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GB Group — PCA acquisition an excellent fit

GB Group (AIM: GBG)

Last close As at 06/08/2026

GBP2.22

▲ 1.00 (0.45%)

Market capitalisation

GBP508m

More on this equity

Research: TMT

GB Group — PCA acquisition an excellent fit

The acquisition of PCA Predict is an excellent fit with GB Group’s (GBG) address intelligence services, adding SME reach and, combined with Matchcode360 and Loqate, providing GBG with the most complete offer in the industry. GBG has closed a £58m placing to fund the £66m acquisition (EV), which it will supplement with existing cash and debt. Despite the planned increase in investment to expand PCA outside the UK, the deal should be earnings enhancing and we upgrade our FY18 and FY19 EPS forecasts by 8.5% and 10.4%, respectively.

Written by

Katherine Thompson

Director

TMT

GB Group

PCA acquisition an excellent fit

Acquisition

Software & comp services

11 May 2017

Price

385p

Market cap

£585m

Net cash (£m) as at 31 March 2017

5.2

Shares in issue

152m

Free float

97%

Code

GBG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

32.3

28.7

27.9

Rel (local)

30.9

25.4

6.7

52-week high/low

376.00p

215.00p

Business description

GB Group (GBG) has complementary identity data intelligence offerings of verification, capture, maintenance and analysis, enabling companies to identify and understand their customers.

Next events

FY results

6 June 2017

Analysts

Bridie Barrett

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5729

Katherine Thompson

+44 (0)20 3077 5730

GB Group is a research client of Edison Investment Research Limited

The acquisition of PCA Predict is an excellent fit with GB Group’s (GBG) address intelligence services, adding SME reach and, combined with Matchcode360 and Loqate, providing GBG with the most complete offer in the industry. GBG has closed a £58m placing to fund the £66m acquisition (EV), which it will supplement with existing cash and debt. Despite the planned increase in investment to expand PCA outside the UK, the deal should be earnings enhancing and we upgrade our FY18 and FY19 EPS forecasts by 8.5% and 10.4%, respectively.

Year
end

Revenue (£m)

EBIT*
(£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

03/16

73.4

13.4

13.2

8.2

2.1

47.0

0.5

03/17e

87.5**

17.0**

16.5

9.7

2.2

39.7

0.6

03/18e

117.1

23.3

22.6

11.5

2.5

33.5

0.6

03/19e

133.4

27.3

26.7

13.4

2.8

28.7

0.7

Note: *EBIT, PBT and EPS (fully diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Reported in trading update.

PCA adds SME reach to address intelligence services

PCA Predict provides type-ahead address look-up functionality to SMEs in order to improve customer experience and conversion rates. PCA has over 9,000 SME customers to its self-serve cloud-based platform, providing a highly complementary fit to GBG’s existing enterprise focused services in this area (Loqate and Matchcode360). The combined business will have the broadest offering on the market and management believes that there are other synergy opportunities from the cross sell of GBG’s other services. GBG is paying net £66m for the business; a total consideration of £78m reflects £10m cash acquired with the company and £2m fees. To finance the acquisition, GBG has placed 17.1m new shares at 340p, raising £58m, and will supplement this with cash on hand and debt drawn from existing facilities.

Earnings enhancing despite growth investment

Management estimates the global addressable market for address intelligence services at $1bn, of which the UK is c 15%. PCA has grown its revenues at double-digit rates over the last two years, but its customer base remains largely UK oriented. It plans to invest to enable the enlarged division to target the US and Australian markets, where it is currently under-represented. Despite this step up in investment, we expect the deal to be earnings enhancing from the first year and upgrade our FY18 and FY19 EPS by 8.5% and 10.4%, respectively.

Valuation: Fairly priced

GBG is paying a multiple of 14.0x EV/EBITDA and 20.3x P/E for PCA (12 months to February 2017), a full but fair price given the strategic value it brings to GBG, and still considerably below GBG’s own rating. Chris Clarke, incoming CEO at GBG, is steeped in experience in this segment from his time at Experian, and we are optimistic that cross-selling opportunities and plans to invest outside the UK should ensure strong growth into the medium term.

PCA Predict acquisition

PCA – type ahead look-up functionality

PCA (derived from Post Code Anywhere) is a UK-based provider of postal address, mobile and email data cleansing and verification in order to improve the customer data entry experience and ultimately customer conversion rates. It runs a cloud-based self-serve platform for its 9,000, largely SME customer base, however it also sells into some larger accounts (for example Allianz, ASOS, Atos, Countrywide, William Hill). PCA’s headquarters are in Worchester, UK, where the majority of its 50 employees are located. It also has small satellite operations in the US and Germany.

Deal rationale

Scale and reach: GBG’s US-based Loqate has a predominantly enterprise customer base, sold via channel partners, and UK-based Matchcode also serves a largely enterprise grade customer. PCA’s self-serve, cloud-based platform gives GBG reach into the SME market.

Leading position: Management believes that post this acquisition, GBG will have the most complete solution in the address intelligence services market. Its largest competitors in this segment include Experian (Experian Data Quality), Informatica (Address Doctor) and to a lesser extent Google’s Auto Address functionality (although this only goes as far as street level). However, these services do not have an SME capability, nor the granularity of reference data that can be offered by GBG post this acquisition.

Synergies: GBG will add data access from the wider group to enhance the PCA service offer. The acquisition should also enable GBG to cross sell its other services into PCA’s client base. For example, regulated customers such as lawyers or IFAs may be interested in the verification tools. The technology will be integrated with GBG Loqate and GBG Matchcode and the use of a common technology platform should enable scale benefits related to data sourcing.

Expansion to the US and Australia: GBG estimates the address intelligence market is worth approximately $1bn. PCA is currently largely UK-focused. Under the GBG umbrella, management plans to introduce a common brand and add new data sources to grow its footprint in the US and Australia.

Exhibit 1: PCA Predict complements Matchcode and Loqate

Source: GB Group

Acquisition terms and impact on forecasts

The total consideration for the deal is £78m, reflecting an enterprise value of £66m, £10m cash acquired with PCA and £2m in deal fees. Of this consideration, £10m will be placed in escrow to cover any potential warranties, indemnities, potential competition authority reviews and other conditions.

To finance the acquisition, GBG has placed 17.1m new shares at 340p (a 3.4% discount to the price on 8 May), raising £58m. The balance will be financed by existing cash reserves and borrowings of £10m under existing bank facilities.

PCA reported double-digit revenue growth in FY15 (+18%) and FY17 (+16.5% for the 12 months to February) and management expects double-digit revenue growth to continue in the current year.

PCA runs a self-serve cloud-based platform to customers. This means that the gross margin was approximately 10pp lower than GBG’s equivalent business (due to commissions paid to channel partners, payment service providers hosting costs and scale benefits). However, as there is no direct salesforce, the operating margin (33% in FY17) is higher than GBG’s.

In our forecasts we reflect plans to immediately reconfigure the sales effort to enable the cross-selling of GBG’s services, and the investment in new reference data sources in the US and Australian markets, and consequently we expect EBIT margins to decrease to approximately 27%. We forecast PCA revenues of £14.5m (on a reported basis) in FY17 and £18.1m in FY19, which implies an average revenue growth of 16% over the period FY17 to FY19. Over time, we believe there could be scope to increase the gross margin as PCA benefits from GBG’s scale in sourcing data. This would represent upside to our current margin estimates.

We update our forecasts to reflect the acquisition and financing and have also taken the opportunity to update for GBG’s headline FY17 revenue and EBITA figures, announced in April. Changes are summarised in Exhibit 2 and presented in full in Exhibit 3.

Overall, we increase our EBITA estimates by approximately 19% in both FY18 and FY19. The dilution impact from the placing and the additional £10m of debt financing mean that at the EPS level we increase forecasts by 8.5% in FY18 and 10.4% in FY19.

Exhibit 2: Summary forecast changes

£000s

2017e

2018e

2019e

Previous

New

% change

 

Previous

New

% change

 

Previous

New

% change

Revenues

89,000

87,500

-1.7

105,000

117,093

11.5

118,125

133,352

12.9

EBITA

16,574

17,000

2.6

19,600

23,300

18.9

22,900

27,300

19.2

PBT

15,917

16,500

3.7

19,008

22,550

18.6

22,308

26,700

19.7

EPS - normalised, diluted (p)

9.4

9.7

3.4

10.6

11.5

8.5

12.1

13.4

10.4

Source: Edison Investment Research


Exhibit 3: Financial summary

£000s

2014

2015

2016

2017e

2018e

2019e

Year end 31 March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

41,835

57,283

73,401

87,500

117,093

133,352

Cost of Sales

(14,473)

(16,448)

(17,606)

(11,693)

(28,822)

(32,798)

Gross Profit

27,362

40,835

55,795

75,807

88,271

100,555

EBITDA

 

 

7,849

11,844

14,772

19,200

26,200

30,605

Operating Profit (before amort. and except.)

7,164

10,790

13,428

17,000

23,300

27,300

Acquired intangible amortisation

(1,110)

(1,986)

(2,501)

(2,540)

(2,540)

(2,540)

Exceptionals

(1,080)

(1,629)

(94)

(1,200)

(2,200)

0

Share of associate

(159)

(10)

0

0

0

0

Share based payments

(747)

(971)

(1,245)

(1,600)

(1,750)

(1,699)

Operating Profit

4,068

6,194

9,588

11,660

16,810

23,061

Net Interest

(79)

(266)

(270)

(500)

(750)

(600)

Profit Before Tax (norm)

 

 

7,085

10,524

13,158

16,500

22,550

26,700

Profit Before Tax (FRS 3)

 

 

3,989

5,928

9,318

11,160

16,060

22,461

Tax

(474)

(1,127)

(178)

(3,630)

(4,961)

(5,874)

Profit After Tax (norm)

5,597

8,314

10,395

12,870

17,589

21,093

Profit After Tax (FRS 3)

3,515

4,801

9,140

7,530

11,099

16,587

Average Number of Shares Outstanding (m)

109.6

119.1

122.7

127.8

147.8

152.5

EPS - normalised (p)

 

 

5.1

7.0

8.5

10.1

11.9

13.8

EPS - normalised and fully diluted (p)

 

4.8

6.7

8.2

9.7

11.5

13.4

EPS - (IFRS) (p)

 

 

3.2

4.0

7.4

5.9

7.5

10.9

Dividend per share (p)

1.7

1.9

2.1

2.2

2.5

2.8

Gross Margin (%)

65.4

71.3

76.0

86.6

75.4

75.4

EBITDA Margin (%)

18.8

20.7

20.1

21.9

22.4

23.0

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

17.1

18.8

18.3

19.4

19.9

20.5

BALANCE SHEET

Fixed Assets

 

 

26,985

51,238

59,364

94,424

165,684

162,489

Intangible Assets

23,329

45,296

54,113

88,573

159,933

157,243

Tangible Assets

1,519

2,829

2,234

2,834

2,734

2,229

Other fixed assets

2,137

3,113

3,017

3,017

3,017

3,017

Current Assets

 

 

23,775

33,186

36,189

51,945

67,339

86,202

Debtors

11,929

17,408

23,774

34,555

49,073

56,377

Cash

11,846

15,778

12,415

17,390

18,267

29,825

Other

0

0

0

0

0

0

Current Liabilities

 

 

(17,861)

(30,784)

(32,559)

(40,640)

(52,158)

(57,162)

Creditors

(17,861)

(24,305)

(30,927)

(39,008)

(50,526)

(55,530)

Contingent consideration

0

(5,733)

(1,050)

(1,050)

(1,050)

(1,050)

Short term borrowings

0

(746)

(582)

(582)

(582)

(582)

Long Term Liabilities

 

 

(2,066)

(7,506)

(6,593)

(17,751)

(24,851)

(20,851)

Long term borrowings

0

(3,643)

(3,160)

(14,318)

(21,418)

(17,418)

Contingent consideration

0

(895)

0

0

0

0

Other long term liabilities

(2,066)

(2,968)

(3,433)

(3,433)

(3,433)

(3,433)

Net Assets

 

 

30,833

46,134

56,401

87,978

156,015

170,678

CASH FLOW

Operating Cash Flow

 

 

9,355

11,684

13,397

15,300

21,000

28,305

Net Interest

(79)

(266)

(282)

(500)

(750)

(600)

Tax

65

(337)

(248)

(3,630)

(4,961)

(5,874)

Capex

(1,144)

(2,011)

(1,762)

(2,700)

(2,700)

(2,650)

Acquisitions/disposals

(1,443)

(18,672)

(12,263)

(37,100)

(74,000)

0

Financing

416

10,954

790

25,000

58,000

0

Dividends

(1,632)

(1,955)

(2,277)

(2,553)

(2,812)

(3,622)

Net Cash Flow

5,538

(603)

(2,645)

(6,183)

(6,223)

15,559

Opening net debt/(cash)

 

 

(6,308)

(11,846)

(11,389)

(8,673)

(2,490)

3,733

HP finance leases initiated

0

0

0

0

0

0

Other

0

146

(71)

0

0

0

Closing net debt/(cash)

 

 

(11,846)

(11,389)

(8,673)

(2,490)

3,733

(11,825)

Source: GB Group (historics), Edison Investment Research (forecasts)

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by GB Group and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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. Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

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Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, 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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by GB Group and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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. Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, 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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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TXT e-solutions — Making progress in North America and Asia

TXT reported strong organic revenue growth in Q117, with 14% growth for TXT Retail and 8% growth for TXT Next. Our forecasts are substantially unchanged. TXT continues to internationalise both businesses and we believe it could make further bolt-on acquisitions in the TXT Next business. In Italy, the recently introduced individual savings account scheme (PIR) is driving up demand for TXT’s shares, and in our view this is the main driver of the share price outperformance year-to-date.

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