International expansion paying off

GB Group 28 November 2019 Update
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GB Group

International expansion paying off

H120 results

Software & comp services

28 November 2019

Price

700p

Market cap

£1,357m

Net debt (£m) at end H120

53.8

Shares in issue

193.9m

Free float

98.7%

Code

GBG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

15.5

25.2

51.2

Rel (local)

13.3

18.9

41.5

52-week high/low

713.0p

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 57% of revenues internationally.

Next events

FY20 trading update

April 2020

Analyst

Katherine Thompson

+44 (0)20 3077 5730

GB Group is a research client of Edison Investment Research Limited

Strong organic revenue growth in H120 was boosted by several multi-year fraud licences and the contribution from the VIX Verify and IDology acquisitions. During H1, GB Group (GBG) made good progress with its strategy to expand internationally and enhance its product functionality and datasets. Management is confident of meeting consensus expectations for FY20; while our forecasts are unchanged at the operating profit level, a higher effective tax rate reduces our normalised EPS forecasts by c 3% in FY20–22e.

Year end

Revenue (£m)

EBIT*
(£m)

PBT*
(p)

Diluted EPS*
(p)

DPS
(p)

P/E
(x)

03/18

119.7

26.3

25.8

13.5

2.7

52.0

03/19

143.5

32.0

31.3

15.4

3.0

45.5

03/20e

192.6

44.0

40.8

16.0

3.4

43.8

03/21e

213.9

48.4

45.5

17.8

3.8

39.3

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

Strong organic growth from all divisions

GBG generated 17% organic constant currency revenue growth in H120, before the £25.9m contribution from the VIX Verify and IDology acquisitions. The Fraud division was particularly strong, benefiting from the signing of several multi-year licences. On an organic constant currency basis, the Identity business grew 15% and the Location business 14%. Adjusted operating profit was 119% higher y-o-y driving a margin of 22.8%, up from 16.9% a year ago.

Small upward revisions to forecasts

We assume that business in the Fraud division will moderate after a strong H1 and factor in a weaker pound in H2. Our forecasts are unchanged at the revenue and operating profit level. After factoring in higher tax rates to reflect the higher proportion of business in the US and Australia, as well as the UK rate no longer falling to 17% in FY21, normalised EPS declines by 2.9% in FY20e and 3.0% in FY21e and FY22e. With the target of converting 90–95% of EBITDA to cash and limited capex requirements, we expect GBG to rapidly reduce debt and continue to forecast a return to a net cash position in FY22e. The company continues to seek out bolt-on acquisitions and we estimate it could fund a deal worth c £55m from existing debt facilities.

Valuation: Premium rating reflects earnings quality

GBG trades at a premium to the UK software sector and at the upper end of its ID management peer group on a P/E basis, reflecting its strong growth outlook and high recurring revenues. Our reverse DCF analysis estimates the current share price is factoring in operating margins of 24% and revenue growth of c 15% per year from FY23, at the upper end of the group’s revenue and margin targets. Triggers for upside from the current level could include accretive acquisitions, successful cross-selling from recent acquisitions and adoption of GBG’s combined identity/location solution.

Review of H120 results

Exhibit 1: H120 results highlights

£m

H120

H119

y-o-y

Revenues

94.3

58.3

61.7%

Gross profit

68.3

44.4

53.9%

Gross margin

72.4%

76.1%

-3.7%

Adjusted* operating profit

21.5

9.8

118.6%

Adjusted operating margin

22.8%

16.9%

5.9%

Reported operating profit

9.8

3.8

161.5%

Reported operating margin

10.4%

6.4%

4.0%

Normalised dil. EPS (p)

8.2

4.9

67.5%

Reported basic EPS (p)

3.0

1.9

57.9%

Net debt**

53.8

18.6

189.2%

Source: GB Group, Edison Investment Research. Note: *Adjusted operating profit excludes share-based payments, amortisation of acquired intangibles and exceptional items. **Excludes lease liabilities of £6.4m and unamortised loan arrangement fees of £0.5m.

GBG reported revenue growth of 62% y-o-y in H120. H119 revenues have been restated from £57.3m to £58.3m to reflect the application of IFRS 15. FY19 revenues are unchanged (as they already reflected IFRS 15) but the H1/H2 split has been revised to reflect the phasing of revenue recognition.

On a constant currency organic basis, H120 revenues were 17% higher y-o-y, before a £25.9m contribution to revenues from the VIX Verify and IDology acquisitions. Excluding several multi-year fraud licences signed in H120, growth would have been nearer 13%.

Adjusted operating profit of £21.5m was 119% higher than in H119 (which has been restated from £8.8m to £9.8m as a result of the IFRS15 adjustment to revenues). This resulted in an adjusted operating margin of 22.8% for H120 up from 16.9% a year ago.

The company applied IFRS 16 for the first time in H120, with minimal impact on PBT. Rent expenses of £1.066m were replaced with a depreciation charge of £935k on right of use assets and a £155k finance charge, with a net negative £22k impact on PBT. At the end of H120, the company reported right of use assets with a net book value of £5.5m and £6.4m in lease liabilities relating to these assets.

GBG finished H120 with a net debt position of £53.8m (or £53.3m net of unamortised loan arrangement fees), down from £66.3m at the end of FY19.

New divisional structure reflects business focus

The company disclosed revenue and adjusted operating profit (AOP) performance in a new format, with three core business lines and an unallocated category. Compared to previous disclosure:

Fraud: includes CAFS and Trace & Investigate.

Identity: includes eIDV and Employ & Comply.

Location: includes the Loqate business.

Unallocated: includes Engage revenues and operating costs as well as group operating costs. Management has gone through an exercise of splitting out costs so only those that are controlled by a business unit are included in that division’s AOP calculation, and those costs controlled at a group level (eg group finance, compliance, legal) are included within unallocated. For example, for H119 the company previously reported unallocated costs of £1.1m and we were forecasting costs of £2.0m for FY20. It is now reporting that group operating costs were £4.9m in H119 and £5.6m in H120.

Exhibit 2: New divisional performance

Revenues (£m)

H120

H119

y-o-y

Organic constant currency

Fraud

16.82

12.61

33.5%

34%

Identity

51.19

21.88

133.9%

15%

Location

22.21

19.25

15.4%

14%

Unallocated (Engage)

4.11

4.59

(10.5%)

(11%)

Total revenues

94.34

58.33

61.7%

17%

Adjusted operating profit (£m)

Fraud

5.40

2.44

121.2%

Identity

15.78

5.53

185.1%

Location

6.54

5.89

11.0%

Unallocated

-6.23

-4.04

54.3%

Total AOP

21.50

9.83

118.6%

Adjusted operating margin

Fraud

32.1%

19.4%

12.7%

Identity

30.8%

25.3%

5.5%

Location

29.4%

30.6%

(1.2%)

Unallocated

(151.5%)

(87.9%)

(63.6%)

Total adjusted operating margin

22.8%

16.9%

5.9%

Source: GB Group

The Fraud business saw strong organic growth of 34%, benefiting from signing several multi-year licences worth £2.1m during H120. Management does not expect a repeat of such deals in H2. This helped lift the adjusted operating margin to 32.1% from 19.4% a year ago and 30.7% for FY19. The business saw existing customers using GBG in new geographies (eg AmBank in Malaysia and Citi in Taiwan and Indonesia) as well as signing up new customers in Europe (BnP/Arval, Standard Life).

The Identity business included £25.9m of revenues from acquisitions; on an organic constant currency basis, the business grew 15% y-o-y. The adjusted operating margin expanded from 25.3% in H119 and 26.1% in FY19 to 30.8% in H120, helped by a full six months of the higher margin IDology business. New customer wins in H1 included William Hill, KPMG and Totesport.

The Location business grew 14% y-o-y on an organic constant currency basis, with an adjusted operating margin slightly lower than a year ago. New customer wins include John Lewis (already a Trace & Investigate customer), Nike, GNC in North America, China Minsheng Bank (already a Fraud customer) and Bank of Beijing in Asia Pacific.

The Unallocated division saw a revenue decline, mainly due to the failure of Thomas Cook. Management expects a further decline in H2 as the full impact of losing Thomas Cook works its way through. Aside from the costs of the Engage business, management aims to keep group operating costs at roughly 6% of group sales.

Business update

The company has previously outlined its strategic priorities to deliver on its vision of becoming the global leader in identity data intelligence. Its four areas of focus are to:

maximise international growth from the Identity, Location and Fraud businesses;

optimise growth in specialist UK businesses, in particular, using them to differentiate the Identity, Location and Fraud services in the UK;

join up GBG with the customer at the centre; and

use M&A to enhance reach and capability.

Via this strategy, GBG aims to grow revenues at an organic rate of 10–12% and generate adjusted operating margins of at least 20% per year. Clearly, the business exceeded both these targets in H120, but management is cautious in its approach to H220 performance and is still pointing to these targets for the current year.

International revenues now the majority

The company noted that revenues from outside the UK made up 57% of group revenues, up from 45% in FY19 and 35% in H119. This implies growth in international revenues of 163% y-o-y, or 36% if the acquisitions of VIX Verify and IDology are excluded. We estimate that UK revenues grew 7% over the same period.

Integration of acquisitions ongoing

Through H120, the company has focused on integrating the VIX Verify and IDology acquisitions. It has completed the integration of Loqate’s data into IDology’s ExpertID solution, resulting in the ability to offer a combined location/ID verification solution. GBG is working on adding GBG global datasets to the IDology platform and integrating IDology datasets into the international platform. It is also working on integrating IDscan into GreenID, VIX Verify’s ID verification solution.

As indicated when it was acquired, the company has added 17 new sales heads to the IDology business.

Both acquisitions have grown the level of business with existing customers and signed up new customers (VIX Verify: Victoria University, KC securities; IDology: NextGate), working with GBG to win combined deals.

Further M&A likely

The company reiterated its plans to supplement organic growth with bolt-on acquisitions. During H120, net debt was reduced by £12.4m and should reduce further in H220. Net debt/EBITDA stood at 1.05x at the end of H120 – management confirmed that 2x EBITDA was the maximum it would be comfortable with. Using our FY20 EBITDA forecast, we estimate that net debt could go as high as £96m. Based on our net debt forecast of £41m at the end of FY20 (excluding lease liabilities), this would imply a deal size of c £55m could be funded without fundraising. The company has £86m in borrowing capacity.

Adding datasets, combining services

During H120, the company added datasets including UK educational information and Indian driving licence data, and signed an exclusive deal with NavInfo for address data in mainland China.

The company is looking to evolve to linked platforms so customers can take combined solutions, and in the UK, a combined Identity/Location service is already available.

Outlook and changes to forecasts

The company noted that trading in H220 has begun in line with its expectations and management remains confident in the company’s ability to meet full-year consensus expectations (FY20 revenues £195.5m, AOP £45.1m). We have revised our forecasts to reflect the application of IFRS 16 and the new divisional structure. We have also increased our effective tax rate assumption from 21% to 23% reflecting the higher contribution from the US and Australia, as well as the UK rate no longer declining to 17% in FY21.

Exhibit 3: Changes to forecasts

£m

FY20e

FY20e

 

 

FY21e

FY21e

 

 

FY22e

FY22e

 

 

old

new

change

y-o-y

old

new

change

y-o-y

old

new

change

y-o-y

Revenues

192.6

192.6

(0.0%)

34.2%

213.9

213.9

(0.0%)

11.1%

237.3

237.5

0.1%

11.0%

Gross profit

140.5

139.6

(0.6%)

29.9%

158.2

155.5

(1.7%)

11.4%

175.6

173.4

(1.3%)

11.5%

Gross margin

72.9%

72.5%

(0.4%)

(2.4%)

74.0%

72.7%

(1.3%)

0.2%

74.0%

73.0%

(1.0%)

0.3%

EBITDA

46.2

47.9

3.6%

40.5%

50.7

52.4

3.5%

9.5%

55.4

57.2

3.4%

9.1%

EBITDA margin

24.0%

24.9%

0.9%

1.1%

23.7%

24.5%

0.8%

(0.3%)

23.3%

24.1%

0.8%

(0.4%)

EBITA

44.0

44.0

0.0%

37.5%

48.4

48.4

0.1%

9.9%

53.0

53.0

0.1%

9.5%

EBITA margin

22.9%

22.9%

0.0%

0.5%

22.6%

22.6%

0.0%

(0.2%)

22.3%

22.3%

0.0%

(0.3%)

PBT

40.7

40.8

0.0%

30.0%

45.5

45.5

0.1%

11.7%

50.4

50.4

0.1%

10.7%

EPS - normalised, diluted (p)

16.4

16.0

(2.9%)

3.7%

18.4

17.8

(3.0%)

11.6%

20.3

19.7

(3.0%)

10.5%

EPS - reported (p)

7.7

7.4

(4.4%)

(3.7%)

10.5

10.2

(2.9%)

37.2%

12.6

12.2

(3.0%)

20.0%

Net debt/(cash)

37.7

47.5

26.1%

(28.4%)

7.0

20.2

187.2%

(57.4%)

(26.8)

(10.3)

(61.5%)

(151%)

Net debt/(cash) excl. lease liabilities

37.7

41.0

7.0

13.8

(26.8)

(16.7)

Source: Edison Investment Research

Valuation

Exhibit 4: Valuation metrics

EV/Sales (x)

EV/EBITDA (x)

EV/EBIT (x)

P/E (x)

Div yield (x)

Yr1

Yr2

Yr3

Yr1

Yr2

Yr3

Yr1

Yr2

Yr3

Yr1

Yr2

Yr3

Yr1

Yr2

Yr3

GBG

7.4

6.7

6.0

29.7

27.1

24.9

32.3

29.4

26.8

43.8

39.3

35.5

0.5

0.5

0.6

Ave ID Management

5.0

5.1

5.2

22.4

16.8

15.2

12.9

30.2

18.8

31.0

25.0

23.0

0.8

1.0

1.0

Ave UK Software

3.8

3.3

3.5

17.9

12.5

13.5

41.8

12.6

11.7

37.2

22.6

10.5

1.0

1.0

1.3

Source: Edison Investment Research, Refinitiv (at 25 November)

GBG trades at a premium to the UK software sector and at the upper end of its ID management peer group on a P/E basis, reflecting its strong growth outlook and high recurring revenues. Our reverse DCF analysis estimates the current share price is factoring in operating margins of 24% and revenue growth of c 15% per year from FY23, at the upper end of the group’s revenue and margin targets. Triggers for upside from the current level could include accretive acquisitions, successful cross-selling from recent acquisitions and adoption of GBG’s combined identity/location solution.

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

192,567

213,852

237,468

Cost of Sales

(16,448)

(17,606)

(20,302)

(27,092)

(36,060)

(52,956)

(58,382)

(64,116)

Gross Profit

40,835

55,795

67,166

92,610

107,444

139,611

155,471

173,352

EBITDA

 

 

11,844

14,772

18,734

28,741

34,080

47,883

52,442

57,223

Operating Profit (before amort. and except.)

10,790

13,428

17,006

26,311

32,031

44,035

48,412

53,001

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)

(301)

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

21,918

28,545

33,457

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

40,755

45,532

50,421

Profit Before Tax (FRS 3)

 

 

5,928

9,318

10,082

13,400

14,736

18,638

25,665

30,877

Tax

(1,127)

(178)

668

(2,746)

(2,583)

(4,287)

(5,903)

(7,102)

Profit After Tax (norm)

8,314

10,395

13,206

20,642

24,760

31,381

35,060

38,824

Profit After Tax (FRS 3)

4,801

9,140

10,750

10,654

12,153

14,351

19,762

23,775

Average Number of Shares Outstanding (m)

119.1

122.7

131.6

150.6

158.1

193.9

194.6

195.1

EPS - normalised (p)

 

 

7.0

8.5

10.0

13.7

15.7

16.2

18.0

19.9

EPS - normalised and fully diluted (p)

 

6.7

8.2

9.9

13.5

15.4

16.0

17.8

19.7

EPS - (IFRS) (p)

 

 

4.0

7.4

8.2

7.1

7.7

7.4

10.2

12.2

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

72.5

72.7

73.0

EBITDA Margin (%)

20.7

20.1

21.4

24.0

23.7

24.9

24.5

24.1

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

433,585

428,113

409,883

392,161

Intangible Assets

45,296

54,113

98,753

161,372

420,137

411,363

394,163

377,563

Tangible Assets

2,829

2,234

2,856

4,700

4,815

10,296

9,266

8,144

Other fixed assets

3,113

3,017

4,044

4,212

8,633

6,454

6,454

6,454

Current Assets

 

 

33,186

36,189

48,914

61,121

76,404

105,969

137,285

172,806

Debtors

17,408

23,774

30,569

37,969

54,874

73,176

81,264

90,238

Cash

15,778

12,415

17,618

22,753

21,189

32,453

55,680

82,227

Other

0

0

727

399

341

341

341

341

Current Liabilities

 

 

(30,784)

(32,559)

(44,444)

(56,942)

(71,822)

(86,963)

(92,629)

(99,477)

Creditors

(24,305)

(30,927)

(36,436)

(56,100)

(70,302)

(83,917)

(89,583)

(96,431)

Contingent consideration

(5,733)

(1,050)

(7,122)

(45)

(79)

0

0

0

Short term borrowings

(746)

(582)

(886)

(797)

(1,441)

(3,046)

(3,046)

(3,046)

Long Term Liabilities

 

 

(7,506)

(6,593)

(15,940)

(16,711)

(116,707)

(103,358)

(94,789)

(86,294)

Long term borrowings

(3,643)

(3,160)

(11,499)

(8,451)

(85,447)

(76,880)

(72,880)

(68,880)

Contingent consideration

(895)

0

0

0

0

0

0

0

Other long term liabilities

(2,968)

(3,433)

(4,441)

(8,260)

(31,260)

(26,478)

(21,909)

(17,414)

Net Assets

 

 

46,134

56,401

94,183

157,752

321,460

343,761

359,751

379,196

CASH FLOW

Operating Cash Flow

 

 

11,684

13,397

16,305

31,620

27,779

44,495

50,019

55,098

Net Interest

(266)

(282)

(498)

(545)

(689)

(3,256)

(2,880)

(2,580)

Tax

(337)

(248)

(2,193)

(3,247)

(2,930)

(9,374)

(10,472)

(11,597)

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)

(82)

0

0

Financing

10,954

790

24,755

56,668

157,339

327

0

0

Dividends

(1,955)

(2,277)

(2,775)

(3,582)

(4,049)

(5,782)

(6,539)

(7,374)

Net Cash Flow

(603)

(2,645)

(3,473)

8,533

(79,276)

23,529

27,228

30,546

Opening net debt/(cash)

 

 

(11,846)

(11,389)

(8,673)

(5,233)

(13,505)

65,699

47,473

20,246

HP finance leases initiated

0

0

0

0

0

(6,425)

0

0

Other

146

(71)

33

(261)

72

1,122

0

0

Closing net debt/(cash)

 

 

(11,389)

(8,673)

(5,233)

(13,505)

65,699

47,473

20,246

(10,301)

Source: GB Group, Edison Investment Research


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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 research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 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 licence. 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 Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

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 research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 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 licence. 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 Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

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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