Growth and profits on track

GB Group 6 June 2019 Update
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GB Group

Growth and profits on track

FY19 results

Software & comp services

6 June 2019

Price

585p

Market cap

£1,128m

Net debt (£m) at end FY19

66.3

Shares in issue

192.9m

Free float

99%

Code

GBG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(2.0)

19.9

15.2

Rel (local)

0.3

19.7

23.3

52-week high/low

631.0p

410.5p

Business description

GB Group is a specialist in identity data intelligence. Its products and services enable its customers to better understand and verify their customers and employees, and are used across a range of fraud, risk management, compliance and customer on-boarding services. With headquarters in the UK, GB operates across 16 countries, has customers in 72 countries and generates more than 45% of revenues internationally.

Next events

Capital markets day

11 July

Analyst

Katherine Thompson

+44 (0)20 3077 5730

GB Group is a research client of Edison Investment Research Limited

GB Group (GBG) reported FY19 results in line with recently upgraded estimates. It continues to deliver on its strategy to grow organic revenues at double-digit rates while delivering operating margins in excess of 20%. Recent acquisitions are performing well and helped drive the 56% growth in international revenues over the year. We make minor changes to our forecasts, resulting in small upgrades to normalised EPS estimates.

Year end

Revenue (£m)

EBIT*

(£m)

PBT*
(£m)

Diluted EPS*
(p)

DPS
(p)

P/E
(x)

03/18

119.7

26.3

25.8

13.5

2.7

43.4

03/19

143.5

32.0

31.3

15.4

3.0

38.0

03/20e

192.6

44.0

40.7

16.4

3.4

35.6

03/21e

213.9

48.4

45.5

18.4

3.8

31.8

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

FY19 results meet GBG’s growth targets

GBG reported revenue growth of 19.9% for FY19, or 11.5% on an organic constant currency basis, at the upper end of GBG’s 10–12% target organic growth range. Adjusted operating profit of £32.0m grew 22% y-o-y, with a margin of 22.3%, and normalised EPS grew 15% y-o-y. The three focus businesses grew organic revenues at rates in the mid- to high-teens and provide the engine for future growth. The company has started to pay down some of the debt put in place when IDology was acquired and finished the year with a net debt position of £66.3m. We make no material changes to our revenue or EBITA forecasts; reductions in interest expense and tax result in EPS upgrades of 2.2% in FY20 and 2.6% in FY21.

Organic growth the immediate priority

GBG’s immediate focus is on integrating recent acquisitions and capitalising on its increased presence in the US and Asia Pacific, with investment in sales and customer support. It is also investing in technology to enable the group to scale up securely and develop integrated solutions across the different product areas, with a combined Identity/Location solution the first to be launched later this year. With c £54m headroom from current debt facilities and strong cash generation leading us to forecast a net cash position by the end of FY22, the group has adequate funding to pursue additional acquisitions in the medium term.

Valuation: Profitable growth warrants premium rating

At a P/E of 35.6x FY20e and 31.8x FY21e, the stock trades at a premium to the UK software sector. 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 strong cash generation combined with the opportunity from structural growth in identity data intelligence services and the potential for accretive acquisitions.

Review of FY19 results

We recently upgraded our forecasts on the back of the April trading update, factoring in better performance than originally forecast for the two recently acquired businesses (VIX Verify and IDology). Consequently, FY19 results are marginally ahead of our forecasts for revenue, adjusted operating profit (EBITA) and normalised EPS.

Group revenues increased 20% on a reported basis, 8.7% an organic reported basis and 11.5% on an adjusted organic, constant currency basis.1 Adjusted operating profit increased 22% and normalised EPS 15% over the same period. The company continues to expense R&D as incurred and highlighted an additional £5m investment during FY19 related to improving the fraud platform, moving to hosted solutions, and developing joint solutions.

As we have previously written, this adjusts for the £3.5m perpetual licence signed in H118, recognising only one-third in FY18 to reflect the typical three-year term of licences.

Reported EPS was ahead of our forecast due to lower than expected exceptional costs. The company incurred costs of £3.75m relating to acquisitions and a further £0.26m in reorganisation costs. This compares to our forecast for exceptional costs of £9.8m which included the costs of the fundraising – costs of £3.3m were set off against the proceeds raised.

EBITDA to operating cash conversion (pre-exceptionals) was 92.7% for the year and the company expects this to be 90–95% in the future.

The company announced a dividend of 2.99p for FY19, +12.8% y-o-y.

Exhibit 1: FY19 results highlights

£m

FY18a

FY19e

FY19a

diff

y-o-y

 

 

 

 

 

Revenues

119.7

143.3

143.5

0.1%

19.9%

Gross profit

92.6

109.2

107.4

-1.6%

16.0%

Gross margin

77.4%

76.2%

74.9%

-1.4%

-2.5%

EBITDA

28.7

34.4

34.1

-0.9%

18.6%

EBITDA margin

24.0%

24.0%

23.7%

-0.2%

-0.3%

EBITA

26.3

31.7

32.0

1.0%

21.7%

EBITA margin

22.0%

22.1%

22.3%

0.2%

0.3%

PBT

25.8

30.8

31.3

1.6%

21.5%

EPS - normalised, diluted (p)

13.5

15.1

15.4

1.6%

14.3%

EPS - reported (p)

7.1

5.2

7.7

47.2%

8.7%

Net debt/(cash)

(13.5)

66.3

66.3*

0.0%

N/A

Net debt/EBITDA (x)

N/A

1.9

1.9

Source: GB Group, Edison Investment Research. Note: *Includes £0.5m of unamortised arrangement fees.

Divisional revenue performance substantially in line

The group saw strong growth in its three main focus areas of Identity, Location and Fraud, which combined made up 79% of group revenues in FY19. Customer numbers grew from more than 17,000 to over 19,000 during the year, of which c 900 would have come from the acquisitions (assuming no customers in common); the remaining 1,100 were new customers to the group.

The largest business line, Identity, grew 37% on a reported basis and 13% on an organic, constant currency (cc) basis, after adjusting for the perpetual licence signed in FY18. Acquisitions contributed revenue of £12.0m (VIX Verify’s contribution and a month and half contribution from IDology). New customer wins include fintechs (Revolut, Coinbase) and on-demand businesses (Deliveroo) that are expanding at pace but need support with KYC processes as they sign up new customers. This is particularly true of Revolut, which has been in the press as a result of problems with its compliance procedures.

The Location business grew 17% on a reported basis, with 14% organic cc growth and a £1.4m contribution from acquisitions (the full year effect of PCA, which was acquired in May 2017). New customers in the year included Kohls, eBay, Sephora, N26 and HelloFresh.

The Fraud business (which includes Trace & Investigate) grew 14% on a reported and organic basis, with 17% organic cc growth. This business is more focused on Asia Pacific, but it also signed Discover Financial Services, its first US customer, during the year.

The two other businesses are UK focused and saw similar performance to the prior year: Employ & Comply grew 3% in FY19 after similar growth in FY18. Engage continued to decline, down 8% after a decline of 3% in FY18 and 16% in FY17.

The Fraud, Risk & Compliance division reported adjusted operating profit of £20.4m (+28% y-o-y) and a margin of 23.3%, 30bp higher than in FY18 but slightly lower than we forecast. The Location & Customer Intelligence division reported adjusted operating profit of £12.6m (+10% y-o-y) and a margin of 22.6%, ahead of our forecast and 40bp lower than in FY18. All of the VIX revenue was reported in the Identity business, whereas we had assumed a split between Identity and Location. As the VIX operating margin was lower than the group average, this explains the difference in divisional profitability compared to our forecasts. Combined, group adjusted operating profit was marginally ahead of our forecast.

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

Revenues

FY18a

FY19e

FY19a

diff

y-o-y

reported

y-o-y

organic

y-o-y organic cc

Identity

37.8

51.7

51.9

0.4%

37%

13%

13%

Fraud

13.5

16.2

16.0

-1.2%

19%

19%

25%

Trace & Investigate

12.4

13.3

13.4

1.0%

8%

8%

8%

Employ & Comply

6.1

6.4

6.3

-1.6%

3%

3%

3%

Fraud, Risk & Compliance

69.8

87.6

87.6

0.1%

26%

12%

13%

Location

39.4

46.3

46.3

0.0%

17%

14%

14%

Engage

10.5

9.5

9.6

1.6%

-8%

-8%

-8%

Location & Customer Intelligence

49.9

55.8

55.9

0.3%

12%

9%

9%

Total revenues

119.7

143.3

143.5

0.1%

20%

11%

12%

Adjusted operating profit

Fraud, Risk & Compliance

16.0

21.6

20.4

-5.6%

28%

Location & Customer Intelligence

11.5

11.7

12.6

7.7%

10%

Unallocated costs

-1.2

-1.6

-1.0

-37.5%

-17%

Group adjusted operating profit

26.3

31.7

32.0

0.9%

22%

Adjusted operating margin

Fraud, Risk & Compliance

23%

25%

23%

-1%

0%

Location & Customer Intelligence

23%

21%

23%

2%

-1%

Group adj. operating profit

22%

22%

22%

0%

0%

Source: GB Group, Edison Investment Research

Acquisition progress

The company is pleased with the performance of both acquisitions made in FY19.

VIX Verify: since being acquired on 23 October 2018, VIX has contributed revenues of £7.67m and operating profit of £1.33m, equating to a margin of 17.4%. This compares to a margin of 3.6% for the year to 30 June 2018, highlighting that the company has managed to achieve cost synergies sooner than expected.

IDology: since being acquired on 13 February 2019, IDology has contributed revenues of £4.28m and operating profit of £1.89m, equating to an operating margin of 44.1%. This compares to an EBITDA margin of 42.7% for CY18. The integration is performing in line with management’s expectations – the integration between GBG’s location and identity solutions is going well, and proposals and customer visits are being undertaken on a joint basis where relevant.

When it acquired IDology, GBG arranged a £110m credit facility with a £30m accordion and interest payable at LIBOR plus 1.5%. By the end of FY19 it had used £85.4m of this facility, with £54m still available for future acquisitions.

Making good progress with growth strategy

The company targets double-digit organic revenue growth and adjusted operating margins of at least 20%. It achieved this in FY19 and continues to work towards these targets for FY20 and beyond. GBG needs to achieve organic growth in excess of 10% for the three focus areas to compensate for lower growth in the UK-centric businesses, such that the 10%+ organic growth rate is maintained for the group.

Key areas of strategic focus to drive this growth include:

Maximise growth internationally from the three focus areas: 45% of revenues were generated outside of the UK in FY19, up from 34% in FY18, with growth of 56% y-o-y compared to 1% growth in the UK. A full year of revenues from the IDology acquisition should take international revenues above 50% in FY20.

Optimise growth in specialist UK businesses: we expect Engage revenues to gradually decline and the other two businesses to show mid-single-digit percentage growth.

Join up GBG with customers at the centre: staff have been recruited across the group to strengthen customer support and accelerate product innovation. The goal is to provide a seamless experience no matter which products customers are using. The company will soon be launching a combined Identity/Location solution.

Use M&A to enhance capability and reach: acquisitions are considered if they add technology, geographic coverage, additional datasets and/or new customers. This was the case for the recent VIX and IDology deals, which have given GBG access to multi-national customers in North America and Asia Pacific as well as new datasets and new technology. While short term, the company is focused on integrating recent deals and we expect M&A activity to resume in the medium term.

Outlook and changes to forecasts

Trading year-to-date has been in line with management’s expectations. We make minimal changes to our revenue and adjusted operating profit forecasts. We have reduced our net interest cost forecast to reflect the reduction in debt prior to year-end and reduced our tax rate assumption from 22% to 21%.

Exhibit 3: Changes to forecasts

£m

FY20e

FY20e

 

 

FY21e

FY21e

 

 

FY22e

 

previous

new

change

y-o-y

old

new

change

y-o-y

new

y-o-y

Revenues

192.8

192.6

-0.1%

34.2%

214.4

213.9

-0.2%

11.0%

237.3

11.0%

Gross profit

140.6

140.5

-0.1%

30.7%

158.5

158.2

-0.2%

12.6%

175.6

11.0%

Gross margin

72.9%

72.9%

0.0%

-2.0%

74.0%

74.0%

0.0%

1.0%

74.0%

0.0%

EBITDA

46.9

46.2

-1.4%

35.7%

51.4

50.7

(1.5%)

9.6%

55.4

9.3%

EBITDA margin

24.3%

24.0%

-0.3%

0.3%

24.0%

23.7%

(0.3%)

-0.3%

23.3%

(0.4%)

EBITA

44.1

44.0

-0.1%

37.4%

48.5

48.4

(0.3%)

9.8%

53.0

9.5%

EBITA margin

22.9%

22.9%

0.0%

0.5%

22.6%

22.6%

0.0%

-0.2%

22.3%

-0.3%

PBT

40.3

40.7

1.1%

30.0%

45.0

45.5

1.1%

11.6%

50.4

10.8%

EPS - normalised, diluted (p)

16.1

16.4

2.2%

6.8%

17.9

18.4

2.6%

11.7%

20.3

10.5%

EPS - reported (p)

12.2

7.7

(36.7%)

0.7%

14.4

10.5

-27.6%

35.0%

12.6

20.1%

Net debt/(cash)

42.7

37.7

-11.7%

-43.2%

16.9

7.0

-58.4%

-81.3%

(26.8)

-479.9%

Net debt/EBITDA (x)

0.9

0.8

0.3

0.1

N/A

Source: Edison Investment Research

Valuation

We compare GBG’s financial performance and valuation metrics to the median of four peer groups (averages not used as peers include many loss-making companies). GBG’s revenue growth is at the top end of the group and its operating profitability is also towards the upper end of peers. On EV and P/E multiples, GBG trades more in line with cyber security peers. We believe this premium rating is warranted, considering the group’s historic track record of profitable growth and cash generation and its high level of recurring revenues, combined with the opportunity from structural growth in identity data intelligence services.

Exhibit 4: Peer group financial and valuation metrics

Rev growth (%)

EBITDA margin (%)

EBIT margin (%)

EV/Sales (x)

EV/EBITDA (x)

P/E (x)

Yr1

Yr2

Yr1

Yr2

Yr1

Yr2

Yr1

Yr2

Yr1

Yr2

Yr1

Yr2

GBG

34.2

11.0

24.0

23.7

22.9

22.6

6.2

5.6

25.8

23.6

35.6

31.8

ID Management

7.3

8.0

30.5

33.3

21.2

26.7

5.0

4.9

17.1

15.2

21.4

22.6

Identity Access Management

20.7

17.4

8.8

12.3

7.4

10.5

4.3

3.5

14.0

10.8

23.5

23.9

Cyber Security

12.5

11.2

21.5

22.0

16.9

18.1

5.6

4.8

24.3

20.5

35.5

36.0

UK Software

13.3

11.0

18.7

20.4

14.2

17.1

3.2

2.7

12.1

10.8

19.0

18.7

Source: Edison Investment Research, Refinitiv. Note: Prices at 3 June.

We also perform a reverse DCF to estimate what growth rates and margins are factored into the share price. Using our explicit forecasts to FY22, a WACC of 8.4% and long-term growth of 3%, we estimate that revenue growth of 13.8% pa from FY23 to FY28 and EBITDA margins of 24% (in line with FY19) are required to support the current share price. 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

2019

2020e

2021e

2022e

March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

57,283

73,401

87,468

119,702

143,504

192,626

213,889

237,321

Cost of Sales

(16,448)

(17,606)

(20,302)

(27,092)

(36,060)

(52,164)

(55,707)

(61,765)

Gross Profit

40,835

55,795

67,166

92,610

107,444

140,462

158,182

175,556

EBITDA

 

 

11,844

14,772

18,734

28,741

34,080

46,241

50,662

55,352

Operating Profit (before amort. and except.)

10,790

13,428

17,006

26,311

32,031

44,020

48,355

52,955

Acquired intangible amortisation

(1,986)

(2,501)

(4,022)

(7,885)

(10,316)

(19,300)

(17,100)

(16,500)

Exceptionals

(1,629)

(94)

(1,410)

(2,143)

(4,003)

0

0

0

Share of associate

(10)

0

0

0

0

0

0

0

Share based payments

(971)

(1,245)

(994)

(2,375)

(2,287)

(2,516)

(2,767)

(3,044)

Operating Profit

6,194

9,588

10,580

13,908

15,425

22,204

28,487

33,411

Net Interest

(266)

(270)

(498)

(508)

(689)

(3,280)

(2,880)

(2,580)

Profit Before Tax (norm)

 

 

10,524

13,158

16,508

25,803

31,342

40,740

45,475

50,375

Profit Before Tax (FRS 3)

 

 

5,928

9,318

10,082

13,400

14,736

18,924

25,607

30,831

Tax

(1,127)

(178)

668

(2,746)

(2,583)

(3,974)

(5,378)

(6,474)

Profit After Tax (norm)

8,314

10,395

13,206

20,642

24,760

32,184

35,925

39,796

Profit After Tax (FRS 3)

4,801

9,140

10,750

10,654

12,153

14,950

20,230

24,356

Average Number of Shares Outstanding (m)

119.1

122.7

131.6

150.6

158.1

193.1

193.5

194.0

EPS - normalised (p)

 

 

7.0

8.5

10.0

13.7

15.7

16.7

18.6

20.5

EPS - normalised and fully diluted (p)

 

6.7

8.2

9.9

13.5

15.4

16.4

18.4

20.3

EPS - (IFRS) (p)

 

 

4.0

7.4

8.2

7.1

7.7

7.7

10.5

12.6

Dividend per share (p)

1.9

2.1

2.4

2.7

3.0

3.4

3.8

4.3

Gross Margin (%)

71.3

76.0

76.8

77.4

74.9

72.9

74.0

74.0

EBITDA Margin (%)

20.7

20.1

21.4

24.0

23.7

24.0

23.7

23.3

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

18.8

18.3

19.4

22.0

22.3

22.9

22.6

22.3

BALANCE SHEET

Fixed Assets

 

 

51,238

59,364

105,653

170,284

435,195

416,474

399,967

384,069

Intangible Assets

45,296

54,113

98,753

161,372

421,747

402,047

384,547

367,647

Tangible Assets

2,829

2,234

2,856

4,700

4,815

5,794

6,787

7,789

Other fixed assets

3,113

3,017

4,044

4,212

8,633

8,633

8,633

8,633

Current Assets

 

 

33,186

36,189

48,914

61,121

76,404

112,767

147,458

186,187

Debtors

17,408

23,774

30,569

37,969

54,874

73,198

81,278

90,182

Cash

15,778

12,415

17,618

22,753

21,189

39,228

65,839

95,664

Other

0

0

727

399

341

341

341

341

Current Liabilities

 

 

(30,784)

(32,559)

(44,444)

(56,942)

(73,432)

(89,375)

(95,062)

(101,824)

Creditors

(24,305)

(30,927)

(36,436)

(56,100)

(71,912)

(87,855)

(93,542)

(100,304)

Contingent consideration

(5,733)

(1,050)

(7,122)

(45)

(79)

(79)

(79)

(79)

Short term borrowings

(746)

(582)

(886)

(797)

(1,441)

(1,441)

(1,441)

(1,441)

Long Term Liabilities

 

 

(7,506)

(6,593)

(15,940)

(16,711)

(114,995)

(104,995)

(100,995)

(96,995)

Long term borrowings

(3,643)

(3,160)

(11,499)

(8,451)

(85,447)

(75,447)

(71,447)

(67,447)

Contingent consideration

(895)

0

0

0

0

0

0

0

Other long term liabilities

(2,968)

(3,433)

(4,441)

(8,260)

(29,548)

(29,548)

(29,548)

(29,548)

Net Assets

 

 

46,134

56,401

94,183

157,752

323,172

334,871

351,367

371,437

CASH FLOW

Operating Cash Flow

 

 

11,684

13,397

16,305

31,620

27,779

43,859

48,269

53,211

Net Interest

(266)

(282)

(498)

(545)

(720)

(3,280)

(2,880)

(2,580)

Tax

(337)

(248)

(2,193)

(3,247)

(2,930)

(3,974)

(5,378)

(6,474)

Capex

(2,011)

(1,762)

(2,227)

(2,018)

(1,625)

(2,800)

(2,900)

(3,000)

Acquisitions/disposals

(18,672)

(12,263)

(36,840)

(70,363)

(255,101)

0

0

0

Financing

10,954

790

24,755

56,668

157,339

0

0

0

Dividends

(1,955)

(2,277)

(2,775)

(3,582)

(4,049)

(5,766)

(6,501)

(7,331)

Net Cash Flow

(603)

(2,645)

(3,473)

8,533

(79,307)

28,039

30,611

33,825

Opening net debt/(cash)

 

 

(11,846)

(11,389)

(8,673)

(5,233)

(13,505)

65,699

37,660

7,049

HP finance leases initiated

0

0

0

0

0

0

0

0

Other

146

(71)

33

(261)

103

0

0

0

Closing net debt/(cash)

 

 

(11,389)

(8,673)

(5,233)

(13,505)

65,699

37,660

7,049

(26,776)

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.

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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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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

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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

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. 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

1,185 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

1,185 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 £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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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

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

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. 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

1,185 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

1,185 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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