Last close As at 06/08/2026
GBP2.22
▲ 1.00 (0.45%)
Market capitalisation
GBP508m
Research: TMT
GB Group’s Loqate division was the focus of yesterday’s capital markets day. Presenters highlighted the need for accurate address data as a prerequisite for many business processes, including e-commerce, insurance and invoicing. Loqate’s ability to provide the “golden record” in a simple, fast and consistent way gives it a competitive edge and supports the division’s international growth ambitions.
GB Group |
Location, location, location |
Capital markets day |
Software & comp services |
14 December 2018 |
Share price performance
Business description
Next events
Analysts
GB Group is a research client of Edison Investment Research Limited |
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GB Group’s Loqate division was the focus of yesterday’s capital markets day. Presenters highlighted the need for accurate address data as a prerequisite for many business processes, including e-commerce, insurance and invoicing. Loqate’s ability to provide the “golden record” in a simple, fast and consistent way gives it a competitive edge and supports the division’s international growth ambitions.
Year end |
Revenue (£m) |
EBIT (£m) |
PBT* |
Dil. EPS* |
DPS |
P/E |
03/17 |
87.5 |
17.0 |
16.5 |
9.9 |
2.4 |
44.0 |
03/18 |
119.7 |
26.3 |
25.8 |
13.5 |
2.7 |
32.2 |
03/19e |
136.4 |
27.0 |
26.4 |
13.8 |
3.0 |
31.5 |
03/20e |
161.7 |
30.9 |
30.4 |
15.6 |
3.3 |
27.7 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
“Where are you?” - Loqate provides the answer
At its capital markets day, GBG presented a deep dive into its Loqate division (34% of H119 revenues). The division provides location data in 240 countries/territories, in 130 address formats and eight character sets. Customers (Moo, Oracle) highlighted their reasons for using Loqate, including data quality, ongoing data maintenance and Loqate’s relationship management. As well as helping e-commerce retailers to reduce the rate of delivery failures (c 20% of deliveries fail due to inaccurate address details), Oracle highlighted that accurate address data are vital in software used for sales management, billing, and tax purposes.
Enriching location data; expanding internationally
With an estimated market opportunity of $1bn, and a c 25% UK market share, Loqate has the potential to gain a larger share of this market, particularly from international customers. It is focused on customers in the UK, the US, Germany, Canada and Australia/NZ, and currently generates c 20% of divisional revenues from outside the UK. Sales takes a three-pronged approach: self-service (11% of revenues), direct customers (66%) and channel partners (23%). The business sees scope to grow revenues through a combination of new customer wins and selling more data types (eg email and phone number verification, additional data on properties such as flood risk or number of bedrooms) to existing customers.
Valuation: Premium reflects growth opportunity
At 22.5x FY19e and 19.8x FY20e EBITDA, the stock trades at a premium to the UK software sector on an EV/EBITDA basis; on a P/E basis it trades at a discount in FY19 but a premium for FY20. Looking at more directly relevant sub-sectors, including global peers, the stock trades more in line with cyber-security peers, with similar levels of profitability and growth. We believe this premium rating is warranted, considering the group’s historic track record of profitable growth and good cash generation, combined with the opportunity from structural growth in identity data intelligence services and the potential for accretive acquisitions.
Exhibit 1: Financial summary
£'000s |
2015 |
2016 |
2017 |
2018 |
2019e |
2020e |
||
March |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||
Revenue |
|
|
57,283 |
73,401 |
87,468 |
119,702 |
136,350 |
161,676 |
Cost of Sales |
(16,448) |
(17,606) |
(20,302) |
(27,092) |
(33,910) |
(39,952) |
||
Gross Profit |
40,835 |
55,795 |
67,166 |
92,610 |
102,440 |
121,724 |
||
EBITDA |
|
|
11,844 |
14,772 |
18,734 |
28,741 |
29,675 |
33,689 |
Operating Profit (before amort. and except.) |
10,790 |
13,428 |
17,006 |
26,311 |
27,000 |
30,932 |
||
Acquired intangible amortisation |
(1,986) |
(2,501) |
(4,022) |
(7,885) |
(8,100) |
(7,300) |
||
Exceptionals |
(1,629) |
(94) |
(1,410) |
(2,143) |
(1,830) |
0 |
||
Share of associate |
(10) |
0 |
0 |
0 |
0 |
0 |
||
Share based payments |
(971) |
(1,245) |
(994) |
(2,375) |
(2,500) |
(2,750) |
||
Operating Profit |
6,194 |
9,588 |
10,580 |
13,908 |
14,570 |
20,882 |
||
Net Interest |
(266) |
(270) |
(498) |
(508) |
(569) |
(580) |
||
Profit Before Tax (norm) |
|
|
10,524 |
13,158 |
16,508 |
25,803 |
26,431 |
30,352 |
Profit Before Tax (FRS 3) |
|
|
5,928 |
9,318 |
10,082 |
13,400 |
14,001 |
20,302 |
Tax |
(1,127) |
(178) |
668 |
(2,746) |
(5,286) |
(5,767) |
||
Profit After Tax (norm) |
8,314 |
10,395 |
13,206 |
20,642 |
21,541 |
24,585 |
||
Profit After Tax (FRS 3) |
4,801 |
9,140 |
10,750 |
10,654 |
8,715 |
14,535 |
||
Average Number of Shares Outstanding (m) |
119.1 |
122.7 |
131.6 |
150.6 |
153.0 |
153.6 |
||
EPS - normalised (p) |
|
|
7.0 |
8.5 |
10.0 |
13.7 |
14.1 |
16.0 |
EPS - normalised and fully diluted (p) |
|
6.7 |
8.2 |
9.9 |
13.5 |
13.8 |
15.6 |
|
EPS - (IFRS) (p) |
|
|
4.0 |
7.4 |
8.2 |
7.1 |
5.7 |
9.5 |
Dividend per share (p) |
1.9 |
2.1 |
2.4 |
2.7 |
3.0 |
3.3 |
||
Gross Margin (%) |
71.3 |
76.0 |
76.8 |
77.4 |
75.1 |
75.3 |
||
EBITDA Margin (%) |
20.7 |
20.1 |
21.4 |
24.0 |
21.8 |
20.8 |
||
Operating Margin (before GW and except.) (%) |
18.8 |
18.3 |
19.4 |
22.0 |
19.8 |
19.1 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
51,238 |
59,364 |
105,653 |
170,284 |
183,360 |
176,053 |
Intangible Assets |
45,296 |
54,113 |
98,753 |
161,372 |
173,492 |
165,212 |
||
Tangible Assets |
2,829 |
2,234 |
2,856 |
4,700 |
5,656 |
6,629 |
||
Other fixed assets |
3,113 |
3,017 |
4,044 |
4,212 |
4,212 |
4,212 |
||
Current Assets |
|
|
33,186 |
36,189 |
48,914 |
61,121 |
66,606 |
87,941 |
Debtors |
17,408 |
23,774 |
30,569 |
37,969 |
45,262 |
53,045 |
||
Cash |
15,778 |
12,415 |
17,618 |
22,753 |
20,945 |
34,497 |
||
Other |
0 |
0 |
727 |
399 |
399 |
399 |
||
Current Liabilities |
|
|
(30,784) |
(32,559) |
(44,444) |
(56,942) |
(61,890) |
(67,173) |
Creditors |
(24,305) |
(30,927) |
(36,436) |
(56,100) |
(61,093) |
(66,376) |
||
Contingent consideration |
(5,733) |
(1,050) |
(7,122) |
(45) |
0 |
0 |
||
Short term borrowings |
(746) |
(582) |
(886) |
(797) |
(797) |
(797) |
||
Long Term Liabilities |
|
|
(7,506) |
(6,593) |
(15,940) |
(16,711) |
(22,711) |
(18,711) |
Long term borrowings |
(3,643) |
(3,160) |
(11,499) |
(8,451) |
(14,451) |
(10,451) |
||
Contingent consideration |
(895) |
0 |
0 |
0 |
0 |
0 |
||
Other long term liabilities |
(2,968) |
(3,433) |
(4,441) |
(8,260) |
(8,260) |
(8,260) |
||
Net Assets |
|
|
46,134 |
56,401 |
94,183 |
157,752 |
165,364 |
178,109 |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
11,684 |
13,397 |
16,305 |
31,620 |
25,545 |
31,189 |
Net Interest |
(266) |
(282) |
(498) |
(545) |
(569) |
(580) |
||
Tax |
(337) |
(248) |
(2,193) |
(3,247) |
(5,286) |
(5,767) |
||
Capex |
(2,011) |
(1,762) |
(2,227) |
(2,018) |
(2,650) |
(2,750) |
||
Acquisitions/disposals |
(18,672) |
(12,263) |
(36,840) |
(70,363) |
(21,245) |
0 |
||
Financing |
10,954 |
790 |
24,755 |
56,668 |
446 |
0 |
||
Dividends |
(1,955) |
(2,277) |
(2,775) |
(3,582) |
(4,049) |
(4,540) |
||
Net Cash Flow |
(603) |
(2,645) |
(3,473) |
8,533 |
(7,809) |
17,552 |
||
Opening net debt/(cash) |
|
|
(11,846) |
(11,389) |
(8,673) |
(5,233) |
(13,505) |
(5,697) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
146 |
(71) |
33 |
(261) |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(11,389) |
(8,673) |
(5,233) |
(13,505) |
(5,697) |
(23,249) |
Source: Company data, Edison Investment Research
|
|
Research: Industrials
John Laing Group’s (JLG’s) pre-close update confirms the strong level of activity in the business in FY18. JLG will provide guidance on the level of realisations and investment commitments expected for FY19 at its results (due March) but we believe the outlook for next year and beyond appears encouraging based on the investment pipeline and global demand for infrastructure. JLG’s discount to its peer group does not reflect its proven track record or the prospects for further growth.