Strong organic growth in H122

GB Group 1 December 2021 Update
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GB Group

Strong organic growth in H122

H122 results

Software & comp services

1 December 2021

Price

770p

Market cap

£1,933m

$1.33:£1

Net cash (£m) at end H122

39.5

Shares in issue

251.1m

Free float

94%

Code

GBG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(13.1)

(14.4)

(8.9)

Rel (local)

(10.9)

(12.6)

(19.8)

52-week high/low

954p

748p

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 18 countries, has customers in more than 70 countries and generates more than 64% of revenues internationally.

Next events

Trading update

January 2022

Analyst

Katherine Thompson

+44 (0)20 3077 5730

GB Group is a research client of Edison Investment Research Limited

GB Group (GBG) reported a strong performance in H122, with organic constant currency revenue growth of 12.6% y-o-y and an adjusted operating margin of 25.5%. The Acuant acquisition completed on 29 November and the group’s immediate focus is on combining the two companies and pushing forward with growth plans. Our forecasts are substantially unchanged.

Year end

Revenue (£m)

Adj. operating profit* (£m)

PBT*
(£m)

Diluted EPS*
(p)

DPS
(p)

P/E
(x)

03/20

199.1

47.9

45.7

17.9

0.0

43.0

03/21

217.7

57.9

56.7

22.4

6.4

34.4

03/22e

234.0

55.1

53.5

19.4

3.5

39.6

03/23e

295.7

70.8

67.6

20.1

3.6

38.3

03/24e

332.0

79.5

76.9

22.4

3.7

34.3

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

Strong underlying organic growth in H122

In H122, GBG reported revenue growth of 5.4% y-o-y or 12.6% on an organic constant currency basis, with all divisions growing at a double-digit rate. Adjusting for exceptional revenue benefits from cryptocurrency trading and the US stimulus programme, GBG generated underlying revenue growth of 17.6%. The adjusted operating margin of 25.5% was ahead of the pre-Acuant target of 22–23% but is expected to decline to more normal levels in H222 as hiring accelerates and one-off revenues do not repeat. The company closed H122 with net cash of £39.5m. Our forecasts are substantially unchanged.

Focus shifts to integration of Acuant

The outlook for H222 is in line with board expectations and the focus now shifts to integrating the recently completed Acuant acquisition. The deal strengthens the group’s presence in the US, the largest identity verification market globally, and broadens GBG’s product range. The combined group is now in a better position to meet customer requirements for end-to-end solutions, providing a point of differentiation from high-profile, privately owned point solution providers.

Valuation: Not fully capturing growth potential

The stock has regained some ground since the 19 November placing at 725p. On our revised estimates, including Acuant from 1 December, GBG is trading at a premium to identity management (IDM) peers but at a discount to higher-growth, lower-profitability identity access management (IAM) and cybersecurity (CS) peers. However, our reverse DCF calculates that the share price is factoring in revenue growth of only 8.5% from FY25, well below the double-digit growth rate previously factored in by the market. Considering that Acuant is expected to grow faster than the original GBG, this appears overly conservative. Using a 12% growth rate (the lower end of new management guidance) from FY25 would imply a per share value of 950p.

Review of H122 results

Exhibit 1: GB Group H122 results highlights

£m

H122

H121

y-o-y

Revenues

109.2

103.5

5.4%

Gross profit

76.9

72.6

5.9%

Gross margin

70.5%

70.2%

0.3%

Adjusted operating profit

27.8

26.8

3.5%

Adjusted operating margin

25.5%

25.9%

-0.5%

Reported operating profit

14.8

15.7

-5.2%

Reported operating margin

13.6%

15.1%

-1.5%

Adjusted diluted EPS (p)

10.9

10.4

4.8%

Reported basic EPS (p)

5.7

6.1

-6.6%

Net cash/(debt)

39.5

-2.7

N/A

Source: GB Group

GBG reported H122 results substantially in line with its 21 October trading update. Revenue was 5.4% higher y-o-y. Adjusting for the businesses sold in FY21 and currency, GBG revenue grew 12.6% y-o-y on an organic, constant currency basis in H122. Adjusted operating profit grew at a slower pace, reflecting the resumption of spending on items such as travel and marketing and the start of an increase in headcount. The company has changed how it reports adjusted EPS to a method consistent with our normalised EPS calculations. Previously it reported adjusted EPS using adjusted PBT less reported tax, but now adjusts the tax charge to reflect the exclusion of items such as share-based payments and exceptionals, resulting in an effective tax rate of 19.4% for H122. The company repaid its remaining debt in H221 and closed H122 with gross/net cash of £39.5m. In H122, the company converted 112.6% of EBITDA to cash, compared to an artificially high 154.9% in H121 (benefiting from delayed cash payments during the pandemic).

Organic growth across all divisions

Exhibit 2: Divisional performance

£m

H122

H121

y-o-y

Constant currency organic growth

Revenues

Fraud

15.5

12.9

19.7%

17.0%

Identity

63.7

63.1

1.0%

10.4%

Location

29.9

26.6

12.3%

15.4%

Other

0.0

0.9

(96%)

N/A

Total revenues

109.2

103.5

5.4%

12.6%

Adjusted operating profit

Fraud

4.9

2.2

119.8%

Identity

28.1

23.3

20.6%

Location

10.7

7.8

37.1%

Other + central overheads

-15.9

-6.5

145.1%

Total adjusted operating profit

27.8

26.8

3.5%

Adjusted operating margin

Fraud

31.5%

17.2%

14.4%

Identity

44.2%

37.0%

7.2%

Location

35.7%

29.2%

6.4%

Other + central overheads

N/A

N/A

N/A

Total adjusted operating margin

25.5%

25.9%

-0.5%

Source: GB Group

The table above shows that each division reported double-digit organic constant currency revenue growth in H122. Fraud was the highest, at 17.0%, partially reflecting weaker demand in H121 due to pandemic restrictions. Location saw strong growth of 15.4%, after 9% growth in H121, helped by the shift to e-commerce. Identity, which included the Employ & Comply business that was sold in H221, saw 10.4% growth on an organic constant currency basis. In H121 the Identity business benefited from c £10m in revenue from the US stimulus programme. In H122, this contributed a further £3m and GBG also benefited from exceptionally high cryptocurrency trading volumes, which added an extra £4m. Stripping out the effect of acquisitions (£0.5m), disposals (£3.3m), currency (£3.7m) and one-off revenue benefits, the company calculates that underlying revenue growth was 17.6% (ie H122 clean revenue £101.7m versus H121 clean revenue £86.5m).

We note that GBG has revised how it reports central overheads. Previously, an element of central cost was allocated to each division. Now any resource that is used across the group is included in central overheads, leaving only those costs controlled by the divisions within their reporting structure. This split is not yet available for any prior periods so margins for H122 are not comparable with H121 at a divisional level. At a group level, the adjusted operating margin declined 0.5pp, but at 25.5% was still materially above the company’s pre-Acuant target range of 22–23%. Having put the brakes on spending during H121 as an initial reaction to managing through the pandemic, the company resumed investment in the business from H221.

Providing more transparency on revenue composition

GBG previously reported divisional revenue split into three revenue categories: licence, transactional and services. It has amended this to give more clarity on the types of licence and the proportion of revenue contracted on a consumption (or transactional) basis. The table below shows the new reporting by revenue type including comparatives for H121 and FY21.

Exhibit 3: Revenue by type and by division (£000s)

Group revenues by type

H121

H221

FY21

H122

y-o-y growth

Consumption-based

16,010

16,740

32,750

15,448

-4%

Term-based

27,634

34,610

62,244

32,428

17%

Subscription revenues

43,644

51,350

94,994

47,876

10%

Consumption

54,654

56,611

111,265

57,123

5%

Other

5,247

6,153

11,400

4,155

-21%

Total revenue

103,545

114,114

217,659

109,154

5%

Location

Consumption-based

8,978

9,406

18,384

8,423

-6%

Term-based

15,616

21,783

37,399

19,095

22%

Subscription revenues

24,594

31,189

55,783

27,518

12%

Consumption

1,669

1,301

2,970

1,982

19%

Other

357

559

916

405

13%

Total revenue

26,620

33,049

59,669

29,905

12%

Identity

Consumption-based

6,743

6,975

13,718

6,586

-2%

Term-based

2,830

2,108

4,938

1,563

-45%

Subscription revenues

9,573

9,083

18,656

8,149

-15%

Consumption

52,482

54,691

107,173

54,471

4%

Other

1,059

1,197

2,256

1,108

5%

Total revenue

63,114

64,971

128,085

63,728

1%

Fraud

Consumption-based

289

359

648

439

52%

Term-based

9,188

10,719

19,907

11,770

28%

Subscription revenues

9,477

11,078

20,555

12,209

29%

Consumption

503

619

1,122

670

33%

Other

2,952

3,815

6,767

2,604

-12%

Total revenue

12,932

15,512

28,444

15,483

20%

Other

Consumption-based

-

-

-

-

N/A

Term-based

-

-

-

-

N/A

Subscription revenues

-

-

-

-

N/A

Consumption

-

-

-

-

N/A

Other

879

582

1,461

38

-96%

Total revenue

879

582

1,461

38

-96%

Source: GB Group

To clarify, a consumption-based subscription licence is one where the customer pays in advance for a set number of transactions in a given period of time. If the customer does not use all the transactions paid for in the period, they are forfeited. Conversely, a consumption contract is one where the customer pays in arrears based on the number of transactions undertaken in a period. More than 85% of the Identity business is contracted on a consumption basis, ie customers pay per verification. Conversely, nearly 80% of Fraud revenue is contracted on a subscription licence basis, with most licences for a multi-year term and only a small proportion on a consumption basis. The Location business has more than 90% of revenue from subscription licences, with more than two-thirds of these on a consumption basis. At a group level, this results in 44% of revenue generated from subscription licences (32% consumption-based, 68% term-based), 52% from consumption-based contracts and 4% from Other (mainly services).

Acuant acquisition completed

The company completed the acquisition of Acuant on 29 November (see Accelerating growth with Acuant acquisition). As a reminder, the company believes that this business can grow revenue by 25% pa in the medium term, having grown 22% in the 12 months to 30 September 2021. Management has put in place 100-day and 200-day plans for the combined group and will initially focus on low-hanging fruit such as plugging GBG’s data into Acuant’s products and using GBG’s salesforce in EMEA and APAC to sell Acuant solutions. Acuant’s channel network will also be useful to help sell GBG’s products and to help GBG gain access to new verticals such as automotive, healthcare and government.

Outlook and changes to forecasts

The outlook for H222 and FY22 is in line with board expectations. At a group level, we make minimal changes to our forecasts, which were updated last week for the Acuant acquisition. At a divisional level, we have revised our margin forecasts to reflect the new way of allocating central costs.

Exhibit 4: Changes to forecasts

£m

FY22e

FY23e

FY24e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Revenues

233.6

234.0

0.2%

7.5%

295.1

295.7

0.2%

26.4%

332.0

332.0

(0.0%)

12.3%

Gross profit

168

168

0.2%

10.4%

212.4

212.9

0.2%

26.4%

239.1

239.0

(0.0%)

12.3%

Gross margin

72.0%

72.0%

0.0%

1.9%

72.0%

72.0%

0.0%

0.0%

72.0%

72.0%

0.0%

0.0%

EBITDA

58.8

58.8

(0.0%)

(4.2%)

74.7

74.7

0.0%

27.0%

83.6

83.6

0.0%

11.9%

EBITDA margin

25.2%

25.1%

(0.0%)

(3.1%)

25.3%

25.3%

(0.0%)

0.1%

25.2%

25.2%

0.0%

(0.1%)

EBITA

55.1

55.1

(0.0%)

(4.8%)

70.8

70.8

0.0%

28.5%

79.5

79.5

0.0%

12.3%

EBITA margin

23.6%

23.6%

(0.0%)

(3.0%)

24.0%

24.0%

(0.0%)

0.4%

24.0%

24.0%

0.0%

0.0%

PBT

53.5

53.5

(0.0%)

(5.6%)

67.6

67.6

0.0%

26.4%

76.9

76.9

0.0%

13.7%

EPS - normalised, diluted (p)

18.6

19.4

4.4%

(13.2%)

20.1

20.1

0.0%

3.4%

22.4

22.4

0.0%

11.5%

EPS - reported (p)

8.9

8.9

(0.0%)

(35.7%)

13.3

13.3

0.0%

50.3%

15.9

15.9

0.0%

19.4%

DPS (p)

3.5

3.5

0.0%

(45.3%)

3.6

3.6

0.0%

2.9%

3.7

3.7

0.0%

2.8%

Net debt/(cash)

109.3

106.6

(2.5%)

N/A

61.8

59.0

(4.6%)

(44.6%)

10.9

8.2

(24.7%)

(86.1%)

Net debt/EBITDA (x)

1.9

1.8

0.8

0.8

0.1

0.1

Divisional forecasts

Revenue

Identity

131.5

135.6

3.1%

5.9%

185.2

189.8

2.5%

40.0%

211.8

216.9

2.4%

14.3%

Location

72.2

66.2

(8.3%)

11.0%

78.0

71.5

(8.3%)

8.0%

85.8

78.0

(9.1%)

9.0%

Fraud

29.9

32.1

7.5%

13.0%

31.9

34.3

7.6%

6.8%

34.5

37.1

7.7%

8.1%

Group

233.6

234.0

0.2%

7.5%

295.1

295.7

0.2%

26.3%

332.0

332.0

(0.0%)

12.3%

Adjusted operating profit

Identity

41.0

53.8

31.2%

12.6%

55.2

68.9

24.7%

28.1%

62.4

78.1

25.2%

13.4%

Location

21.7

23.2

7.0%

19.0%

23.4

24.3

4.0%

4.9%

25.7

25.7

(0.0%)

5.8%

Fraud

6.3

9.6

53.6%

80.9%

7.2

10.3

43.5%

6.8%

7.9

10.4

31.2%

0.9%

Other

(13.8)

(31.5)

128.1%

(15.0)

(32.7)

118.0%

(16.5)

(34.7)

110.3%

Group

55.1

55.1

(0.0%)

-4.8%

70.8

70.8

0.0%

28.5%

79.5

79.5

0.0%

12.3%

Adjusted operating margin

Identity

31.2%

39.7%

29.8%

36.3%

29.4%

36.0%

Location

30.0%

35.0%

30.0%

34.0%

30.0%

33.0%

Fraud

21.0%

30.0%

22.5%

30.0%

23.0%

28.0%

Group

23.6%

23.6%

24.0%

24.0%

24.0%

24.0%

Source: Edison Investment Research

Exhibit 5: Financial summary

£'000s

2017

2018

2019

2020

2021

2022e

2023e

2024e

March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

87,468

119,702

143,504

199,101

217,659

233,965

295,654

331,964

Cost of Sales

(20,302)

(27,092)

(36,060)

(54,914)

(65,096)

(65,510)

(82,783)

(92,950)

Gross Profit

67,166

92,610

107,444

144,187

152,563

168,455

212,871

239,014

EBITDA

 

 

18,734

28,741

34,080

51,739

61,410

58,805

74,712

83,613

Operating Profit (before amort. and except.)

17,006

26,311

32,031

47,945

57,896

55,121

70,821

79,540

Acquired intangible amortisation

(4,022)

(7,885)

(10,316)

(19,008)

(17,671)

(18,500)

(18,500)

(18,500)

Exceptionals

(1,410)

(2,143)

(4,003)

(1,552)

448

(5,000)

0

0

Share of associate

0

0

0

0

0

0

0

0

Share based payments

(994)

(2,375)

(2,287)

(4,541)

(5,170)

(5,687)

(6,256)

(6,881)

Operating Profit

10,580

13,908

15,425

22,844

35,503

25,934

46,065

54,159

Net Interest

(498)

(508)

(689)

(2,218)

(1,240)

(1,648)

(3,205)

(2,666)

Profit Before Tax (norm)

 

 

16,508

25,803

31,342

45,727

56,656

53,473

67,616

76,874

Profit Before Tax (FRS 3)

 

 

10,082

13,400

14,736

20,626

34,263

24,286

42,860

51,493

Tax

668

(2,746)

(2,583)

(3,562)

(7,385)

(5,235)

(9,238)

(11,099)

Profit After Tax (norm)

13,206

20,642

24,760

35,210

44,481

42,778

51,388

57,655

Profit After Tax (FRS 3)

10,750

10,654

12,153

17,064

26,878

19,051

33,622

40,394

Ave. Number of Shares Outstanding (m)

131.6

150.6

158.1

193.6

195.2

215.1

252.6

254.1

EPS - normalised (p)

 

 

10.0

13.7

15.7

18.2

22.8

19.9

20.3

22.7

EPS - normalised and fully diluted (p)

 

9.9

13.5

15.4

17.9

22.4

19.4

20.1

22.4

EPS - (IFRS) (p)

 

 

8.2

7.1

7.7

8.8

13.8

8.9

13.3

15.9

Dividend per share (p)

2.4

2.7

3.0

0.0

6.4

3.5

3.6

3.7

Gross Margin (%)

76.8

77.4

74.9

72.4

70.1

72.0

72.0

72.0

EBITDA Margin (%)

21.4

24.0

23.7

26.0

28.2

25.1

25.3

25.2

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

19.4

22.0

22.3

24.1

26.6

23.6

24.0

24.0

BALANCE SHEET

Fixed Assets

 

 

105,653

170,284

438,683

430,219

394,564

924,994

908,486

892,071

Intangible Assets

98,753

161,372

425,646

414,505

377,663

906,163

887,713

869,313

Tangible Assets

2,856

4,700

4,815

9,420

6,937

8,867

10,809

12,794

Other fixed assets

4,044

4,212

8,222

6,294

9,964

9,964

9,964

9,964

Current Assets

 

 

48,914

61,121

76,522

95,984

85,653

139,846

174,691

205,667

Debtors

30,569

37,969

54,992

66,554

58,617

65,510

82,783

92,950

Cash

17,618

22,753

21,189

27,499

21,135

68,435

86,007

106,816

Other

727

399

341

1,931

5,901

5,901

5,901

5,901

Current Liabilities

 

 

(44,444)

(56,942)

(77,030)

(86,459)

(90,000)

(99,560)

(123,824)

(138,351)

Creditors

(36,436)

(56,100)

(70,302)

(80,280)

(86,338)

(95,808)

(120,072)

(134,599)

Contingent consideration

(7,122)

(45)

(5,287)

(6,179)

(3,662)

(3,752)

(3,752)

(3,752)

Short term borrowings

(886)

(797)

(1,441)

0

0

0

0

0

Long Term Liabilities

 

 

(15,940)

(16,711)

(116,707)

(94,810)

(25,961)

(195,501)

(158,511)

(120,391)

Long term borrowings

(11,499)

(8,451)

(85,447)

(62,139)

0

(175,000)

(145,000)

(115,000)

Contingent consideration

0

0

0

0

0

0

0

0

Other long-term liabilities

(4,441)

(8,260)

(31,260)

(32,671)

(25,961)

(20,501)

(13,511)

(5,391)

Net Assets

 

 

94,183

157,752

321,468

344,934

364,256

769,779

800,841

838,995

CASH FLOW

Operating Cash Flow

 

 

16,305

31,620

27,779

48,498

72,631

56,605

81,704

87,973

Net Interest

(498)

(545)

(689)

(1,768)

(1,211)

(1,641)

(3,205)

(2,666)

Tax

(2,193)

(3,247)

(2,930)

(6,386)

(14,205)

(10,695)

(16,228)

(19,218)

Capex

(2,227)

(2,018)

(1,625)

(1,339)

(738)

(3,250)

(3,400)

(3,550)

Acquisitions/disposals

(36,840)

(70,363)

(255,101)

(81)

2,545

(460,000)

0

0

Financing

24,755

56,668

157,339

(1,553)

3,476

297,635

(2,483)

(2,607)

Dividends

(2,775)

(3,582)

(4,049)

(5,761)

(5,883)

(6,677)

(8,816)

(9,122)

Net Cash Flow

(3,473)

8,533

(79,276)

31,610

56,615

(128,022)

47,572

50,810

Opening net debt/(cash)

 

 

(8,673)

(5,233)

(13,505)

65,699

34,640

(21,135)

106,565

58,993

HP finance leases initiated

0

0

0

0

0

0

0

0

Other

33

(261)

72

(551)

(840)

322

0

0

Closing net debt/(cash)

 

 

(5,233)

(13,505)

65,699

34,640

(21,135)

106,565

58,993

8,184

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 £60,000 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 2021 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

1185 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

1185 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 £60,000 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 2021 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

1185 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

1185 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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