GB Group: Expanding eIDV in the US (Edison Group)

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An Edison Group research note on GB Group (AIM: GBG), Expanding eIDV in the US, dated 13 February 2019 and written by Katherine Thompson, Director TMT. It states that GB Group has acquired IDology, a US identity verification business, for an enterprise value of $300m/£231m. It states that GBG placed 39m shares at 410p per share to fund £160m of the purchase price, with the rest coming from a new credit facility. The note estimates that the deal offers significant cross-selling potential and will lift GBG's international revenues to close to 50%. It lists a share price of 420p, a market capitalisation of £810m and shares in issue of 192.3m.

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GB Group — Expanding eIDV in the US

GB Group (AIM: GBG)

Last close As at 22/01/2026

GBP2.39

▲ 8.00 (3.46%)

Market capitalisation

GBP568m

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Research: TMT

13 February 2019

GB Group — Expanding eIDV in the US

GB Group (GBG) has acquired IDology, a US identity verification business, for an enterprise value of $300m/£231m. It has placed 39m shares at 410p per share to fund £160m of the purchase price, with the remainder coming from a new credit facility. We estimate that the deal offers significant cross-selling potential and will boost GBG’s international revenues to close to 50%.

Written by

Katherine Thompson

Director

TMT

GB Group
Expanding eIDV in the US
Acquisition and fund raise
Software & comp services
13 February 2019
Price 420p Market cap £810m $1.285:£1 Net cash (£m) at end H119 18.6 Shares in issue (includes 39m placing shares to be issued on 14 February) 192.3m Free float 98% Code GBG Primary exchange AIM Secondary exchange N/A Share price performance % 1m 3m 12m Abs (9.4) (17.9) 9.2 Rel (local) (11.8) (17.9) 9.2 52-week high/low 626p 389p 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, it operates across 24 countries and generates more than one-third of revenues internationally. Next events FY19 trading update April 2019 Analysts Katherine Thompson +44 (0)20 3077 5730 Dan Ridsdale +44 (0)20 3077 5729 tech@edisongroup.com GB Group is a research client of Edison Investment Research Limited Edison profile page | Price | 420p | Market cap | £810m | $1.285:£1 | Net cash (£m) at end H119 | 18.6 | Shares in issue (includes 39m placing shares to be issued on 14 February) | 192.3m | Free float | 98% | Code | GBG | Primary exchange | AIM | Secondary exchange | N/A | % | 1m | 3m | 12m | Abs | (9.4) | (17.9) | 9.2 | Rel (local) | (11.8) | (17.9) | 9.2 | 52-week high/low | 626p | 389p | 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, it operates across 24 countries and generates more than one-third of revenues internationally. | FY19 trading update | April 2019 | Katherine Thompson | +44 (0)20 3077 5730 | Dan Ridsdale | +44 (0)20 3077 5729 | tech@edisongroup.com | Edison profile page

GB Group (GBG) has acquired IDology, a US identity verification business, for an enterprise value of $300m/£231m. It has placed 39m shares at 410p per share to fund £160m of the purchase price, with the remainder coming from a new credit facility. We estimate that the deal offers significant cross-selling potential and will boost GBG’s international revenues to close to 50%.

Year end | Revenue (£m) | EBIT (£m) | PBT* (£m) | Dil. EPS* (p) | DPS (p) | P/E (x)
03/17 | 87.5 | 17.0 | 16.5 | 9.9 | 2.4 | 42.6
03/18 | 119.7 | 26.3 | 25.8 | 13.5 | 2.7 | 31.2
03/19e | 137.7 | 27.5 | 26.6 | 13.1 | 3.0 | 32.1
03/20e | 192.8 | 44.1 | 40.3 | 16.1 | 3.3 | 26.1

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

Gaining a major presence in the US

The acquisition of IDology adds domestic US data sets and more than 500 customers. We estimate it will boost FY20 revenues by 19%, and eIDV divisional revenues by 52%. In H119, 36% of group revenues came from outside the UK – we estimate that this deal will push international revenues closer to 50%. IDology is significantly more profitable than GBG (EBITDA margin 42% vs GBG at 22%), and we expect this to continue to be the case even after GBG invests in additional sales capacity to maintain IDology’s mid-teens revenue growth rate. GBG expects the deal to be earnings enhancing in FY20 – we forecast 3% diluted EPS accretion.

Good strategic and cultural fit

GBG and IDology have partnered for a number of years and know each other well. The current CEO of IDology has committed to run the business for at least the next year, which should smooth the integration of the business. GBG sees good opportunities for cross-selling, in particular providing IDology’s customers with access to its non-US datasets and to Loqate, its location intelligence service.

Valuation: Premium reflects growth opportunity

At 29.2x FY19e and 18.8x FY20e EBITDA, the stock trades at a premium to the UK software sector on an EV/EBITDA and P/E basis. Looking at more directly relevant sub-sectors, including global peers, the stock trades more in line with cyber-security peers, with similar levels of forecast profitability and growth. We believe this premium rating is warranted, considering the group’s historic track record of profitable growth and strong cash generation, combined with the opportunity from structural growth in identity data intelligence services and the potential for accretive acquisitions.

Acquisition of IDology

Terms of the deal

GBG has acquired IDology, a US provider of identity verification and fraud detection services for an enterprise value of $300m/£231m. GBG will also pay $1m for $1m cash on the IDology balance sheet. The deal is being funded through a combination of debt and equity.

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Debt: the company has arranged a new revolving credit facility worth £110m with a £30m accordion. It expects to use c £84m of this facility to partly fund the acquisition.

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Fund raising: the company has placed shares worth £160m – 39.024m shares at 410p per share, a 3% discount to last night’s closing price. The placing shares represent 25.5% of the existing 153.1m shares outstanding.

The company expects the shares to be issued on AIM on 14 February. Around $7.5m of the consideration will be held in escrow as security for various buyer protection items.

Background on IDology

IDology (www.idology.com) is privately owned, with CEO John Dancu owning more than 50% of the shares. The company is based in Atlanta, Georgia with 70 employees. It has 500 customers and generates more than 70% of revenues from the financial services sector (in H119 GBG generated 28% of revenues from this sector). Its platform provides services in three main areas:

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onboarding;

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verification and set-up; and

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authentication

All customers are also signed up to IDology’s fraud consortium, which shares information on fraudulent activity across its members.

Revenues are generated on a per-transaction basis, with agreed minimums. GBG and IDology have partnered in recent years, each recommending the other to multi-national customers for data sets in their respective regions. The companies have worked together with customers such as Ebay and Etsy.

Financial performance: Strong growth and margins

Exhibit 1: IDology historic financial performance

$m (US GAAP) | CY16 | CY17 | CY18
Revenues | 28.4 | 33.3 | 38.2
Gross profit | 18.4 | 21.8 | 25.3
Opex | (7.2) | (8.0) | (9.0)
EBITDA | 11.2 | 13.8 | 16.3
PBT | 11.1 | 13.7 | 16.2
Revenue growth | 17% | 15%
Gross margin | 64.8% | 65.5% | 66.2%
EBITDA margin | 39.4% | 41.4% | 42.7%

Source: GB Group

Based on an EV of $300m, this values IDology at 7.9x trailing sales and 18.4x trailing EBITDA. Based on our initial forecasts for the business below, this reduces to 6.6x and 17.3x respectively for FY20. This compares to GBG EV multiples of 4.0x FY20e sales and 19.3x FY20e EBITDA based on a share price of 423p before the deal being announced.

Post-acquisition plans

According to management, IDology has not invested heavily in its domestic salesforce, instead generating the impressive level of revenue growth from a high level of upselling to the existing customer base. GBG is keen to maintain the business’s strong growth rate and intends to strengthen the US sales team to accelerate new customer wins.

The CEO, John Dancu, has committed to run the acquired business for at least one year, and the rest of the senior management team will be incentivised to stay for at least two years.

GBG does not intend to combine the two platforms, instead it plans to link the two so that a customer can access data from either platform in one place.

The company sees scope for significant cross-selling from two sources:

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providing international data sets to IDology’s US multi-national customer base.

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adding Loqate to the front-end of the IDology platform.

The acquisition will materially increase revenues generated in the US compared to the 9% reported in FY18.

Earnings accretive in FY20

Management expects the deal to be earnings enhancing in the first full year after acquisition (FY20). We assume all IDology revenues will be included in the eIDV business line. Based on GBG management’s plans to increase sales headcount, we factor in sales growth being maintained at 15% per year but a declining EBITDA margin.

Exhibit 2: IDology forecasts

$m | FY20e | FY21e
Revenues | 45.5 | 52.2
Gross profit | 31.1 | 36.0
Opex | (13.7) | (17.1)
EBITDA | 17.4 | 18.9
PBT
Rev growth | 15% | 15%
Gross margin | 69% | 69%
EBITDA margin | 38.4% | 36.2%

Source: Edison Investment Research

The table below contains our revised estimates and we introduce forecasts for FY21. While the net debt/EBITDA ratio at the end of FY19 looks high, this only includes 1.5 months’ EBITDA contribution from IDology. The combination of a full year EBITDA contribution and cash generation reduces the metric to 1.0x by the end of FY20.

Exhibit 3: Changes to forecasts

£m | FY19e | FY19e | FY20e | FY20e | FY21e
previous | new | change | previous | new | change | new
Revenues | 136,350 | 137,650 | 1.0% | 161,676 | 192,757 | 19.2% | 214,322
Gross profit | 102,440 | 104,105 | 1.6% | 121,724 | 140,486 | 15.4% | 158,436
EBITDA | 29,675 | 30,175 | 1.7% | 33,689 | 46,918 | 39.3% | 51,429
EBITDA margin | 21.8% | 21.9% | 0.2% | 20.8% | 24.3% | 3.5% | 24.0%
EBITA | 27,000 | 27,500 | 1.9% | 30,932 | 44,062 | 42.4% | 48,481
EBITA margin | 19.8% | 20.0% | 0.2% | 19.1% | 22.9% | 3.7% | 22.6%
PBT | 26,431 | 26,638 | 0.8% | 30,352 | 40,282 | 32.7% | 45,001
EPS - normalised, diluted (p) | 13.8 | 13.1 | -5.0% | 15.6 | 16.1 | 3.0% | 17.9
EPS - reported (p) | 5.7 | 3.1 | -45.3% | 9.5 | 12.2 | 29.4% | 14.4
Net (cash)/debt | (5,697) | 71,565 | Nm | (23,249) | 47,889 | Nm | 22,383
Net debt/EBITDA | N/A | 2.4 | N/A | 1.0 | 0.4

Source: Edison Investment Research

Valuation

The table below shows GBG trades compared to ID management companies, identity access management software companies and more general cyber-security companies, as well as UK software peers.

Exhibit 4: Financial and valuation metrics

Rev growth (%) | EBITDA margin (%) | EBIT margin (%) | EV/Sales (x) | EV/EBITDA (x) | P/E (x)
Yr1 | Yr2 | Yr1 | Yr2 | Yr1 | Yr2 | Yr1 | Yr2 | Yr1 | Yr2 | Yr1 | Yr2
GBG | 15.0 | 40.0 | 21.9 | 24.3 | 20.0 | 22.9 | 6.4 | 4.6 | 29.2 | 18.8 | 32.1 | 26.1
ID Management | 6.8 | 9.2 | 18.7 | 25.7 | 13.5 | 20.6 | 4.0 | 4.0 | 32.3 | 16.9 | 20.5 | 19.0
Identity Access Management | 26.4 | 23.9 | -16.6 | -3.1 | -19.7 | -7.0 | 9.3 | 7.4 | 23.0 | 18.2 | 28.1 | 23.2
Cyber Security | 14.4 | 12.6 | 23.1 | 24.6 | 19.1 | 20.5 | 6.0 | 5.3 | 54.6 | 31.7 | 50.5 | 43.5
UK Software | 23.8 | 24.3 | 8.5 | 19.6 | 0.2 | 14.2 | 4.6 | 3.2 | 13.4 | 11.3 | 20.8 | 18.9

Source: Edison Investment Research, Thomson Eikon. Note: Prices at 11 February.

Based on the new share count and current share price of 420p, GBG is trading at a premium to the UK software sector on all metrics, reflecting its superior profitability. Looking at more directly relevant sub-sectors, including global peers, the stock trades on multiples more akin to 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 strong cash generation combined with the opportunity from structural growth in identity data intelligence services. Using a reverse DCF, we estimate that the current share price is factoring in low-double digit revenue growth and EBIT margins of 22%, in line with management’s targets for organic growth of 10%+ and AOP margins of 20%+. We expect management to continue to make accretive acquisitions to boost growth, which should provide further support to the share price.

Exhibit 5: Financial summary

£'000s | 2015 | 2016 | 2017 | 2018 | 2019e | 2020e | 2021e
March | IFRS | IFRS | IFRS | IFRS | IFRS | IFRS | IFRS
PROFIT & LOSS
Revenue | 57,283 | 73,401 | 87,468 | 119,702 | 137,650 | 192,757 | 214,322
Cost of Sales | (16,448) | (17,606) | (20,302) | (27,092) | (33,545) | (52,271) | (55,886)
Gross Profit | 40,835 | 55,795 | 67,166 | 92,610 | 104,105 | 140,486 | 158,436
EBITDA | 11,844 | 14,772 | 18,734 | 28,741 | 30,175 | 46,918 | 51,429
Operating Profit (before amort. and except.) | 10,790 | 13,428 | 17,006 | 26,311 | 27,500 | 44,062 | 48,481
Acquired intangible amortisation | (1,986) | (2,501) | (4,022) | (7,885) | (8,100) | (7,300) | (6,100)
Exceptionals | (1,629) | (94) | (1,410) | (2,143) | (9,830) | 0 | 0
Share of associate | (10) | 0 | 0 | 0 | 0 | 0 | 0
Share based payments | (971) | (1,245) | (994) | (2,375) | (2,500) | (2,750) | (3,025)
Operating Profit | 6,194 | 9,588 | 10,580 | 13,908 | 7,070 | 34,012 | 39,356
Net Interest | (266) | (270) | (498) | (508) | (863) | (3,780) | (3,480)
Profit Before Tax (norm) | 10,524 | 13,158 | 16,508 | 25,803 | 26,638 | 40,282 | 45,001
Profit Before Tax (FRS 3) | 5,928 | 9,318 | 10,082 | 13,400 | 6,208 | 30,232 | 35,876
Tax | (1,127) | (178) | 668 | (2,746) | (1,291) | (6,590) | (7,893)
Profit After Tax (norm) | 8,314 | 10,395 | 13,206 | 20,642 | 21,097 | 31,500 | 35,101
Profit After Tax (FRS 3) | 4,801 | 9,140 | 10,750 | 10,654 | 4,916 | 23,641 | 27,983
Average Number of Shares Outstanding (m) | 119.1 | 122.7 | 131.6 | 150.6 | 157.8 | 193.1 | 193.8
EPS - normalised (p) | 7.0 | 8.5 | 10.0 | 13.7 | 13.4 | 16.3 | 18.1
EPS - normalised and fully diluted (p) | 6.7 | 8.2 | 9.9 | 13.5 | 13.1 | 16.1 | 17.9
EPS - (IFRS) (p) | 4.0 | 7.4 | 8.2 | 7.1 | 3.1 | 12.2 | 14.4
Dividend per share (p) | 1.9 | 2.1 | 2.4 | 2.7 | 3.0 | 3.3 | 3.8
Gross Margin (%) | 71.3 | 76.0 | 76.8 | 77.4 | 75.6 | 72.9 | 73.9
EBITDA Margin (%) | 20.7 | 20.1 | 21.4 | 24.0 | 21.9 | 24.3 | 24.0
Operating Margin (before GW and except.) (%) | 18.8 | 18.3 | 19.4 | 22.0 | 20.0 | 22.9 | 22.6
BALANCE SHEET
Fixed Assets | 51,238 | 59,364 | 105,653 | 170,284 | 416,823 | 409,416 | 403,218
Intangible Assets | 45,296 | 54,113 | 98,753 | 161,372 | 406,955 | 398,675 | 391,595
Tangible Assets | 2,829 | 2,234 | 2,856 | 4,700 | 5,656 | 6,529 | 7,411
Other fixed assets | 3,113 | 3,017 | 4,044 | 4,212 | 4,212 | 4,212 | 4,212
Current Assets | 33,186 | 36,189 | 48,914 | 61,121 | 77,744 | 111,141 | 139,737
Debtors | 17,408 | 23,774 | 30,569 | 37,969 | 49,662 | 63,382 | 70,473
Cash | 15,778 | 12,415 | 17,618 | 22,753 | 27,683 | 47,359 | 68,865
Other | 0 | 0 | 727 | 399 | 399 | 399 | 399
Current Liabilities | (30,784) | (32,559) | (44,444) | (56,942) | (66,290) | (75,610) | (77,460)
Creditors | (24,305) | (30,927) | (36,436) | (56,100) | (65,493) | (74,813) | (76,663)
Contingent consideration | (5,733) | (1,050) | (7,122) | (45) | 0 | 0 | 0
Short term borrowings | (746) | (582) | (886) | (797) | (797) | (797) | (797)
Long Term Liabilities | (7,506) | (6,593) | (15,940) | (16,711) | (106,711) | (102,711) | (98,711)
Long term borrowings | (3,643) | (3,160) | (11,499) | (8,451) | (98,451) | (94,451) | (90,451)
Contingent consideration | (895) | 0 | 0 | 0 | 0 | 0 | 0
Other long term liabilities | (2,968) | (3,433) | (4,441) | (8,260) | (8,260) | (8,260) | (8,260)
Net Assets | 46,134 | 56,401 | 94,183 | 157,752 | 321,565 | 342,235 | 366,784
CASH FLOW
Operating Cash Flow | 11,684 | 13,397 | 16,305 | 31,620 | 18,045 | 42,518 | 46,188
Net Interest | (266) | (282) | (498) | (545) | (863) | (3,780) | (3,480)
Tax | (337) | (248) | (2,193) | (3,247) | (1,291) | (6,590) | (7,893)
Capex | (2,011) | (1,762) | (2,227) | (2,018) | (2,650) | (2,750) | (2,850)
Acquisitions/disposals | (18,672) | (12,263) | (36,840) | (70,363) | (254,708) | 0 | 0
Financing | 10,954 | 790 | 24,755 | 56,668 | 160,446 | 0 | 0
Dividends | (1,955) | (2,277) | (2,775) | (3,582) | (4,049) | (5,721) | (6,459)
Net Cash Flow | (603) | (2,645) | (3,473) | 8,533 | (85,070) | 23,677 | 25,506
Opening net debt/(cash) | (11,846) | (11,389) | (8,673) | (5,233) | (13,505) | 71,565 | 47,889
HP finance leases initiated | 0 | 0 | 0 | 0 | 0 | 0 | 0
Other | 146 | (71) | 33 | (261) | 0 | 0 | 0
Closing net debt/(cash) | (11,389) | (8,673) | (5,233) | (13,505) | 71,565 | 47,889 | 22,383

Source: GB Group, Edison Investment Research

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Edison Investment Research standard fees are £49,500 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 Edison analyst at the time of publication. 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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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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. Australia Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). 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 Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith. 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 (nor will such persons be able to purchase shares in the placing). 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 The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. 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 1,185 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 1,185 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 £49,500 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 Edison analyst 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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. Australia Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). 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 Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith. 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 (nor will such persons be able to purchase shares in the placing). 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 The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. 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 1,185 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 1,185 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 £49,500 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 Edison analyst 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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. Australia Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). 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 Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith. 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 (nor will such persons be able to purchase shares in the placing). 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 The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. 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 1,185 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 1,185 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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