Last close As at 07/08/2026
GBP2.22
▲ 1.00 (0.45%)
Market capitalisation
GBP508m
Research: TMT
GB Group (GBG) expects to report revenues and EBIT ahead of our forecasts on a strong performance from the fraud management and global electronic verification services. Net cash of £13.4m is also well ahead. This excellent momentum underpins our 12% organic revenue growth forecast in FY19, and the strong balance sheet provides additional support to the group’s buy-and-build strategy.
Written by
GB Group |
Strong underlying growth puts FY18 ahead |
Trading update |
Media |
18 April 2018 |
Share price performance
Business description
Analysts
GB Group is a research client of Edison Investment Research Limited |
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GB Group (GBG) expects to report revenues and EBIT ahead of our forecasts on a strong performance from the fraud management and global electronic verification services. Net cash of £13.4m is also well ahead. This excellent momentum underpins our 12% organic revenue growth forecast in FY19, and the strong balance sheet provides additional support to the group’s buy-and-build strategy.
Year |
Revenue (£m) |
EBITA |
PBT* |
EPS* |
DPS |
P/E |
Yield |
03/17 |
87.5 |
17.0 |
16.5 |
9.9 |
2.4 |
46.9 |
0.5 |
03/18e |
119.7 |
26.0 |
25.4 |
13.2 |
2.5 |
35.2 |
0.5 |
03/19e |
133.4 |
27.0 |
26.5 |
13.5 |
2.8 |
34.4 |
0.6 |
03/20e |
148.0 |
29.8 |
29.4 |
14.9 |
3.2 |
31.1 |
0.7 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
GBG expects FY18 revenues of £119.7m, up 37% y-o-y (2% ahead of our forecast) and EBITA of approximately £26m, 12% ahead of our forecast. Organic revenue growth of 17% is enhanced by the inclusion of a £3.5m perpetual licence sale within ID Scan in H1; recognising this over a three-year period converts to an underlying growth rate of 15% and implies a pick-up in underlying growth from 12% in H1 to 17% in H2. Mix effects and the recognition of said licence meant at 21.8% the operating margin was ahead of management’s targeted trend margin of 20%. Year-end net cash of £13.4m was considerably better than forecast (£2.9m net debt), a combination of the better result, cash conversion, lower capital expenditure and cash tax as well as a lower final payment for PCA Predict.
The better-than-forecast performance was helped by continued strong growth from fraud risk and compliance, which has seen additional volumes from Bitcoin-oriented verifications towards the end of the year. Furthermore, the integration of GBG data into PCA Predict coupled with the investment in the US sales team is delivering ahead of plan with some early client wins from New York. Finally, volumes in the GOV.UK.Verify service have now reached a level that has prompted GBG to start to recognise revenues from this platform. We update forecasts for FY18 headline trading update but otherwise leave our operational forecasts for FY19 unchanged ahead of the results on 4 June.
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Disclaimer
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Disclaimer
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SNP has undertaken a series of acquisitions over the last few years that have transformed the scale and the geographical footprint of the business. The goal is to position the group for the anticipated surge in data migrations globally, particularly around SAP S/4HANA, and SNP has already completed more than 30 S/4 projects. In FY18, management is focused on driving organic growth. We have maintained our headline forecasts, although adjusted net debt rises due to higher-than-expected FY17 net debt. Given the favourable industry drivers and the potential for margin recovery, the shares look attractive on c 21x our FY19e earnings.