Executing on growth strategy

GB Group 27 November 2018 Update
Download PDF

GB Group

Executing on growth strategy

H119 results

Software & comp services

27 November 2018

Price

438.5p

Market cap

£671m

Net cash (£m) at end H119

18.6

Shares in issue

153.1m

Free float

98%

Code

GBG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(8.7)

(29.5)

4.4

Rel (local)

(10.0)

(23.7)

10.2

52-week high/low

626p

388p

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 more than one-third of revenues internationally.

Next events

Capital markets day

13 December

Analysts

Katherine Thompson

+44 (0)20 3077 5730

Dan Ridsdale

+44 (0)20 3077 5729

GB Group is a research client of Edison Investment Research Limited

GB Group’s H119 results confirm that it is on track to reach its targets for 10%+ organic growth and 20%+ operating margins. As previously flagged, H119 reported growth rates are skewed by the large perpetual licence signed a year ago; adjusting for this the group achieved 11% underlying organic growth and 8% adjusted operating profit growth. We maintain our revenue and profitability forecasts, with small adjustments to our net cash forecasts.

Year end

Revenue (£m)

EBIT

(£m)

PBT*
(£m)

Dil. EPS*
(p)

DPS
(p)

P/E
(x)

03/17

87.5

17.0

16.5

9.9

2.4

44.5

03/18

119.7

26.3

25.8

13.5

2.7

32.6

03/19e

136.4

27.0

26.4

13.8

3.0

31.8

03/20e

161.7

30.9

30.4

15.6

3.3

28.1

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

H119 results confirm 11% underlying organic growth

GBG reported revenue growth of 9% y-o-y and adjusted operating profit (AOP) decline of 16% y-o-y in H119, with an AOP margin of 15%. Adjusting for the £3.5m perpetual licence signed in H118, the group saw 14% revenue growth, of which 11% was organic. Underlying AOP increased 8% y-o-y, reflecting the investment the company is making in product and people to support organic growth plans. Reflecting typical seasonality and the inclusion of the Vix Veriify Global (VVG) acquisition from October, we would expect to see a stronger performance in H219. Management expects to achieve consensus revenue and profit expectations for FY19. We make no changes to our revenue and AOP forecasts, with a minor reduction in net cash to reflect exceptional costs incurred in FY19e.

Making progress with strategic priorities

The group made good progress in its strategy to drive global growth from the three core areas of identity verification, fraud and location intelligence while making acquisitions to bolster geographic reach, expertise, data sets and customers. The recent VVG acquisition strengthens eIDV and Loqate in Asia Pacific and adds new customers in financial services and gambling.

Valuation: Premium reflects growth opportunity

At 22.7x FY19e and 20.0x FY20e EBITDA, the stock trades at a premium to the UK software sector on an EV/EBITDA basis; on a P/E basis it trades at a discount in FY19 but a premium for FY20. Looking at more directly relevant sub-sectors, including global peers, the stock trades more in line with cyber-security peers, with similar levels of profitability and growth. We believe this premium rating is warranted, considering the group’s historic track record of profitable growth and good cash generation combined with the opportunity from structural growth in identity data intelligence services and the potential for accretive acquisitions.

Review of H119 results

Exhibit 1: Half-year results highlights

£m

H119

H118

Underlying H118

% y-o-y

Underlying y-o-y

Revenues

57.3

52.6

50.3

8.8%

13.9%

Gross profit

43.3

41.3

5.7%

Gross margin

75.6%

78.6%

77%

(2.9%)

(1.4%)

Adjusted operating profit (AOP)*

8.8

10.4

8.1

(15.8%)

8%

Adjusted operating margin

15.3%

19.8%

16.1%

(4.5%)

(0.8%)

Reported operating profit

2.7

3.8

(28.4%)

Reported operating margin

4.7%

7.2%

(2.5%)

Normalised dil. EPS (p)

5.2

6.0

(13.3%0

Reported basic EPS (p)

1.3

1.6

(18.8%)

Net cash

18.6

4.1

353.7%

Source: GB Group. Note: *Adjusts for amortisation of acquired intangibles, share-based payments and exceptional items.

As highlighted in the recent trading update, GBG has reported revenue growth of 8.8% y-o-y for H119. Stripping out the effect of the perpetual licence signed in H118 (discussed in further detail below), and the £1.5m in revenues from the PCA Predict acquisition (a full six-month contribution versus four months a year ago), GBG generated underlying organic revenue growth of 11% y-o-y. New customers in the period included Kohl’s, Abercrombie & Fitch, Hugo Boss, Aldi, Credit Harmony, PT Bank and CMBC, highlighting the international nature of the customer base.

Gross margin of 75.6% was 2.9pp lower than a year ago, again reflecting the perpetual licence signed in H118; adjusted for this, gross margin was 1.4pp lower y-o-y. Operating costs before depreciation, amortisation, share-based payments and exceptional items were 12% higher y-o-y but essentially flat h-o-h. The company incurred exceptional costs totalling £1.0m, of which £0.9m related to acquisitions and £0.1m to staff reorganisation. Tax of £0.5m equated to an effective rate of 20% of reported PBT and 6% of adjusted PBT. The group closed H119 with a net cash balance of £18.6m, up from the £4.1m reported a year ago and £13.5m at the end of FY18. Adjusted EBITDA to operating cash flow converted at a rate of 106% compared to 92% a year ago.

Divisional results skewed by prior year perpetual licence

Exhibit 2: Divisional revenues and adjusted operating profit (£m)

Revenues

H119

H118

y-o-y

eIDV

18.7

18.7

0%

CAFS

6.3

5.4

17%

T&I

5.4

5.0

10%

E&C

3.2

3.1

5%

Fraud, risk and compliance

33.6

32.1

5%

Loqate

19.3

16.5

17%

Engage

4.3

4.1

7%

Location and customer intelligence

23.6

20.6

15%

Total revenues

57.3

52.6

9%

Adjusted operating profit (AOP)*

Fraud, risk and compliance

5.6

7.7

-27%

Location and customer intelligence

4.3

3.4

26%

Unallocated costs

-1.1

-0.7

57%

Group adjusted operating profit

8.8

10.4

-15%

Adjusted operating margin

Fraud, risk and compliance

17%

24%

-7%

Location and customer intelligence

18%

17%

1%

Group adjusted operating profit

15%

20%

-5%

Source: GB Group. Note: *Adjusts for amortisation of acquired intangibles, share-based payments and exceptional items.

The table above shows H1 divisional revenue and adjusted operating profit. As previously discussed, the £3.5m perpetual licence signed in the eIDV business in H118 resulted in flat growth year-on-year for that division in H119. Treating the perpetual licence as a more typical three-year term licence would result in underlying eIDV revenues of £16.5m in H118, equating to growth of 13% y-o-y. CAFS and T&I both saw strong double-digit organic revenue growth. Excluding the £1.5m impact from the PCA acquisition, Loqate grew 8% y-o-y – the company noted that it saw strong growth in North America and plans to expand its East Coast team. Engage has contracted in recent years, so a return to growth is welcome.

The perpetual licence similarly skewed operating profit margins for eIDV and the group as a whole, with the group seeing a 5% margin decline year-on-year. Adjusting for the licence, AOP grew 8% on an underlying basis resulting in a margin of 15.3% for H119. We note that GBG reported adjusted operating profit margins of 14% in H117 and H116 and 16% in H115, reflecting the typical seasonality of the business which tends to see a higher level of licence renewals in H2. We see H119 results as reverting back to normal seasonality.

Further progress made against strategic priorities

The company has laid out its strategic priorities for the three years to 2021. We review H1 results in the context of these priorities.

Maximise growth from “3 global big bets”

The group is focused on driving growth on a global basis from the key areas of identity verification (eIDV), fraud management (CAFS) and location intelligence (Loqate). The divisional growth rates above highlight that these were the largest contributors to growth for the group during H119 and we would expect this to continue to be the case. In eIDV, GBG is focused on providing market leading solutions in its core markets (its UVP31 proposition). For IDScan, the company has developed a digital access model for document verification, to add to its existing on-premise scanner-based solution, and added digital tampering and liveness functionality to its digital on-boarding solution. In CAFS and Loqate, GBG has hired business development staff in the US, Germany and Asia, with total new hires of 31 for the group in H119. Loqate added seven new data suppliers during H1.

Unique Value Proposition Level Three

Revenue from international customers grew 31% y-o-y to make up 36% of group revenues in H119, up from 30% in H118 and 34% for FY18.

The company noted that it is going to exit the GOV.UK Verify scheme, for which government funding will stop in March 2019. We understand that this has not contributed material profits to the group so this is likely to have limited impact on our forecasts.

Optimise growth in specialist UK businesses

The T&I, E&C and Engage businesses are UK-focused and operate in lower growth markets. Management is keen to optimise the growth from these businesses and we would expect the company to be able to continue to generate mid-single digit revenue growth from each of these business lines.

Join up GBG with the customer at the centre

Since Chris Clarke joined as CEO in April 2017, the company has shifted its focus from product to customer, making it easier for the customer to access all GBG solutions that are required from one entry point. The three businesses involved in location intelligence are now combined into the Loqate division and the Loqate brand was launched in June to unify the products.

Use M&A to enhance reach and capability

GBG acquired Vix Verify Global in October2 for £21.2m, adding further reach in Asia Pacific for identity verification and location intelligence solutions. The deal adds 400 customers and 74 employees. We expect the company to make further acquisitions, to expand functionality, expertise and geographic coverage. At the end of H119, the company had £41.1m undrawn on its credit facility. In October £10m was drawn down to fund the VVG acquisition, leaving £31.1m of group borrowing capacity for future deals to add to the post-VVG cash balance of £16.3m.

Outlook and changes to forecasts

The company expects to meet consensus revenue and profit forecasts for FY19. We make no changes to our revenue or AOP forecasts. We have revised our estimates to reflect the £1m in exceptional costs incurred in H119, an additional £0.8m in costs for H2 relating to the VVG acquisition and the £0.4m received from the issue of shares.

Exhibit 3: Changes to estimates

£m

 

FY19e

FY19e

 

 

FY20e

FY20e

 

 

previous

new

change

 

previous

new

change

Revenues

136,350

136,350

0.0%

161,733

161,676

0.0%

EBITA

27,000

27,000

0.0%

30,942

30,932

0.0%

EBITA margin (%)

19.8%

19.8%

19.1%

19.1%

PBT

26,431

26,431

0.0%

30,362

30,352

0.0%

EPS - normalised, diluted (p)

13.8

13.8

0.0%

15.6

15.6

(0.1%)

EPS - reported (p)

6.9

5.7

(17.4%)

9.5

9.5

(0.1%)

Net (cash)/debt

(7,185)

(5,697)

-20.7%

(24,746)

(23,249)

(6.1%)

Source: Edison Investment Research

Valuation

The table below shows GBG trades compared to ID management companies, Identity Access Management software companies and more general cyber-security companies, as well as UK software peers.

Exhibit 4: Peer group financial and valuation metrics

Rev growth

EBITDA margin

EBIT margin

EV/Sales

EV/EBITDA

P/E

Yr1

Yr2

Yr1

Yr2

Yr1

Yr2

Yr1

Yr2

Yr1

Yr2

Yr1

Yr2

GBG

13.9%

18.6%

21.8%

20.8%

19.8%

19.1%

4.9

4.2

22.7

20.0

31.8

28.1

Average sub-sector:

ID Management

8.9%

8.0%

18.8%

26.0%

13.7%

19.9%

3.6

3.6

34.5

15.2

20.8

18.3

Identity Access Management

27.7%

23.7%

-14.3%

-0.9%

-20.9%

-6.6%

7.2

5.7

21.2

16.1

34.2

27.1

Cyber Security

15.6%

12.9%

20.8%

22.4%

16.8%

18.6%

5.3

4.7

26.9

21.8

33.9

29.2

UK Software

27.3%

20.3%

17.2%

22.5%

11.2%

16.9%

6.0

4.1

21.9

12.9

34.8

20.4

Source: Edison Investment Research, Thomson Eikon (as at 26 November)

The stock trades at a premium to the UK software sector on an EV/EBITDA basis; on a P/E basis it trades at a discount in FY19 but a premium for FY20. Looking at more directly relevant sub-sectors, including global peers, the stock trades on multiples more akin to cyber-security peers, with similar levels of profitability and growth. We believe this premium rating is warranted, considering the group’s historic track record of profitable growth and good cash generation combined with the opportunity from structural growth in identity data intelligence services. Using a reverse DCF, we estimate that the current share price is factoring in low-double digit revenue growth and EBITDA margins of 21.5%, in line with management’s targets for organic growth of 10%+ and AOP margins of 20%+. We expect management to continue to make accretive acquisitions to boost growth, which should provide further support to the share price.

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

136,350

161,676

Cost of Sales

(16,448)

(17,606)

(20,302)

(27,092)

(33,910)

(39,952)

Gross Profit

40,835

55,795

67,166

92,610

102,440

121,724

EBITDA

 

 

11,844

14,772

18,734

28,741

29,675

33,689

Operating Profit (before amort. and except.)

10,790

13,428

17,006

26,311

27,000

30,932

Acquired intangible amortisation

(1,986)

(2,501)

(4,022)

(7,885)

(8,100)

(7,300)

Exceptionals

(1,629)

(94)

(1,410)

(2,143)

(1,830)

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

14,570

20,882

Net Interest

(266)

(270)

(498)

(508)

(569)

(580)

Profit Before Tax (norm)

 

 

10,524

13,158

16,508

25,803

26,431

30,352

Profit Before Tax (FRS 3)

 

 

5,928

9,318

10,082

13,400

14,001

20,302

Tax

(1,127)

(178)

668

(2,746)

(5,286)

(5,767)

Profit After Tax (norm)

8,314

10,395

13,206

20,642

21,541

24,585

Profit After Tax (FRS 3)

4,801

9,140

10,750

10,654

8,715

14,535

Average Number of Shares Outstanding (m)

119.1

122.7

131.6

150.6

153.0

153.6

EPS - normalised (p)

 

 

7.0

8.5

10.0

13.7

14.1

16.0

EPS - normalised and fully diluted (p)

 

6.7

8.2

9.9

13.5

13.8

15.6

EPS - (IFRS) (p)

 

 

4.0

7.4

8.2

7.1

5.7

9.5

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

75.3

EBITDA Margin (%)

20.7

20.1

21.4

24.0

21.8

20.8

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

18.8

18.3

19.4

22.0

19.8

19.1

BALANCE SHEET

Fixed Assets

 

 

51,238

59,364

105,653

170,284

183,360

176,053

Intangible Assets

45,296

54,113

98,753

161,372

173,492

165,212

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

48,914

61,121

66,606

87,941

Debtors

17,408

23,774

30,569

37,969

45,262

53,045

Cash

15,778

12,415

17,618

22,753

20,945

34,497

Other

0

0

727

399

399

399

Current Liabilities

 

 

(30,784)

(32,559)

(44,444)

(56,942)

(61,890)

(67,173)

Creditors

(24,305)

(30,927)

(36,436)

(56,100)

(61,093)

(66,376)

Contingent consideration

(5,733)

(1,050)

(7,122)

(45)

0

0

Short term borrowings

(746)

(582)

(886)

(797)

(797)

(797)

Long Term Liabilities

 

 

(7,506)

(6,593)

(15,940)

(16,711)

(22,711)

(18,711)

Long term borrowings

(3,643)

(3,160)

(11,499)

(8,451)

(14,451)

(10,451)

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

94,183

157,752

165,364

178,109

CASH FLOW

Operating Cash Flow

 

 

11,684

13,397

16,305

31,620

25,545

31,189

Net Interest

(266)

(282)

(498)

(545)

(569)

(580)

Tax

(337)

(248)

(2,193)

(3,247)

(5,286)

(5,767)

Capex

(2,011)

(1,762)

(2,227)

(2,018)

(2,650)

(2,750)

Acquisitions/disposals

(18,672)

(12,263)

(36,840)

(70,363)

(21,245)

0

Financing

10,954

790

24,755

56,668

446

0

Dividends

(1,955)

(2,277)

(2,775)

(3,582)

(4,049)

(4,540)

Net Cash Flow

(603)

(2,645)

(3,473)

8,533

(7,809)

17,552

Opening net debt/(cash)

 

 

(11,846)

(11,389)

(8,673)

(5,233)

(13,505)

(5,697)

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)

(5,697)

(23,249)

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 £49,500 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 Edison analyst 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 2018 Edison Investment Research Limited (Edison). All rights reserved 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.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). 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

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

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 (nor will such persons be able to purchase shares in the placing).

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

Neither this Communication nor any copy (physical or electronic) of it may be (i) taken or transmitted into the United States of America, (ii) distributed, directly or indirectly, in the United States of America or to any US person (within the meaning of regulations Regulation S made under the US Securities Act 1933, as amended), (iii) taken or transmitted into or distributed in Canada, Australia, the Republic of Ireland or the Republic of South Africa or to any resident thereof, except in compliance with applicable securities laws, (iv) taken or transmitted into or distributed in Japan or to any resident thereof for the purpose of solicitation or subscription or offer for sale of any securities or in the context where the distribution thereof may be construed as such solicitation or offer, or (v) or taken or transmitted into any EEA state other than the United Kingdom. Any failure to comply with these restrictions may constitute a violation of the securities laws or the laws of any such jurisdiction. The distribution of this Communication in or into other jurisdictions may be restricted by law and the persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

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

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 £49,500 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 Edison analyst 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 2018 Edison Investment Research Limited (Edison). All rights reserved 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.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). 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

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

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 (nor will such persons be able to purchase shares in the placing).

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

Neither this Communication nor any copy (physical or electronic) of it may be (i) taken or transmitted into the United States of America, (ii) distributed, directly or indirectly, in the United States of America or to any US person (within the meaning of regulations Regulation S made under the US Securities Act 1933, as amended), (iii) taken or transmitted into or distributed in Canada, Australia, the Republic of Ireland or the Republic of South Africa or to any resident thereof, except in compliance with applicable securities laws, (iv) taken or transmitted into or distributed in Japan or to any resident thereof for the purpose of solicitation or subscription or offer for sale of any securities or in the context where the distribution thereof may be construed as such solicitation or offer, or (v) or taken or transmitted into any EEA state other than the United Kingdom. Any failure to comply with these restrictions may constitute a violation of the securities laws or the laws of any such jurisdiction. The distribution of this Communication in or into other jurisdictions may be restricted by law and the persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

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

Share this with friends and colleagues

You may be interested in