Consistent strong performance

GB Group 7 June 2018 Update
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GB Group

Consistent strong performance

FY18 results update

Software & comp services

7 June 2018

Price

520p

Market cap

£794m

Net cash (£m) March 2018

13.5

Shares in issue

152.7m

Free float

98%

Code

GBG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

5.4

21.1

26.9

Rel (local)

2.9

13.0

23.6

52-week high/low

545p

330.75p

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, it operates across 24 countries and generates approximately one-third of revenues internationally.

Next events

H119 results

November 2018

Analysts

Bridie Barrett

+44 (0)20 3077 5700

Katherine Thompson

+44 (0)20 3077 5730

GB Group is a research client of Edison Investment Research Limited

GBG delivered another excellent performance in FY18 with reported adjusted EPS up 37%. With over 75% of revenues now from the global product lines, a clear organic growth plan and a healthy acquisition pipeline, we retain our forecasts and believe the shares, which trade among identity access management and cyber security peers to be well supported at these levels.

Year end

Revenue (£m)

EBIT

(£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

03/17

87.5

17.0

16.5

9.9

2.4

52.8

0.5

03/18

119.7

26.3

25.8

13.5

2.7

38.6

0.5

03/19e

133.4

27.0

26.5

13.8

3.0

37.6

0.6

03/20e

147.7

30.0

29.6

15.2

3.3

34.1

0.6

3ote: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

FY18 results: Strong organic growth and PCA Predict impact

Revenues of £119.7m (+37% y-o-y, of which 17% was organic) and EBITA of £26.3m (+55%) were in line with April’s trading update, with EBITA 12% above our forecast due to a higher margin – stripping out the impact from the one licence sale during H1, margins of 20% were in line with management’s targeted rate and are expected to fall back to this level in FY19. Adjusting for the licence, underlying organic growth of 15% picked up slightly in H2 (12% in H1) as the synergy benefits of the PCA Predict acquisition start to present, along with some ‘one-off’ effects from a flurry of Bitcoin trading and first revenues being back-recognised from the GOV.UK Verify service. A final dividend of 2.65p (+13% y-o-y) has been proposed.

Faster-growing global products underpin forecasts

Growth was strongest in GBG’s international product lines: fraud (31%), electronic identity verification (eIDV +37%) and location (+81%). These areas now account for over 75% of group sales, which we believe puts GBG in a strong position to continue to deliver our forecast double-digit organic revenue in FY19 and FY20. The group’s efforts to integrate platforms and acquisitions over the last year will enable the launch of a common brand this year, a key part of the strategy to promote a more customer-oriented approach to selling. Although the growth comparative will be relatively difficult in H119, the year appears to have started well; 70% of GBG’s revenues are recurring and deferred revenues as a share of our forecast for the year are ahead of last year. We increase EPS forecasts in FY19 and FY20 by c 2% to reflect a slightly lower tax charge.

Valuation: Premium captures growth opportunity

GBG’s 23.1x FY19 EV/EBITDA and 37.6x P/E ratings are within the mix of other global companies in the identity access management and cyber security segments. While this is a considerable premium to the UK software sector, we believe it is supported by the good earnings quality and cash conversion, strong organic growth outlook and an active acquisition pipeline.

Results overview

Results headlines: Ahead as flagged at pre-close update

The revenue increase of 37% to £119.7m and adjusted EBITA of £26.3m, up 55%, had been pre-announced in April’s trading update – ahead of our previous forecasts (£117.1m and £23.3m respectively) and a 12% beat in terms of adjusted operating profits. While operating margins (22%) were ahead of the group’s targeted 20%, once the impact of the receipt of a one-off perpetual licence in H118 is backed out, margins were as expected at c 20%.

Net of £0.5m finance costs, adjusted PBT of £25.8m was similarly ahead. As in FY17, the group was granted R&D and patent box tax reliefs as well as the benefit of other timing differences, and the effective tax rate of the group at 11% was below our forecast rate, resulting in a reported adjusted diluted EPS of 15.3p (vs forecast of 11.8p).

In our calculation of adjusted EPS for FY18, we use a normalised tax rate of 20%, which implies an adjusted EPS of 13.5p (+37% y-o-y). Although our measure of EPS is conservative, we believe it gives a more meaningful picture of the group’s underlying longer-term earnings pattern.

Reported PBT of £13.4m (up 33% y-o-y) captures a higher charge for amortisation of acquired intangibles of £7.9m, largely due to the acquisition of PCA Predict in May 2017, as well as associated exceptional costs relating to its acquisition, and other restructuring costs of £2.1m and a higher share-based payments charge of £2.4m (FY17: £10m), following the change of CEO last year.

Operating cash flow of £31.6m (FY16: £16.3m) equates to a 110% cash conversion. This is ahead of the group’s trend rate of c 90%, with benefits seen following the PCA acquisition, which has a net positive working capital cycle, as well as a reduction in receivables days out of China, following the establishment of a wholly foreign-owned enterprise in the region last year. As a result, year-end net cash balance of £13.5m was well ahead of our forecast for net debt of £2.8m.

Exhibit 1: Summary FY18 results and forecasts (£m)

 

FY17

FY18

y-o-y change

FY19e

FY20e

Revenues

87.5

119.7

37%

133.4

147.7

Gross profit

67.2

92.6

38%

100.1

111.0

Gross profit margin

76.8%

77.4%

75.1%

75.1%

EBITA

17.0

26.3

55%

27.0

30.0

EBITA margin

19.4%

22.0%

20.2%

20.3%

Amortisation of acquired intangibles

(4.0)

(7.9)

96%

(8.1)

(7.3)

Share based payments

(1.0)

(2.4)

139%

(2.5)

(2.8)

Exceptional items

(1.4)

(2.1)

52%

-

-

Reported operating profit

10.6

13.9

31%

16.4

19.9

Net financing costs

(0.5)

(0.5)

2%

(0.5)

(0.4)

Adjusted PBT

16.5

25.8

56%

26.5

29.6

Reported PBT

10.1

13.4

33%

15.9

19.5

Tax

0.7

(2.7)

-511%

(5.3)

(5.6)

PAT - adjusted

17.2

23.1

34%

21.6

23.9

PAT - reported

10.8

10.7

-1%

10.6

13.9

Adjusted diluted EPS (Edison definition) (p)

9.9

13.5

37%

13.8

15.2

Reported EPS (p)

8.2

7.1

-12%

6.9

9.1

Net cash/ (debt)

5.2

13.5

158%

28.4

45.4

Source: GBG (historicals), Edison Investment Research (forecasts)

Strong performance in focus areas: Fraud, eIDV and Loqate

Of the 37% revenue growth, 20% relates to the acquisition of PCA Predict in May 2017 and a full-year effect from ID Scan, acquired in June 2016. In total, 17% of growth was organic although, adjusting for the impact of a one-off £3.5m perpetual licence sale in H118 by ID Scan, the underlying organic revenue growth was 15%. The pick-up in underlying growth through the year (17% in H218 vs 12% in H118) is attributed to the benefits of integrating GBG data into the PCA platform (c 1pp), a flurry of ID verification requests associated with the interest in Bitcoin trading by one of GBG’s newer clients (Coinbase) and c 1pp from the recognition of first revenues from the GOV.UK Verify platform. The strong underlying growth performance continues to be underpinned by the group’s focus areas for global growth: fraud management (CAFS +31% organic growth), identity verification (eIDV +37% including a full year from ID Scan) and location intelligence products (+81% including this year’s acquisition of PCA Predict, Loqate and Matchcode 360).

Exhibit 2: Divisional performance (£000s)

 

2015

2016

2017

H118

2018

2019e

2020e

Fraud, risk and compliance

33,800

42,400

54,814

32,055

69,800

79,200

89,796

Location and customer intelligence

23,600

31,000

32,672

20,571

49,902

54,150

57,937

Total revenue

57,283

73,401

87,468

52,626

119,702

133,350

147,733

Revenue growth

Fraud, risk and compliance

52%

25%

29%

35%

27%

13%

13%

Location and customer intelligence

21%

31%

5%

50%

53%

9%

7%

Total revenue growth

37%

28%

19%

40%

37%

11%

11%

Fraud, risk and compliance

6,600

10,300

12,923

7,693

16,000

17,776

20,154

Location and customer intelligence

4,800

4,000

4,758

3,442

11,511

10,830

11,587

Group costs

(610)

(872)

(675)

(707)

(1,200)

(1,606)

(1,779)

Total EBITA

10,790

13,428

17,006

10,428

26,311

27,000

29,962

FRC EBITDA margin

19.5%

24.3%

23.6%

24.0%

22.9%

22.4%

22.4%

LCI EBITDA margin

20.3%

12.9%

14.6%

16.7%

23.1%

20.0%

20.0%

Group

18.8%

18.3%

19.4%

19.8%

22.0%*

20.2%

20.3%

Operating cash flow

11,684

13,397

16,305

31,620

27,375

30,219

Cash conversion

99%

91%

87%

110%

92%

92%

Source: GBG, Edison Investment Research. Note:* c 20% excluding the impact of a one-off licence.

GBG has made 11 acquisitions over the last seven years (including the recent small acquisition of Verifeyed, a digital anti-tampering software application) and has built leading positions in a number of products and markets. Investment over the last year has been stepped up to fully integrate these acquisitions, divisions and platforms in anticipation of the launch of a common brand, which should support cross sell opportunities moving forward; the recent appointment of a customer experience leadership role is a part of the efforts since Chris Clark joined last year to become more customer, rather than product, focused.

Further to this, next week management plan to launch its first full solution brand, GBG Loqate, which will pull together all the product lines in this area, providing it with one of the strongest offers on the market globally. The group now has a sales presence in 15 markets across the world and sees particular opportunity to expand PCA Predict from the UK to two of the world’s largest markets – the US and Germany – where sales managers have been put in place and first contracts signed.

International growth, at over 50% y-o-y, continues to be strong with these revenues now accounting for 34% of total. GBG has had a strong representation in financial services and gaming for some time and continued to add global companies to its roster of clients in these areas (Nordstrom, KBC Ireland). During the year, it also added a number of e-tailers including ebay and Etsy in the US.

Momentum appears to be strong heading into the new financial year – deferred revenues at March 2018 were £28.3, +49% y-o-y, accounting for 21% of FY19 forecast revenues (vs 18% at the same point last year, adjusted for PCA Predict). Around 70% of revenues are recurring and, while the basis of comparison will be tough in the first half of the year in particular, over 76% of revenues are now derived from the faster-growing product areas. Some of the headwinds to growth from the less strategic Engage division appear to have eased (revenues, down 3% across the year were stable in H218). For now we leave operational FY19 and FY20 forecasts largely unchanged, but reduce our forecast tax charge slightly as GBG is likely to continue to benefit from a range of tax credits which results in a 2% increase to our FY19e and FY20e EPS forecasts to 13.8p and 15.2p respectively. We also upgrade our forecast year-end cash balance to £28.4m as a consequence of the higher starting point for the year. However, given the above and the 2% beat to FY18 revenues, there may be scope to nudge up our organic revenue forecast slightly as the year progresses.

Valuation reflects earnings quality and growth opportunity

GBG has delivered a consistently strong financial performance over the last three years (see Well positioned in the dynamic ID Intelligence market for more information on the group’s historic performance). Double-digit organic revenue growth, in parallel with a widening gross margin as the group benefited from scale economies, coupled with acquisitions resulted in an EPS CAGR of 27% across the three years to FY18. Current trading remains strong and we expect the internationalisation of GBG’s product set to support continued double-digit organic growth over the forecast period. While the scope for margin improvement is currently capped by the group’s policy to reinvest an increasing share of revenues in new product and market development, this should nevertheless support our forecast for c 15% EPS CAGR to 2020.

The shares have performed strongly since the trading update in April and trade above the average software sector multiples. However, when compared to other companies in the identity access management sector and cyber security segments, which we believe share similar growth drivers, the 23.1x FY19 EV/EBITDA and 37.6x P/E ratings are within the mix (Exhibit 3).

Our reverse DCF, which we roll out one year following the results, implies the shares are already discounting low double-digit revenue growth over the medium term on stable margins (assuming an 8.4% WACC and 3% perpetuity growth after 10 years) as summarised in Exhibit 4. While already a fairly full rating, we believe the share price is supported at these levels based on the good earnings quality, strong cash conversion and the excellent growth outlook, which may be partly reflecting likely M&A activity, a key part of management’s strategy to expand the group’s product set and reach. The global market for identity data intelligence services remains fragmented, particularly internationally and in advanced authentication. Management has indicated that while valuations in the US are stretched for private companies in this area, it has c 40 prospects under review. With approximately £54m cash available to it via its £13.5m net cash balance and £40.7m undrawn facilities, bolt-on acquisitions could be absorbed without share dilution.

Furthermore, given the importance of ID intelligence in enabling the digital economy, and with General Data Protection Regulation initiatives in the spotlight, investors should consider the potential strategic value of quality companies to a widening potential pool of acquirers.

Exhibit 3: Peer summary

Segment

Sales growth

(%)

EBITDA m’gin (%)

EBIT m’gin (%)

EV/ EBITDA

(x)

EV/ EBIT

(x)

P/E

(x)

FY1

FY2

FY1

FY2

FY1

FY1

FY2

FY1

FY2

FY1

FY2

GBG

11.4

10.8

22.3

22.1

20.2

23.1

20.9

25.4

22.9

37.6

34.1

Average ID management

11.7

17.7

23.6

25.0

20.7

19.8

15.2

22.0

32.3

26.8

38.8

Average IAM

13.0

12.4

20.9

22.6

21.5

21.2

17.9

24.2

20.2

36.6

31.3

Average cyber security

17.7

15.2

24.0

22.7

19.1

33.1

28.2

56.8

34.3

61.4

45.0

Average UK software

22.0

13.2 

22.6

25.1 

19.3 

13.9

12.2

17.3

15.4

26.0

21.8

Source: Bloomberg. Note: Priced 5 June 2018 (excludes outliers with multiples over 100x).

Exhibit 4: DCF sensitivity table

EBITDA margin

….revenue growth….

18.0%

19.0%

20.0%

21.0%

22.0%

23.0%

24.0%

25.0%

4.0%

71

75

81

87

93

99

106

114

6.0%

143

153

165

177

190

204

219

235

8.0%

215

231

249

267

287

309

332

357

10.0%

287

309

332

358

385

414

445

479

12.0%

359

387

416

448

482

519

558

600

13.0%

395

426

458

493

531

571

615

661

14.0%

431

465

500

539

580

624

671

722

15.0%

467

503

542

584

628

676

727

782

16.0%

504

542

584

629

677

729

784

843

Source: Edison Investment Research. Note: FY18 EBITDA margin was 22%.

Exhibit 5: Financial summary

£'000s

2015

2016

2017

2018

2019e

2020e

March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

57,283

73,401

87,468

119,702

133,350

147,733

Cost of Sales

(16,448)

(17,606)

(20,302)

(27,092)

(33,212)

(36,722)

Gross Profit

40,835

55,795

67,166

92,610

100,138

111,011

EBITDA

 

 

11,844

14,772

18,734

28,741

29,675

32,719

Operating Profit (before amort. and except.)

10,790

13,428

17,006

26,311

27,000

29,962

Acquired intangible amortisation

(1,986)

(2,501)

(4,022)

(7,885)

(8,100)

(7,300)

Exceptionals

(1,629)

(94)

(1,410)

(2,143)

0

0

Share of associate

(10)

0

0

0

0

0

Share based payments

(971)

(1,245)

(994)

(2,375)

(2,500)

(2,750)

Operating Profit

6,194

9,588

10,580

13,908

16,400

19,912

Net Interest

(266)

(270)

(498)

(508)

(500)

(400)

Profit Before Tax (norm)

 

 

10,524

13,158

16,508

25,803

26,500

29,562

Profit Before Tax (FRS 3)

 

 

5,928

9,318

10,082

13,400

15,900

19,512

Tax

(1,127)

(178)

668

(2,746)

(5,300)

(5,617)

Profit After Tax (norm)

8,314

10,395

13,206

20,642

21,598

23,946

Profit After Tax (FRS 3)

4,801

9,140

10,750

10,654

10,600

13,896

Average Number of Shares Outstanding (m)

119.1

122.7

131.6

150.6

152.8

153.5

EPS - normalised (p)

 

 

7.0

8.5

10.0

13.7

14.1

15.6

EPS - normalised and fully diluted (p)

 

6.7

8.2

9.9

13.5

13.8

15.2

EPS - (IFRS) (p)

 

 

4.0

7.4

8.2

7.1

6.9

9.1

Dividend per share (p)

1.9

2.1

2.4

2.7

3.0

3.3

Gross Margin (%)

71.3

76.0

76.8

77.4

75.1

75.1

EBITDA Margin (%)

20.7

20.1

21.4

24.0

22.3

22.1

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

18.8

18.3

19.4

22.0

20.2

20.3

BALANCE SHEET

Fixed Assets

 

 

51,238

59,364

105,653

170,284

162,160

154,853

Intangible Assets

45,296

54,113

98,753

161,372

152,292

144,012

Tangible Assets

2,829

2,234

2,856

4,700

5,656

6,629

Other fixed assets

3,113

3,017

4,044

4,212

4,212

4,212

Current Assets

 

 

33,186

36,189

48,187

60,722

76,535

93,552

Debtors

17,408

23,774

30,569

37,969

42,847

46,948

Cash

15,778

12,415

17,618

22,753

33,688

46,604

Other

0

0

0

0

0

0

Current Liabilities

 

 

(30,784)

(32,559)

(44,444)

(56,942)

(59,520)

(61,121)

Creditors

(24,305)

(30,927)

(36,436)

(56,100)

(58,678)

(60,279)

Contingent consideration

(5,733)

(1,050)

(7,122)

(45)

(45)

(45)

Short term borrowings

(746)

(582)

(886)

(797)

(797)

(797)

Long Term Liabilities

 

 

(7,506)

(6,593)

(15,940)

(16,711)

(12,711)

(8,711)

Long term borrowings

(3,643)

(3,160)

(11,499)

(8,451)

(4,451)

(451)

Contingent consideration

(895)

0

0

0

0

0

Other long term liabilities

(2,968)

(3,433)

(4,441)

(8,260)

(8,260)

(8,260)

Net Assets

 

 

46,134

56,401

93,456

157,353

166,463

178,573

CASH FLOW

Operating Cash Flow

 

 

11,684

13,397

16,305

31,620

27,375

30,219

Net Interest

(266)

(282)

(498)

(545)

(500)

(400)

Tax

(337)

(248)

(2,193)

(3,247)

(5,300)

(5,617)

Capex

(2,011)

(1,762)

(2,227)

(2,018)

(2,650)

(2,750)

Acquisitions/disposals

(18,672)

(12,263)

(36,840)

(70,363)

0

0

Financing

10,954

790

24,755

56,668

0

0

Dividends

(1,955)

(2,277)

(2,775)

(3,582)

(3,990)

(4,536)

Net Cash Flow

(603)

(2,645)

(3,473)

8,533

14,935

16,916

Opening net debt/(cash)

 

 

(11,846)

(11,389)

(8,673)

(5,233)

(13,505)

(28,440)

HP finance leases initiated

0

0

0

0

0

0

Other

146

(71)

33

(261)

0

0

Closing net debt/(cash)

 

 

(11,389)

(8,673)

(5,233)

(13,505)

(28,440)

(45,356)

Source: GBG (historics), Edison Investment Research (forecasts)

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Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by GB Group and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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

295 Madison Avenue, 18th Floor

10017, New York

US

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by GB Group and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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

295 Madison Avenue, 18th Floor

10017, New York

US

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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