Capitalising on recent strategic investment

GB Group 20 June 2022 Update
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GB Group

Capitalising on recent strategic investment

FY22 results

Software and comp services

20 June 2022

Price

441p

Market cap

£1,111m

$1.22:£1

Net debt (£m) at end FY22

107.0

Shares in issue

251.9m

Free float

94%

Code

GBG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(19.2)

(21.7)

(48.4)

Rel (local)

(13.6)

(16.9)

(45.9)

52-week high/low

953p

415p

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 are used across a range of fraud, risk management, compliance and customer on-boarding services. With headquarters in the UK, GB operates across 17 countries, has customers in more than 70 countries and generates more than 64% of revenues internationally.

Next events

AGM

28 July

Analyst

Katherine Thompson

+44 (0)20 3077 5730

GB Group is a research client of Edison Investment Research Limited

GB Group (GBG) reported strong underlying revenue growth for FY22 while profitability growth reflected the resumption of investment in the business. GBG has demonstrated the ability to navigate challenges with its performance over the COVID-19 pandemic and we view its diversified business (by geography and vertical) as a strength in an uncertain market environment. Our forecasts are substantially unchanged and in our view the valuation has become increasingly detached from the company’s growth potential.

Year end

Revenue
(£m)

Adj. op. profit* (£m)

PBT*
(£m)

Diluted EPS*
(p)

DPS
(p)

P/E
(x)

03/21

217.7

57.9

56.7

22.4

6.4

19.7

03/22

242.5

58.8

57.1

20.2

3.8

21.9

03/23e

300.8

72.2

67.7

20.4

4.0

21.6

03/24e

337.0

81.7

78.0

22.8

4.3

19.4

03/25e

379.5

92.3

89.4

25.9

4.6

17.0

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

FY22 a return to more normal trading

After an exceptional year in FY21 when GBG benefited from a US stimulus contract, disposed of several businesses and reduced costs to manage through the COVID-19 pandemic, trading in FY22 reverted to more normal levels and the company resumed investing in the business, both organically and via the acquisitions of Acuant and Cloudcheck. Revenue grew 11.4% (10.6% constant currency organic, 15.5% on an underlying basis) and adjusted operating profit grew 1.6% y-o-y with a margin of 24.3%. The company paid down £30m of acquisition debt to close the year with net debt of £107m and gearing of 1.7x.

Focused on maximising opportunity from Acuant

After the strategic acquisition of Acuant in November 2021, GBG has a strengthened position in the US, the largest market for identity verification. With a large proportion of the integration complete, GBG is now focused on driving revenue synergies from the deal and using the technology acquired to accelerate the group’s product roadmap.

Valuation: Not capturing growth potential

The share price is down c 40% year-to-date and is trading on a P/E of 21.6x FY23e and 19.4x FY24e, the lowest level since autumn 2019, bar the dip in March 2020. As GBG trades through H123 and gains a better idea of underlying growth and the scale of revenue synergies from the Acuant deal, it should be able to provide the market with confidence that FY23 estimates are achievable and that the acquisition of Acuant is delivering on its promise. Our reverse discounted cash flow (DCF) implies the share price is discounting organic revenue growth of c 3% from FY26, well below the double-digit growth rate GBG has consistently achieved. Considering that Acuant is expected to grow faster than the core GBG business, this appears overly conservative. Using a 12% growth rate (the lower end of management guidance) from FY26 would imply a value per share of 749p.

Review of FY22 results

Exhibit 1: FY22 results versus forecasts and FY21

£m

 

 

 

 

 

FY21a

FY22e

FY22a

diff

y-o-y

Revenue

217.7

242.0

242.5

0.2%

11.4%

Gross profit

152.6

174

172

(1.3%)

12.7%

Gross margin

70.1%

72.0%

70.9%

(1.1%)

0.8%

EBITDA

61.4

61.7

62.2

0.9%

1.3%

EBITDA margin

28.2%

25.5%

25.6%

0.2%

(2.6%)

EBIT

57.9

58.0

58.8

1.5%

1.6%

EBIT margin

26.6%

24.0%

24.3%

0.3%

(2.3%)

PBT

56.7

56.3

57.1

1.4%

0.8%

EPS - normalised, diluted (p)

22.4

20.5

20.2

(1.5%)

(9.9%)

EPS - reported (p)

13.8

9.9

7.1

(28.7%)

(48.7%)

DPS (p)

6.40

3.50

3.81

8.9%

(40.5%)

Net debt/(cash)

(21.1)

107.4

105.9

(1.3%)

(601.2%)

Net debt/EBITDA

N/A

1.7

1.7

Source: GB Group, Edison Investment Research

GBG reported revenue growth of 11.4% for FY22. Excluding acquisitions and adjusting for currency, the group grew 10.6% on an organic basis. Also excluding the one-off benefit from the US stimulus programme in FY21, underlying growth was 15.5%. Pro forma revenue for FY22 was £273.8m, including £29.9m from acquisitions before the acquisition date and the £1.4m deferred revenue adjustment for Acuant.

Adjusted operating profit was 1.6% higher y-o-y, generating a margin of 24.3% compared to 26.6% in FY21. In FY21, revenues benefited from the US stimulus programme and the company cut travel and marketing spend during the pandemic, resulting in a one-off boost to profitability.

Exceptional items totalled £4.5m consisting of acquisition-related costs (£5.6m), gain on forward contracts linked to acquisitions (£3.1m), integration costs (£0.4m), reorganisation costs (£1.1m), FX movement on contingent consideration (£0.2m) and loss on disposal of businesses (£0.3m).

The tax rate on reported PBT was 29.5%, higher than 21.6% in FY21 mainly due to non-deductible costs related to acquisitions. The effective rate on normalised PBT was 22.1%, higher than our 20% forecast.

Normalised diluted EPS of 20.2p was marginally lower than our 20.5p forecast due to the combination of the higher effective tax rate and slightly higher dilutive share count (220.5m vs our 219.9m forecast).

The company declared a dividend of 3.81p for the year and reiterated its commitment to a progressive dividend. This was above our 3.5p forecast and 12% higher than last year’s final dividend.

Year-end net debt stood at £107.0m after taking account of £1m in unamortised loan fees (£105.9m on the balance sheet). The company repaid £30.1m of the £157m debt drawn down to finance the Acuant acquisition. Adjusted EBITDA was converted to cash at a rate of 95.7% compared to 119.5% in FY21, reflecting increased working capital requirements as the business grew.

Divisional performance

We note the company changed the way it allocates central costs during the year. In FY21, a proportion of central costs were allocated to each division. In FY22 it was decided that only those costs that could be controlled by a division would be allocated to it. This means a year-on-year comparison of margins is not meaningful.

Fraud: revenue grew 17.1% y-o-y on a reported basis and 15.7% on a constant currency organic basis, benefiting from the resumption of on-premise deployment activity. The division secured new multi-year contracts with Bank Simpanan Nasional, Bank BTPN, FE Credit, E.ON and AXA and continued to see high renewal rates.

Identity: revenue grew 11.5% y-o-y on a reported basis and 8.5% on a constant currency organic basis. Adjusting for the one-off benefit from the stimulus programme in FY21, underlying revenue grew 17.1%. New customers include Hymans Robertson, St James’s Place, Nintendo and CUNA Mutual. Acuant (acquired 29 November 2021) contributed revenue of £12.3m and Cloudcheck (acquired 31 January) contributed £0.34m.

Location: revenue grew 11.2% y-o-y on a reported basis and 12.7% on a constant currency organic basis, benefiting from the ongoing consumer shift to online activity. New customers include ASICS, HarperCollins, Spotify and JetBlue Airways.

Exhibit 2: Divisional revenue and operating profit (£m)

FY22a

FY22e

FY21a

diff

y-o-y

Constant currency (cc) organic growth

Revenues

Fraud

33.3

32.9

28.4

1.3%

17.1%

15.7%

Identity

142.8

138.7

128.1

3.0%

11.5%

8.5%

Location

66.3

70.4

59.7

-5.8%

11.2%

12.7%

Unallocated

0.0

0.0

1.5

0.0%

(97%)

N/A

Total revenues

242.5

242.0

217.7

0.2%

11.4%

10.6%

Adjusted operating profit

Fraud

8.0

9.9

5.3

-18.7%

50.5%

Identity

57.0

54.9

47.7

4.0%

19.4%

Location

24.6

24.7

19.5

-0.5%

26.3%

Unallocated

-30.8

-31.5

-14.7

-2.1%

N/A

Total adjusted operating profit

58.8

58.0

57.9

1.5%

1.6%

Adjusted operating margin

Fraud

24.1%

30.0%

18.7%

-5.9%

5.3%

Identity

39.9%

39.6%

37.3%

0.4%

2.7%

Location

37.1%

35.1%

32.6%

2.0%

4.5%

Unallocated

N/A

N/A

N/A

N/A

N/A

Total adjusted operating margin

24.3%

24.0%

26.6%

0.3%

-2.3%

Source: GB Group, Edison Investment Research

Exhibit 3 below shows the split of revenue by contract type. To clarify, a consumption-based subscription licence is one where the customer pays in advance for a set number of transactions over a period of time. If the customer does not use all the transactions paid for in the period, they are forfeited. Conversely, a consumption contract is one where the customer pays in arrears based on the number of transactions undertaken in a period. More than three-quarters of the Identity business is contracted on a consumption basis, that is, customers pay per verification. Conversely, nearly three-quarters of Fraud revenue is contracted on a subscription licence basis, with most licences for a multi-year term and only a small proportion on a consumption basis. The Location business has more than 90% of revenue from subscription licences, with more than two-thirds of these on a term basis. At a group level, this results in 49% of revenue generated from subscription licences (33% consumption based, 67% term based), 44% from consumption-based contracts and 7% from other (mainly services).

Exhibit 3: Group revenues by type (£000s)

FY21

FY22

% of revenue FY21

% of revenue FY22

Growth y-o-y

Consumption based

32,750

35,830

14

16

9%

Term based

62,244

76,465

30

33

23%

Subscription revenues

94,994

112,295

44

49

18%

Consumption

111,265

115,212

52

44

4%

Other

11,400

14,973

4

7

31%

Total revenue

217,659

242,480

100

100

11%

Source: GB Group

Integration of Acuant well underway

During Q422, the company combined the Acuant and IDology teams to create the largest pure-play identity verification and fraud prevention provider in the Americas. GBG has already implemented £3m of the planned £5m FY23 synergy target, mainly via cost synergies, and has a strong pipeline of cross-selling opportunities that should help it achieve revenue synergies to make up the remaining £2m.

Acuant and IDology had been selling each other’s products over the last few years. The go-to-market teams have now been combined and the single US entity now provides IDology with more cost-effective document verification and Acuant with better access to IDology products to sell within its Compliance platform.

Product launches across the business

During the year, GBG has released several enhanced identity services: Expect ID Flex API for US enterprise customers, ProID for SMEs in EMEA and a low-code/no-code version of the Green ID platform in APAC. The Location business released the latest generation of its advanced address capture solution. The Fraud business integrated the Investigate solution into its platform, having gained the capability in late 2020 through the Hooyu acquisition.

Creating a global products group

During H222, the company formed its global products group, demonstrating just one of the ways that GBG is bringing together Acuant and GBG’s identity verification and fraud prevention roadmaps. The plan is to accelerate the data, product and platform strategy by around two years, focusing on developing a consistent global experience for customers. GBG plans to offer the market’s largest, continuously updated identity document library, and is targeting the release of its cloud-based fraud prevention solution in H223.

Outlook and changes to forecasts

GBG benefited in Q122 from high volumes of cryptocurrency transactions and the continuation of the US COVID-19 stimulus project; this creates a tough comparative for H123. However, management believes it is well positioned to achieve its strategic and financial objectives for FY23 and is confident in its ability to deliver the targeted synergies from the Acuant acquisition.

We have made minimal changes to our revenue and adjusted operating profit forecasts for FY23/24 and we introduce forecasts for FY25. We have increased our dividend forecast by 11% in FY23 and 16% in FY24. We factor in higher working capital requirements, which increases our net debt forecast at the end of FY23 from £58m to £69m.

Exhibit 4: Changes to forecasts

£m

FY23e

FY23e

 

 

FY24e

FY24e

 

 

FY25e

 

old

new

Change

y-o-y

old

new

change

y-o-y

new

y-o-y

Revenues

300.5

300.8

0.1%

24.0%

336.7

337.0

0.1%

12.1%

379.5

12.6%

Gross profit

216.4

213.5

(1.3%)

24.2%

242.5

239.3

(1.3%)

12.1%

269.5

12.6%

Gross margin

72.0%

71.0%

(1.0%)

0.1%

72.0%

71.0%

(1.0%)

0.0%

71.0%

0.0%

EBITDA

76.0

75.8

(0.3%)

21.8%

84.8

85.5

0.8%

12.8%

96.2

12.6%

EBITDA margin

25.3%

25.2%

(0.1%)

(0.5%)

25.2%

25.4%

0.2%

0.2%

25.3%

(0.0%)

EBITA

72.1

72.2

0.1%

22.7%

80.7

81.7

1.2%

13.2%

92.3

12.9%

EBITA margin

24.0%

24.0%

0.0%

(0.3%)

24.0%

24.3%

0.3%

0.2%

24.3%

0.1%

PBT

68.9

67.7

(1.8%)

18.6%

78.1

78.0

(0.0%)

15.3%

89.4

14.6%

EPS - normalised, diluted (p)

20.5

20.4

(0.5%)

1.0%

22.8

22.8

(0.0%)

11.6%

25.9

13.9%

EPS - reported (p)

13.7

11.0

(19.6%)

56.1%

16.3

13.9

(14.6%)

26.0%

17.0

22.4%

DPS (p)

3.6

4.0

11.1%

5.0%

3.7

4.3

16.2%

7.5%

4.6

7.0%

Net debt/(cash)

58.2

68.5

17.8%

(35.3%)

6.1

19.3

216.4%

(71.9%)

(38.6)

(300.4%)

Net debt/EBITDA (x)

0.8

0.9

0.1

0.2

N/A

Source: Edison Investment Research

Valuation

The share price is down c 40% year-to-date and is trading on a P/E of 21.6x FY23e and 19.4x FY24e. This is the lowest level it has traded at since autumn 2019, bar the dip in March 2020. The company flagged the tough comparison period for H123 and indicated that despite this, it was happy with FY23 forecasts. As the company trades through H123 and gains a better idea of underlying growth and the scale of revenue synergies from the Acuant deal, it should be able to provide the market with confidence that FY23 estimates are achievable and that the acquisition of Acuant is delivering on its promise.

Our reverse DCF (8% WACC raised to reflect rising interest rates, 3% perpetuity growth after 10 years, explicit forecasts to FY25), implies the share price is discounting organic revenue growth of approximately 3% from FY26–FY32, assuming a stable EBIT margin (in line with management’s policy). This growth rate is significantly 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 revenue growth rate to 12% from FY26, the bottom of management’s 12–14% range, would increase the value to 749p per share.

Exhibit 5: Financial summary

£'000s

2020

2021

2022

2023e

2024e

2025e

March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

199,101

217,659

242,480

300,767

337,045

379,510

Cost of Sales

(54,914)

(65,096)

(70,549)

(87,222)

(97,743)

(110,058)

Gross Profit

144,187

152,563

171,931

213,544

239,302

269,452

EBITDA

 

 

51,739

61,410

62,196

75,766

85,474

96,204

Operating Profit (before amort. and except.)

 

47,945

57,896

58,839

72,204

81,747

92,303

Acquired intangible amortisation

(19,008)

(17,671)

(24,735)

(24,735)

(24,735)

(24,735)

Exceptionals

(1,552)

448

(4,526)

0

0

0

Share of associate

0

0

0

0

0

0

Share based payments

(4,541)

(5,170)

(6,171)

(6,788)

(7,467)

(8,214)

Operating Profit

22,844

35,503

23,407

40,681

49,545

59,355

Net Interest

(2,218)

(1,240)

(1,754)

(4,515)

(3,705)

(2,895)

Profit Before Tax (norm)

 

 

45,727

56,656

57,085

67,689

78,042

89,408

Profit Before Tax (FRS 3)

 

 

20,626

34,263

21,653

36,166

45,840

56,460

Tax

(3,562)

(7,385)

(6,390)

(8,318)

(10,543)

(12,986)

Profit After Tax (norm)

35,210

44,481

44,498

52,121

58,531

67,056

Profit After Tax (FRS 3)

17,064

26,878

15,263

27,848

35,297

43,474

Ave. Number of Shares Outstanding (m)

193.6

195.2

216.2

252.6

254.1

255.6

EPS - normalised (p)

 

 

18.2

22.8

20.6

20.6

23.0

26.2

EPS - normalised and fully diluted (p)

 

 

17.9

22.4

20.2

20.4

22.8

25.9

EPS - (IFRS) (p)

 

 

8.8

13.8

7.1

11.0

13.9

17.0

Dividend per share (p)

0.0

6.4

3.8

4.0

4.3

4.6

Gross Margin (%)

72.4

70.1

70.9

71.0

71.0

71.0

EBITDA Margin (%)

26.0

28.2

25.6

25.2

25.4

25.3

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

24.1

26.6

24.3

24.0

24.3

24.3

BALANCE SHEET

Fixed Assets

 

 

430,219

394,564

1,001,090

978,261

955,520

942,863

Intangible Assets

414,505

377,663

969,561

944,876

920,241

895,656

Tangible Assets

9,420

6,937

7,343

9,199

11,093

13,021

Other fixed assets

6,294

9,964

24,186

24,186

24,186

34,186

Current Assets

 

 

95,984

85,653

101,017

129,921

161,070

202,702

Debtors

66,554

58,617

69,715

90,230

101,113

113,853

Cash

27,499

21,135

22,302

29,691

48,957

76,848

Other

1,931

5,901

9,000

10,000

11,000

12,000

Current Liabilities

 

 

(86,459)

(90,000)

(115,795)

(134,080)

(148,827)

(166,440)

Creditors

(80,280)

(86,338)

(109,939)

(128,224)

(142,971)

(160,584)

Contingent consideration

(6,179)

(3,662)

(5,856)

(5,856)

(5,856)

(5,856)

Short term borrowings

0

0

0

0

0

0

Long Term Liabilities

 

 

(94,810)

(25,961)

(199,185)

(161,935)

(122,967)

(93,601)

Long term borrowings

(62,139)

0

(128,226)

(98,226)

(68,226)

(38,226)

Contingent consideration

0

0

(1,920)

(1,920)

(1,920)

(1,920)

Other long term liabilities

(32,671)

(25,961)

(69,039)

(61,789)

(52,821)

(53,455)

Net Assets

 

 

344,934

364,256

787,127

812,167

844,796

885,524

CASH FLOW

Operating Cash Flow

 

 

48,498

72,631

56,256

72,536

88,337

100,078

Net Interest

(1,768)

(1,211)

(1,373)

(4,515)

(3,705)

(2,895)

Tax

(6,386)

(14,205)

(11,610)

(15,569)

(19,510)

(22,352)

Capex

(1,339)

(738)

(1,731)

(3,400)

(3,550)

(3,700)

Acquisitions/disposals

(81)

2,545

(460,484)

0

0

0

Financing

(1,553)

3,476

298,219

(2,067)

(2,171)

(2,279)

Dividends

(5,761)

(5,883)

(6,677)

(9,596)

(10,135)

(10,959)

Net Cash Flow

31,610

56,615

(127,400)

37,389

49,266

57,892

Opening net debt/(cash)

 

 

65,699

34,640

(21,135)

105,924

68,535

19,269

HP finance leases initiated

0

0

0

0

0

0

Other

(551)

(840)

341

0

0

0

Closing net debt/(cash)

 

 

34,640

(21,135)

105,924

68,535

19,269

(38,622)

Source: GB Group, Edison Investment Research


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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 2022 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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