,741

34,080

51,739

61,410

58,806

74,698

83,598

Operating Profit (before amort. and except.)

17,006

26,311

32,031

47,945

57,896

55,122

70,808

79,525

Acquired intangible amortisation

(4,022)

(7,885)

(10,316)

(19,008)

(17,671)

(18,500)

(18,500)

(18,500)

Exceptionals

(1,410)

(2,143)

(4,003)

(1,552)

448

(5,000)

0

0

Share of associate

0

0

0

0

0

0

0

0

Share based payments

(994)

(2,375)

(2,287)

(4,541)

(5,170)

(5,687)

(6,256)

(6,881)

Operating Profit

10,580

13,908

15,425

22,844

35,503

25,935

46,052

54,144

Net Interest

(498)

(508)

(689)

(2,218)

(1,240)

(1,648)

(3,205)

(2,666)

Profit Before Tax (norm)

 

 

16,508

25,803

31,342

45,727

56,656

53,474

67,603

76,859

Profit Before Tax (FRS 3)

 

 

10,082

13,400

14,736

20,626

34,263

24,287

42,847

51,478

Tax

668

(2,746)

(2,583)

(3,562)

(7,385)

(5,235)

(9,235)

(11,096)

Profit After Tax (norm)

13,206

20,642

24,760

35,210

43,059

40,640

51,378

57,645

Profit After Tax (FRS 3)

10,750

10,654

12,153

17,064

26,878

19,052

33,612

40,383

Ave. Number of Shares Outstanding (m)

131.6

150.6

158.1

193.6

195.2

215.1

252.6

254.1

EPS - normalised (p)

 

 

10.0

13.7

15.7

18.2

22.1

18.9

20.3

22.7

EPS - normalised and fully diluted (p)

 

9.9

13.5

15.4

17.9

21.7

18.6

20.1

22.4

EPS - (IFRS) (p)

 

 

8.2

7.1

7.7

8.8

13.8

8.9

13.3

15.9

Dividend per share (p)

2.4

2.7

3.0

0.0

6.4

3.5

3.6

3.7

Gross Margin (%)

76.8

77.4

74.9

72.4

70.1

72.0

72.0

72.0

EBITDA Margin (%)

21.4

24.0

23.7

26.0

28.2

25.2

25.3

25.2

Operating Margin (before GW and except.) (%)

19.4

22.0

22.3

24.1

26.6

23.6

24.0

24.0

BALANCE SHEET

Fixed Assets

 

 

105,653

170,284

438,683

430,219

394,564

924,994

908,486

892,071

Intangible Assets

98,753

161,372

425,646

414,505

377,663

906,163

887,713

869,313

Tangible Assets

2,856

4,700

4,815

9,420

6,937

8,867

10,809

12,794

Other fixed assets

4,044

4,212

8,222

6,294

9,964

9,964

9,964

9,964

Current Assets

 

 

48,914

61,121

76,522

95,984

85,653

136,960

171,686

203,000

Debtors

30,569

37,969

54,992

66,554

58,617

65,406

82,617

92,968

Cash

17,618

22,753

21,189

27,499

21,135

65,653

83,168

104,131

Other

727

399

341

1,931

5,901

5,901

5,901

5,901

Current Liabilities

 

 

(44,444)

(56,942)

(77,030)

(86,459)

(90,000)

(99,271)

(123,427)

(138,302)

Creditors

(36,436)

(56,100)

(70,302)

(80,280)

(86,338)

(95,609)

(119,765)

(134,640)

Contingent consideration

(7,122)

(45)

(5,287)

(6,179)

(3,662)

(3,662)

(3,662)

(3,662)

Short term borrowings

(886)

(797)

(1,441)

0

0

0

0

0

Long Term Liabilities

 

 

(15,940)

(16,711)

(116,707)

(94,810)

(25,961)

(193,362)

(156,373)

(118,253)

Long term borrowings

(11,499)

(8,451)

(85,447)

(62,139)

0

(175,000)

(145,000)

(115,000)

Contingent consideration

0

0

0

0

0

0

0

0

Other long term liabilities

(4,441)

(8,260)

(31,260)

(32,671)

(25,961)

(18,362)

(11,373)

(3,253)

Net Assets

 

 

94,183

157,752

321,468

344,934

364,256

769,321

800,373

838,515

CASH FLOW

Operating Cash Flow

 

 

16,305

31,620

27,779

48,498

72,631

56,289

81,643

88,123

Net Interest

(498)

(545)

(689)

(1,768)

(1,211)

(1,648)

(3,205)

(2,666)

Tax

(2,193)

(3,247)

(2,930)

(6,386)

(14,205)

(12,834)

(16,225)

(19,215)

Capex

(2,227)

(2,018)

(1,625)

(1,339)

(738)

(3,250)

(3,400)

(3,550)

Acquisitions/disposals

(36,840)

(70,363)

(255,101)

(81)

2,545

(460,000)

0

0

Financing

24,755

56,668

157,339

(1,553)

3,476

297,635

(2,483)

(2,607)

Dividends

(2,775)

(3,582)

(4,049)

(5,761)

(5,883)

(6,674)

(8,816)

(9,122)

Net Cash Flow

(3,473)

8,533

(79,276)

31,610

56,615

(130,482)

47,515

50,963

Opening net debt/(cash)

 

 

(8,673)

(5,233)

(13,505)

65,699

34,640

(21,135)

109,347

61,832

HP finance leases initiated

0

0

0

0

0

0

0

0

Other

33

(261)

72

(551)

(840)

0

0

0

Closing net debt/(cash)

 

 

(5,233)

(13,505)

65,699

34,640

(21,135)

109,347

61,832

10,869

Source: GB Group, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by GB Group and prepared and issued by Edison, in consideration of a fee payable by GB Group. 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 2021 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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by GB Group and prepared and issued by Edison, in consideration of a fee payable by GB Group. 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 2021 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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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