Last close As at 05/08/2026
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GBP508m
Research: TMT
GB Group (GBG) expects to report revenue, adjusted operating profit and net cash ahead of consensus for FY21, with strength in the Identity and Location businesses outweighing slower business for the Fraud division. We have upgraded our FY21 forecasts to reflect this and revised our FY22 and FY23 forecasts to reflect the disposal of Employ & Comply at the start of FY22.
GB Group |
Impressive cash generation in FY21 |
FY21 trading update |
Software & comp services |
22 April 2021 |
Share price performance
Business description
Next events
Analyst
GB Group is a research client of Edison Investment Research Limited |
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GB Group (GBG) expects to report revenue, adjusted operating profit and net cash ahead of consensus for FY21, with strength in the Identity and Location businesses outweighing slower business for the Fraud division. We have upgraded our FY21 forecasts to reflect this and revised our FY22 and FY23 forecasts to reflect the disposal of Employ & Comply at the start of FY22.
Year end |
Revenue (£m) |
EBITA* |
PBT* |
Diluted EPS* |
DPS |
P/E |
03/19 |
143.5 |
32.0 |
31.3 |
15.4 |
3.0 |
56.9 |
03/20 |
199.1 |
47.9 |
45.7 |
17.9 |
0.0 |
48.9 |
03/21e |
217.2 |
57.9 |
56.3 |
21.7 |
6.0 |
40.4 |
03/22e |
206.3 |
46.0 |
44.9 |
17.1 |
3.3 |
51.1 |
03/23e |
229.1 |
51.7 |
50.8 |
19.3 |
3.6 |
45.5 |
Note: *EBITA, PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
FY21 well ahead of consensus
GBG expects to report FY21 revenue of £217m (+9% y-o-y on both a reported and organic constant currency basis), ahead of our and consensus forecasts of £213m. The company highlighted strength in Identity; the February trading update had noted that the US stimulus programme and elevated levels of share and crypto-currency trading were key drivers of growth, more than outweighing weaker demand from COVID-19 affected customers. GBG also noted that the Location business grew well, benefiting from the increase in online retail. Adjusted operating profit of £58m (+21% y-o-y) is also ahead of our forecast of £53.2m and consensus of £53.5m, benefiting from higher revenues and the effect of deferring expenditure at the height of the pandemic. Cash generation was well ahead of our expectations, with net cash of £21m at year-end compared to our forecast for net debt of £11m, with all debt repaid prior to year-end.
Estimates revised to reflect recent disposal
We have upgraded our FY21 forecasts to reflect the expected outturn. We have removed the Employ & Comply business from our forecasts (sold 31 March), which reduces revenue by c £6m and adjusted operating profit by c £2m in FY22 and FY23. Overall, our normalised diluted EPS forecasts increase by 9.2% in FY21 and decrease by 4.2% in FY22 and 3.9% in FY23.
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 Identity 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 23.9% and revenue growth of 15.6% per year from FY24, at the upper end of the group’s revenue and margin targets. Outside of faster-than-expected 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.
Changes to forecasts
We have revised our forecasts to reflect the expected outturn for FY21. We have increased our Location revenue and margin forecasts in FY21. For FY22 and FY23, we have slightly changed the mix of Location versus Identity revenues. We have removed the Employ & Comply (E&C) business from 1 April 2021; this was previously reported within the Identity business.
Looking at the remaining businesses within GBG (ie excluding the recently disposed E&C and marketing services businesses), we expect a 1% revenue decline in FY22. Also stripping out the effect of the US stimulus programme in FY21, we forecast revenue growth of 6% in FY22.
Exhibit 1: Changes to forecasts
£m |
FY21e |
FY21e |
|
|
FY22e |
FY22e |
|
|
FY23e |
FY23e |
|
|
old |
new |
change |
y-o-y |
old |
new |
change |
y-o-y |
old |
new |
change |
y-o-y |
|
Revenues |
213.1 |
217.2 |
1.9% |
9.1% |
212.5 |
206.3 |
(2.9%) |
(5.0%) |
235.5 |
229.1 |
(2.7%) |
11.0% |
Gross profit |
153.5 |
156.3 |
1.9% |
8.4% |
153 |
149 |
(2.9%) |
(5.0%) |
169.6 |
165.0 |
(2.7%) |
11.0% |
Gross margin |
72.0% |
72.0% |
0.0% |
(0.4%) |
72.0% |
72.0% |
0.0% |
0.0% |
72.0% |
72.0% |
0.0% |
0.0% |
EBITDA |
57.2 |
61.9 |
8.3% |
19.7% |
52.1 |
50.1 |
(3.8%) |
(19.0%) |
58.1 |
56.0 |
(3.5%) |
11.7% |
EBITDA margin |
26.8% |
28.5% |
1.7% |
2.5% |
24.5% |
24.3% |
(0.2%) |
(4.2%) |
24.7% |
24.4% |
(0.2%) |
0.1% |
EBITA |
53.2 |
57.9 |
8.9% |
20.9% |
48.0 |
46.0 |
(4.1%) |
(20.6%) |
53.7 |
51.7 |
(3.8%) |
12.3% |
EBITA margin |
25.0% |
26.7% |
1.7% |
2.6% |
22.6% |
22.3% |
(0.3%) |
(4.4%) |
22.8% |
22.5% |
(0.3%) |
0.3% |
PBT |
51.5 |
56.3 |
9.2% |
23.1% |
46.9 |
44.9 |
(4.2%) |
(20.3%) |
52.8 |
50.8 |
(3.9%) |
13.2% |
EPS - normalised, diluted (p) |
19.8 |
21.7 |
9.2% |
21.1% |
17.9 |
17.1 |
(4.2%) |
(20.9%) |
20.0 |
19.3 |
(3.9%) |
12.3% |
EPS - reported (p) |
10.7 |
12.6 |
17.3% |
42.5% |
8.7 |
7.9 |
(8.7%) |
(37.1%) |
11.1 |
10.3 |
(7.1%) |
30.1% |
DPS (p) |
6.0 |
6.0 |
0.0% |
N/A |
3.3 |
3.3 |
0.0% |
(45.0%) |
3.6 |
3.6 |
0.0% |
9.1% |
Net debt/(cash) |
11.1 |
(20.8) |
N/A |
N/A |
(20.4) |
(52.1) |
154.7% |
149.7% |
(54.1) |
(86.9) |
60.5% |
67.2% |
Divisional forecasts |
||||||||||||
Revenue |
||||||||||||
Identity |
130.2 |
130.3 |
0.1% |
23.6% |
126.2 |
115.9 |
(8.2%) |
(11.1%) |
139.9 |
128.8 |
(7.9%) |
11.2% |
Location |
50.2 |
54.1 |
7.7% |
5.0% |
53.9 |
58.0 |
7.7% |
7.3% |
60.3 |
65.0 |
7.7% |
12.0% |
Fraud |
30.1 |
30.1 |
0.0% |
-15.1% |
32.5 |
32.5 |
0.0% |
7.7% |
35.3 |
35.3 |
0.0% |
8.8% |
Group |
213.1 |
217.2 |
1.9% |
9.1% |
212.5 |
206.3 |
(2.9%) |
(5.0%) |
235.5 |
229.1 |
(2.7%) |
11.0% |
Adjusted operating profit |
||||||||||||
Identity |
45.3 |
47.3 |
4.5% |
40.8% |
38.2 |
35.1 |
(8.2%) |
-25.8% |
42.4 |
39.0 |
(7.9%) |
11.2% |
Location |
14.3 |
16.8 |
17.5% |
12.3% |
15.1 |
16.2 |
7.7% |
-3.2% |
16.9 |
18.2 |
7.7% |
12.0% |
Fraud |
6.7 |
6.9 |
2.7% |
-48.9% |
8.4 |
8.4 |
0.0% |
22.9% |
9.5 |
9.5 |
0.0% |
13.0% |
Group |
53.2 |
57.9 |
8.9% |
20.9% |
48.0 |
46.0 |
(4.1%) |
-20.6% |
53.7 |
51.7 |
(3.8%) |
12.3% |
Adjusted operating margin |
||||||||||||
Identity |
34.8% |
36.3% |
30.3% |
30.3% |
30.3% |
30.3% |
||||||
Location |
28.4% |
31.0% |
28.0% |
28.0% |
28.0% |
28.0% |
||||||
Fraud |
22.2% |
22.8% |
26.0% |
26.0% |
27.0% |
27.0% |
||||||
Group |
25.0% |
26.7% |
22.6% |
22.3% |
22.8% |
22.5% |
Source: Edison Investment Research
Exhibit 2: Financial summary
£'000s |
2017 |
2018 |
2019 |
2020 |
2021e |
2022e |
2023e |
||
Year end 31 March |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||||
Revenue |
|
|
87,468 |
119,702 |
143,504 |
199,101 |
217,151 |
206,345 |
229,115 |
Cost of Sales |
(20,302) |
(27,092) |
(36,060) |
(54,914) |
(60,802) |
(57,777) |
(64,152) |
||
Gross Profit |
67,166 |
92,610 |
107,444 |
144,187 |
156,349 |
148,568 |
164,963 |
||
EBITDA |
|
|
18,734 |
28,741 |
34,080 |
51,739 |
61,913 |
50,147 |
56,012 |
Operating Profit (before amort. and except.) |
17,006 |
26,311 |
32,031 |
47,945 |
57,945 |
45,993 |
51,662 |
||
Acquired intangible amortisation |
(4,022) |
(7,885) |
(10,316) |
(19,008) |
(18,900) |
(18,900) |
(17,900) |
||
Exceptionals |
(1,410) |
(2,143) |
(4,003) |
(1,552) |
(93) |
0 |
0 |
||
Share of associate |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Share based payments |
(994) |
(2,375) |
(2,287) |
(4,541) |
(4,995) |
(5,495) |
(6,044) |
||
Operating Profit |
10,580 |
13,908 |
15,425 |
22,844 |
33,957 |
21,598 |
27,718 |
||
Net Interest |
(498) |
(508) |
(689) |
(2,218) |
(1,655) |
(1,105) |
(855) |
||
Profit Before Tax (norm) |
|
|
16,508 |
25,803 |
31,342 |
45,727 |
56,290 |
44,888 |
50,807 |
Profit Before Tax (FRS 3) |
|
|
10,082 |
13,400 |
14,736 |
20,626 |
32,302 |
20,493 |
26,863 |
Tax |
668 |
(2,746) |
(2,583) |
(3,562) |
(7,752) |
(4,918) |
(6,447) |
||
Profit After Tax (norm) |
13,206 |
20,642 |
24,760 |
35,210 |
42,781 |
34,115 |
38,614 |
||
Profit After Tax (FRS 3) |
10,750 |
10,654 |
12,153 |
17,064 |
24,550 |
15,575 |
20,416 |
||
Ave. Number of Shares Outstanding (m) |
131.6 |
150.6 |
158.1 |
193.6 |
195.5 |
197.1 |
198.6 |
||
EPS - normalised (p) |
|
|
10.0 |
13.7 |
15.7 |
18.2 |
21.9 |
17.3 |
19.4 |
EPS - normalised and fully diluted (p) |
|
9.9 |
13.5 |
15.4 |
17.9 |
21.7 |
17.1 |
19.3 |
|
EPS - (IFRS) (p) |
|
|
8.2 |
7.1 |
7.7 |
8.8 |
12.6 |
7.9 |
10.3 |
Dividend per share (p) |
2.4 |
2.7 |
3.0 |
0.0 |
6.0 |
3.3 |
3.6 |
||
Gross Margin (%) |
76.8 |
77.4 |
74.9 |
72.4 |
72.0 |
72.0 |
72.0 |
||
EBITDA Margin (%) |
21.4 |
24.0 |
23.7 |
26.0 |
28.5 |
24.3 |
24.4 |
||
Operating Margin (before GW and except.) (%) |
19.4 |
22.0 |
22.3 |
24.1 |
26.7 |
22.3 |
22.5 |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
105,653 |
170,284 |
438,683 |
430,219 |
410,201 |
392,147 |
374,998 |
Intangible Assets |
98,753 |
161,372 |
425,646 |
414,505 |
390,981 |
371,931 |
353,881 |
||
Tangible Assets |
2,856 |
4,700 |
4,815 |
9,420 |
9,702 |
10,697 |
11,598 |
||
Other fixed assets |
4,044 |
4,212 |
8,222 |
6,294 |
9,519 |
9,519 |
9,519 |
||
Current Assets |
|
|
48,914 |
61,121 |
76,522 |
95,984 |
85,267 |
113,391 |
154,870 |
Debtors |
30,569 |
37,969 |
54,992 |
66,554 |
64,060 |
60,872 |
67,589 |
||
Cash |
17,618 |
22,753 |
21,189 |
27,499 |
20,807 |
52,120 |
86,881 |
||
Other |
727 |
399 |
341 |
1,931 |
400 |
400 |
400 |
||
Current Liabilities |
|
|
(44,444) |
(56,942) |
(77,030) |
(86,459) |
(99,322) |
(99,898) |
(110,041) |
Creditors |
(36,436) |
(56,100) |
(70,302) |
(80,280) |
(95,119) |
(95,695) |
(105,838) |
||
Contingent consideration |
(7,122) |
(45) |
(5,287) |
(6,179) |
(4,203) |
(4,203) |
(4,203) |
||
Short term borrowings |
(886) |
(797) |
(1,441) |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(15,940) |
(16,711) |
(116,707) |
(94,810) |
(26,580) |
(20,725) |
(14,979) |
Long term borrowings |
(11,499) |
(8,451) |
(85,447) |
(62,139) |
0 |
0 |
0 |
||
Contingent consideration |
0 |
0 |
0 |
0 |
(458) |
(458) |
(458) |
||
Other long term liabilities |
(4,441) |
(8,260) |
(31,260) |
(32,671) |
(26,122) |
(20,267) |
(14,521) |
||
Net Assets |
|
|
94,183 |
157,752 |
321,468 |
344,934 |
369,566 |
384,916 |
404,848 |
CASH FLOW |
|||||||||
Operating Cash Flow |
|
|
16,305 |
31,620 |
27,779 |
48,498 |
81,370 |
53,911 |
59,438 |
Net Interest |
(498) |
(545) |
(689) |
(1,768) |
(1,454) |
(936) |
(855) |
||
Tax |
(2,193) |
(3,247) |
(2,930) |
(6,386) |
(13,510) |
(10,773) |
(12,194) |
||
Capex |
(2,227) |
(2,018) |
(1,625) |
(1,339) |
(2,100) |
(3,000) |
(3,100) |
||
Acquisitions/disposals |
(36,840) |
(70,363) |
(255,101) |
(81) |
(2,089) |
0 |
0 |
||
Financing |
24,755 |
56,668 |
157,339 |
(1,553) |
(1,037) |
(2,000) |
(2,000) |
||
Dividends |
(2,775) |
(3,582) |
(4,049) |
(5,761) |
(5,855) |
(5,889) |
(6,528) |
||
Net Cash Flow |
(3,473) |
8,533 |
(79,276) |
31,610 |
55,326 |
31,313 |
34,762 |
||
Opening net debt/(cash) |
|
|
(8,673) |
(5,233) |
(13,505) |
65,699 |
34,640 |
(20,807) |
(52,120) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
33 |
(261) |
72 |
(551) |
121 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(5,233) |
(13,505) |
65,699 |
34,640 |
(20,807) |
(52,120) |
(86,881) |
Source: GB Group accounts, Edison Investment Research
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Research: Metals & Mining
Lepidico’s announcement that it has raised capital and awarded the EPCM contract for its Phase 1 Plant project to Lycopodium follows on the heels of an offtake agreement with China’s BJR and comes barely a month after it announced an expansion of its resource base in Namibia. Relative to existing hard rock resources, the resource expansion quantified high grade surface material contained in tailings, stockpiles and dumps both at Rubicon and Helikon that could potentially support operations at Karibib for an additional two years. Just a year after completing its DFS, Lepidico has now transitioned its Phase 1 Plant project into development by effectively completing permitting and approvals processes at the same time as negotiating a first offtake agreement and raising initial equity to allow it to commit to early engineering works. Concurrently, it is advancing negotiations with the US government DFC (which is now conducting confirmatory due diligence) for the provision of project debt.