Managing cash now to support long-term strategy

GB Group 2 July 2020 Update
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GB Group

Managing cash now to support long-term strategy

FY20 results

Software & comp services

2 July 2020

Price

678p

Market cap

£1,317m

$1.23:£1

Net debt (£m) at end FY20

35.0

Shares in issue

194.2m

Free float

98%

Code

GBG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

1.2

20

25.6

Rel (local)

1.3

5.3

50.9

52-week high/low

800p

474p

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 56% of revenues internationally.

Next events

AGM

10 August

Analyst

Katherine Thompson

+44 (0)20 3077 5730

GB Group is a research client of Edison Investment Research Limited

GB Group reported strong performance in FY20 and started taking measures to preserve cash in Q420. Trading in Q121 has been mixed and while management is unwilling to provide guidance for FY21, it has confidence that in the longer term it is well positioned to benefit from the acceleration in digital transformation that should drive demand for its identity data intelligence services. We have upgraded our EPS forecasts by 5% in FY21 and 3% in FY22.

Year end

Revenue (£m)

EBITA*
(£m)

PBT*
(p)

Diluted EPS*
(p)

DPS
(p)

P/E
(x)

03/19

143.5

32.0

31.3

15.4

3.0

44.0

03/20

199.1

47.9

45.7

17.9

0.0

37.9

03/21e

176.5

30.8

28.7

11.1

2.0

60.6

03/22e

189.3

38.8

37.0

14.3

2.6

47.1

03/23e

208.2

46.2

44.5

17.1

3.2

39.3

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

Strong FY20 performance

GB Group generated 10.7% organic constant currency revenue growth in FY20, with particularly strong growth from the Fraud division of 24.3%, Identity just ahead of the group average at 11.5% and Location lagging at 6.8%. EBITA of £47.9m beat our forecast and the 24.1% margin benefited from management starting to take cash preservation measures in Q420 as the threat from COVID-19 emerged. Year-end net debt of £35m (including unamortised bank fees) was 47% lower y-o-y.

FY21 outlook uncertain; small upgrade to estimates

As GB Group has seen mixed performance year to date, with variation by product, location and vertical, it is not in a position to give guidance for FY21. New business continues to be signed, although some sales cycles have lengthened. While the company is likely to see depressed transaction volumes this year, and to a lesser extent, weaker licence sales, the general shift in governments and corporates to provide their products and services online provides good long-term growth prospects across all three product lines. We have revised up our forecasts for FY21 and FY22 (normalised EPS up 4.7% and 3.3% respectively) and initiate a FY23 forecast for 20% EPS growth. Even with a revenue decline in FY21, we forecast net debt reducing to £13m by year-end and a net cash position by end FY22.

Valuation: Premium rating reflects growth potential

GBG trades at a premium to the UK software and IT services sectors and at the upper end of its ID management peer group on a P/E basis, reflecting its strong growth outlook (post COVID-19), high recurring revenues and strong balance sheet. Our reverse DCF analysis estimates the current share price is factoring in operating margins of 23% and revenue growth of c 14% per year from FY24, at the upper end of the group’s revenue and margin targets. Outside of COVID-19 recovery, triggers for upside could include successful cross-selling from recent acquisitions, adoption of GBG’s combined identity/location solution and in the medium term, accretive acquisitions.

Review of FY20 results

Below we include the video of the company’s results presentation.

Exhibit 1: Company presentation to analysts

Source: GB Group

GB Group provided a trading update in April, when it announced that revenues would be in the region of £199m and EBITA at least £47m. Results were slightly ahead of this, with EBITA 2.1% and normalised EPS 4.5% ahead of our forecasts. Net debt at year end had declined to £34.6m (£35.0m if unamortised bank fees are included).

Exhibit 2: FY20 results highlights

£m

FY19a

FY20e

FY20a

diff

y-o-y

Revenues

143.5

198.9

199.1

0.1%

38.7%

Gross profit

107.4

144.2

144.2

(0.0%)

34.2%

Gross margin

74.9%

72.5%

72.4%

(0.1%)

(2.5%)

EBITDA

34.1

50.8

51.7

1.8%

51.8%

EBITDA margin

23.7%

25.5%

26.0%

0.4%

2.2%

EBITA

32.0

47.0

47.9

2.1%

49.7%

EBITA margin

22.3%

23.6%

24.1%

0.5%

1.8%

Normalised PBT

31.3

43.7

45.7

4.7%

45.9%

EPS - normalised, diluted (p)

15.4

17.1

17.9

4.5%

16.2%

EPS - reported (p)

7.7

8.6

8.8

2.8%

14.6%

Net debt/(cash)

66.3

35.2

34.6

(1.5%)

(47.8%)

Net debt/EBITDA (x)

1.9

0.7

0.7

Source: GB Group, Edison Investment Research Note: EBITA = operating profit before exceptional items, amortisation of acquired intangibles and share-based payments.

Revenues grew 38.7% y-o-y, or 10.7% on an organic, constant currency basis. On a half-yearly basis, organic growth was 17% in H120 and 5% in H220. H120 benefited from several one-off licences in the Fraud division. International revenues made up 56% of the total, up from 45% in FY19, reflecting the full-year contributions from acquisitions.

EBITDA increased at a faster rate than revenues, partly due to the one-off benefit from implementing IFRS 16, which removed £2.1m in lease expense from EBITDA. At the EBITA level, the margin increased 1.8pp y-o-y. The company noted that due to COVID-19 uncertainty from the start of Q420, it decided not to start certain internal projects and this gave the company a 2–3pp benefit compared to its expectations for FY20.

Net finance cost of £2.2m came in below our £3.3m forecast, which, combined with the higher than expected EBITA, resulted in normalised PBT 4.7% ahead and normalised diluted EPS 4.5% ahead of our forecast.

The company reported exceptional items totalling £1.6m. During the year, the deferred consideration for IDology was revised due to the changes in tax treatment brought about by the US CARES Act. As part of the acquisition agreement, GBG had agreed that any tax losses within IDology that were subsequently used by the group would be paid out in cash to the vendors. These were estimated at the prevailing 21% tax rate. The CARES Act allows tax losses to be calculated for the years 2014-2018 at the 35% tax rate in force then. This resulted in a restatement of various items on the balance sheet in FY19, most notably an increase in the provision for deferred consideration of £5.2m and an increase in goodwill of £5.5m and a £1m exceptional charge to the income statement in FY21.

In May, the company repaid a further £10m of its loan facility and had a net debt position of £20.5m at the end of the month. Based on 12-month trailing EBITDA, this equated to a gearing ratio of 0.4x. The company has access to an additional debt facility of £57.5m with a further £30m accordion.

Divisional performance

The table below shows performance on a divisional basis, including organic constant currency growth.

Exhibit 3: Divisional performance

£m

FY20a

FY20e

FY19a

diff

y-o-y

y-o-y organic

y-o-y organic, constant currency

Revenues

Fraud

35.5

32.6

29.1

8.9%

21.9%

22%

24.3%

Identity

105.4

106.8

58.2

-1.3%

81.0%

11%

11.5%

Location

49.8

51.8

46.3

-3.9%

7.6%

8%

6.8%

Unallocated (Engage)

8.4

7.7

9.9

9.1%

-14.9%

-15%

-15%

Total revenues

199.1

198.9

143.5

0.1%

38.7%

10.3%

10.7%

Adjusted operating profit

Fraud

13.4

10.0

9.0

34.3%

48.9%

Identity

33.6

32.6

15.2

3.1%

120.9%

Location

14.6

16.9

16.7

-13.9%

-12.8%

Unallocated (Engage)

-13.7

-12.6

-8.9

8.7%

53.7%

Total adjusted operating profit

47.9

47.0

32.0

2.1%

49.7%

Adjusted operating margin

Fraud

37.9%

30.7%

31.0%

7.2%

6.9%

Identity

31.9%

30.6%

26.1%

1.3%

5.8%

Location

29.2%

32.6%

36.1%

-3.4%

-6.8%

Unallocated (Engage)

-162.9%

-163.6%

-90.2%

0.7%

-72.7%

Total adjusted operating margin

24.1%

23.6%

22.3%

0.5%

1.8%

Source: GB Group, Edison Investment Research Note: adjusted operating profit excludes exceptional items, amortisation of acquired intangibles and share-based payments.

Identity

GBG’s largest division reported revenue growth of 81% with an adjusted operating margin of 31.9%, up 5.8pp y-o-y. Organic constant currency revenue growth was 11.5% for the year (+15% in H1 and +8% in H2). In H2, the division signed up Rank (for its UK casinos), PayPal, Adyen and Sky.

Location

This division reported revenue growth of 7.6% with an adjusted operating margin of 29.2%, down 6.8pp y-o-y. Constant currency revenue growth was 7% (14% in H 1 and 2% in H2). Towards the end of H220, the division signed a five-year contract with IBM that extends and expands an existing distribution agreement. The contract is worth at least $13.5m over the five-year period. The company noted that several new contracts were signed towards the end of H2 and therefore did not contribute materially to FY20 revenues.

Fraud

The Fraud division reported a strong year, with revenue growth of 21.9% and an adjusted operating margin of 37.9%, 6.9pp higher than in FY19. Revenue growth in H1 of 34% was boosted by multi-year licences totalling £2.1m, but we had not expected H2 growth (c 13% y-o-y) to be so robust. In H2, new customers included First Abu Dhabi Bank and Volkswagen Payments SA and the business extended the number of countries served for Arval (signed in H1) to three.

The company noted that it is seeing an increasing number of customers using more than one service. For example, FlexiGroup in Australia is using both Identity and Fraud services in Australia, and Domestic and General is using both Location and Identity services in the UK.

The company also provided detail on the split of revenues by type, namely licence, transaction and service. In the chart below we show the breakdown for both FY19 and FY20. Clearly, within both Identity and Location there has been a shift to charging by transaction as opposed to by subscription or multi-year licence. It is in these two divisions that we expect to see a larger COVID-19 impact in FY21, as lower transaction levels in certain markets will have a direct impact on transaction revenues.

Exhibit 4: Split by type of revenue

Fraud

Identity

Location

Unallocated

Group

FY20

FY19

FY20

FY19

FY20

FY19

FY20

FY19

FY20

FY19

Licences

95%

94%

7%

21%

62%

76%

0%

0%

36%

52%

Transactions

0%

0%

89%

78%

33%

23%

0%

0%

55%

39%

Services

5%

6%

4%

1%

5%

1%

100%

100%

9%

9%

Revenue contribution

18%

20%

53%

41%

25%

32%

4%

7%

Source: GB Group

COVID-19 response and outlook

In the April trading update, the company highlighted the measures it was taking to ensure staff could work safely and to preserve cash for this period of uncertainty.

Staff are working remotely, providing support to customers and, where there is customer demand, selling remotely.

Staff pay is frozen, accrued bonuses for executive management for FY20 have been suspended and only essential recruitment is allowed.

Project spend is being assessed and only those projects vital to the company’s long-term performance will be undertaken.

The company will not pay a dividend for FY20 – we had estimated this would cost £6.5m in FY21.

Outlook remains uncertain

The company has seen a mixed performance, depending on the product, geography and end market. As a result, it is still not in a position to give guidance for FY21. Customer churn, solvency and bad debt are at normal levels although some customers have started taking longer to settle their invoices. The company is continuing to win new business, albeit with longer sales cycles, and has seen some countercyclical opportunities that have helped to mitigate the effect of reduced underlying activity. Renewals are comparable with the prior year.

Exhibit 5: FY20 revenue by sector

Source: GB Group

The company gave a breakdown of revenues in FY20 by vertical (Exhibit 5) – it estimates that c 18% of revenues have been hit by the COVID-19 restrictions (gaming, travel and leisure and smaller COVID challenged), with the remaining 82% seeing a mixed performance.

For Q121 trading the company has seen:

Location: volumes are up year on year.

Identity: in the US and Australia, volumes are up strongly year on year. In the UK and Europe volumes are slightly down, due to the higher exposure to sports betting and background checks. With the return of English Premier League football, sports betting is starting to pick up again.

Fraud: this business is mainly licence based. New customers are still being signed up, but implementation projects are sometimes taking longer.

The company has performed a scenario analysis based on various potential outcomes during FY21 and FY22 to confirm its going concern status. Its base-case scenario for going concern calculations (not guidance) is that revenues will decline 10.3% in FY21 to £175m and remain flat in FY22. Cash preservation measures already taken would reduce FY21 operating costs by £15m and save £7m from not proposing a dividend for FY20. In this scenario, there is significant headroom in covenant compliance tests and sufficient liquidity to maintain operations.

Flexing the testing to calculate at which point covenants would be breached, the company would need to see a revenue decline of 33% in FY21 (or 42% if operating costs are cut by a further 20%) before the covenant test is breached in June 2021. The breach could be remedied by reducing debt by £400k or increasing EBITDA by £130k but even without this, it would be remedied by September 2021.

Changes to forecasts

We have increased our FY21 and FY22 revenue forecasts marginally and introduce a forecast of 10% growth in FY23. We have increased our effective tax rate from 23% to 24%, based on company guidance.

Exhibit 6: Changes to estimates

£m

FY21e

FY21e

 

 

FY22e

FY22e

 

 

FY23e

 

old

new

change

y-o-y

old

new

change

y-o-y

new

y-o-y

Revenues

174.6

176.5

1.1%

(11.4%)

187.4

189.3

1.0%

7.3%

208.2

10.0%

Gross profit

127.0

128.3

1.1%

(11.0%)

136.8

138.2

1.0%

7.7%

152.0

10.0%

Gross margin

72.7%

72.7%

0.0%

0.3%

73.0%

73.0%

0.0%

0.3%

73.0%

0.0%

EBITDA

33.9

34.8

2.6%

(32.7%)

42.1

43.0

2.0%

23.3%

50.5

17.7%

EBITDA margin

19.4%

19.7%

0.3%

(6.3%)

22.5%

22.7%

0.2%

3.0%

24.3%

1.6%

EBITA

29.9

30.8

3.1%

(35.7%)

37.9

38.8

2.3%

25.8%

46.2

19.0%

EBITA margin

17.1%

17.5%

0.3%

(6.6%)

20.2%

20.5%

0.3%

3.0%

22.2%

1.7%

PBT

27.0

28.7

6.1%

(37.3%)

35.3

37.0

4.9%

29.2%

44.5

20.2%

EPS - normalised, diluted (p)

10.6

11.1

4.7%

(38.0%)

13.8

14.3

3.3%

28.7%

17.1

19.7%

EPS - reported (p)

2.8

1.9

(34.1%)

(78.8%)

6.2

4.9

(21.0%)

163.4%

8.0

62.1%

Net debt/(cash)

13.6

13.2

(2.8%)

(61.9%)

(5.9)

(8.1)

38.1%

(161.4%)

(35.4)

336.1%

Net debt/EBITDA (x)

0.4

0.4

N/A

N/A

N/A

Source: Edison Investment Research

Valuation

Exhibit 7: Peer group metrics and multiples

Rev growth (%)

EBIT margin (%)

EV/Sales

EV/EBIT

P/E

Div yield (%)

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

GBG

(11.4)

7.3

17.5

20.5

7.6

7.1

43.4

34.5

60.6

47.1

0.3

0.4

Ave ID Management

4.0

9.4

21.6

24.3

5.6

5.5

29.8

21.4

28.7

23.5

1.0

1.5

Median ID Management

4.0

8.1

24.0

26.5

6.0

6.2

27.6

22.1

32.8

23.3

0.9

1.5

Ave UK Software

15.4

10.9

5.4

8.9

4.5

4.0

20.4

10.6

27.4

22.1

0.6

0.8

Median UK Software

8.7

7.9

14.3

18.0

3.2

3.0

23.2

16.3

26.5

19.1

0.0

0.3

Ave UK IT Services

15.7

10.8

11.3

13.1

2.6

2.4

13.8

30.1

N/A

40.9

1.5

1.8

Median UK IT Services

9.5

8.1

10.9

15.6

2.3

2.3

20.2

21.3

23.0

25.5

0.6

2.0

Source: Edison Investment Research, Refinitiv (as at 29 June)

GBG trades at a premium to the UK software and IT services sectors and at the upper end of its ID management peer group on a P/E basis, reflecting its growth prospects (after COVID-19 disruption recedes) and high recurring revenues. The company also has a solid balance sheet and is cash generative, positioning it well to weather this period of uncertainty.

Our reverse DCF analysis, which uses a WACC of 7.5%, long-term growth of 3% and our forecasts to FY23, estimates the current share price is factoring in operating margins of 23% and revenue growth of c 14% per year from FY24, at the upper end of the group’s revenue and margin targets. Triggers for upside from the current level, apart from recovery as COVID-19 restrictions are reduced, could include accretive acquisitions, successful cross-selling from recent acquisitions and adoption of GBG’s combined identity/location solution.

Exhibit 8: Financial summary

£'000s

2015

2016

2017

2018

2019

2020

2021e

2022e

2023e

March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

57,283

73,401

87,468

119,702

143,504

199,101

176,494

189,295

208,154

Cost of Sales

(16,448)

(17,606)

(20,302)

(27,092)

(36,060)

(54,914)

(48,183)

(51,110)

(56,202)

Gross Profit

40,835

55,795

67,166

92,610

107,444

144,187

128,311

138,185

151,952

EBITDA

 

 

11,844

14,772

18,734

28,741

34,080

51,739

34,825

42,956

50,541

Operating Profit (before amort. and except.)

10,790

13,428

17,006

26,311

32,031

47,945

30,834

38,776

46,162

Acquired intangible amortisation

(1,986)

(2,501)

(4,022)

(7,885)

(10,316)

(19,008)

(18,900)

(18,900)

(17,900)

Exceptionals

(1,629)

(94)

(1,410)

(2,143)

(4,003)

(1,552)

0

0

0

Share of associate

(10)

0

0

0

0

0

0

0

0

Share based payments

(971)

(1,245)

(994)

(2,375)

(2,287)

(4,541)

(4,995)

(5,495)

(6,044)

Operating Profit

6,194

9,588

10,580

13,908

15,425

22,844

6,939

14,381

22,218

Net Interest

(266)

(270)

(498)

(508)

(689)

(2,218)

(2,155)

(1,730)

(1,630)

Profit Before Tax (norm)

 

 

10,524

13,158

16,508

25,803

31,342

45,727

28,679

37,046

44,532

Profit Before Tax (FRS 3)

 

 

5,928

9,318

10,082

13,400

14,736

20,626

4,784

12,651

20,588

Tax

(1,127)

(178)

668

(2,746)

(2,583)

(3,562)

(1,148)

(3,036)

(4,941)

Profit After Tax (norm)

8,314

10,395

13,206

20,642

24,760

35,210

21,796

28,155

33,844

Profit After Tax (FRS 3)

4,801

9,140

10,750

10,654

12,153

17,064

3,636

9,615

15,647

Ave.Number of Shares Outstanding (m)

119.1

122.7

131.6

150.6

158.1

193.6

194.6

195.3

196.1

EPS - normalised (p)

 

 

7.0

8.5

10.0

13.7

15.7

18.2

11.2

14.4

17.3

EPS - normalised and fully diluted (p)

 

6.7

8.2

9.9

13.5

15.4

17.9

11.1

14.3

17.1

EPS - (IFRS) (p)

 

 

4.0

7.4

8.2

7.1

7.7

8.8

1.9

4.9

8.0

Dividend per share (p)

1.9

2.1

2.4

2.7

3.0

0.0

2.0

2.6

3.2

Gross Margin (%)

71.3

76.0

76.8

77.4

74.9

72.4

72.7

73.0

73.0

EBITDA Margin (%)

20.7

20.1

21.4

24.0

23.7

26.0

19.7

22.7

24.3

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

18.8

18.3

19.4

22.0

22.3

24.1

17.5

20.5

22.2

BALANCE SHEET

Fixed Assets

 

 

51,238

59,364

105,653

170,284

438,683

430,219

412,229

394,148

376,969

Intangible Assets

45,296

54,113

98,753

161,372

425,646

414,505

395,505

376,505

358,505

Tangible Assets

2,829

2,234

2,856

4,700

4,815

9,420

10,430

11,349

12,170

Other fixed assets

3,113

3,017

4,044

4,212

8,222

6,294

6,294

6,294

6,294

Current Assets

 

 

33,186

36,189

48,914

61,121

76,522

95,984

104,396

126,331

156,398

Debtors

17,408

23,774

30,569

37,969

54,992

66,554

63,538

68,146

74,935

Cash

15,778

12,415

17,618

22,753

21,189

27,499

38,927

56,254

79,531

Other

0

0

727

399

341

1,931

1,931

1,931

1,931

Current Liabilities

 

 

(30,784)

(32,559)

(44,444)

(56,942)

(77,030)

(86,459)

(83,984)

(86,482)

(92,514)

Creditors

(24,305)

(30,927)

(36,436)

(56,100)

(70,302)

(80,280)

(77,805)

(80,303)

(86,335)

Contingent consideration

(5,733)

(1,050)

(7,122)

(45)

(5,287)

(6,179)

(6,179)

(6,179)

(6,179)

Short term borrowings

(746)

(582)

(886)

(797)

(1,441)

0

0

0

0

Long Term Liabilities

 

 

(7,506)

(6,593)

(15,940)

(16,711)

(116,707)

(94,810)

(79,075)

(69,220)

(59,474)

Long term borrowings

(3,643)

(3,160)

(11,499)

(8,451)

(85,447)

(62,139)

(52,139)

(48,139)

(44,139)

Contingent consideration

(895)

0

0

0

0

0

0

0

0

Other long term liabilities

(2,968)

(3,433)

(4,441)

(8,260)

(31,260)

(32,671)

(26,936)

(21,081)

(15,335)

Net Assets

 

 

46,134

56,401

94,183

157,752

321,468

344,934

353,565

364,777

381,379

CASH FLOW

Operating Cash Flow

 

 

11,684

13,397

16,305

31,620

27,779

48,498

35,366

40,846

49,783

Net Interest

(266)

(282)

(498)

(545)

(689)

(1,768)

(2,155)

(1,730)

(1,630)

Tax

(337)

(248)

(2,193)

(3,247)

(2,930)

(6,386)

(6,883)

(8,891)

(10,688)

Capex

(2,011)

(1,762)

(2,227)

(2,018)

(1,625)

(1,339)

(2,900)

(3,000)

(3,100)

Acquisitions/disposals

(18,672)

(12,263)

(36,840)

(70,363)

(255,101)

(81)

0

0

0

Financing

10,954

790

24,755

56,668

157,339

(1,553)

(2,000)

(2,000)

(2,000)

Dividends

(1,955)

(2,277)

(2,775)

(3,582)

(4,049)

(5,761)

0

(3,898)

(5,088)

Net Cash Flow

(603)

(2,645)

(3,473)

8,533

(79,276)

31,610

21,428

21,327

27,278

Opening net debt/(cash)

 

 

(11,846)

(11,389)

(8,673)

(5,233)

(13,505)

65,699

34,640

13,212

(8,115)

HP finance leases initiated

0

0

0

0

0

0

0

0

0

Other

146

(71)

33

(261)

72

(551)

0

0

0

Closing net debt/(cash)

 

 

(11,389)

(8,673)

(5,233)

(13,505)

65,699

34,640

13,212

(8,115)

(35,392)

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 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 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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

United Kingdom

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

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

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

United States

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

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

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 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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

United Kingdom

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

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

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

United States

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

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

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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