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GB Group — Factoring in COVID-19 disruption

GB Group (AIM: GBG)

Last close As at 04/11/2024

324.60

▲ 9.80 (3.11%)

Market capitalisation

GBP813m

More on this equity

Research: TMT

GB Group — Factoring in COVID-19 disruption

GB Group’s (GBG’s) year-end trading update confirmed a strong performance in FY20, despite COVID-19 restrictions in Asia Pacific having a modest impact in Q4. Although the lockdown restrictions are boosting demand for online products and services, not all verticals are benefiting (eg travel, transport). We have revised our FY21 and FY22 forecasts to reflect lower levels of usage-based revenues and new business as well as reductions to operating costs. We estimate that the company has ample funds to manage through the disruption and in the longer-term should be a beneficiary of increasing amounts of business shifting online.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

GB Group

Factoring in COVID-19 disruption

FY20 trading update

Software & comp services

22 April 2020

Price

658p

Market cap

£1,278m

Net debt (£m) at end FY20*

*Excluding finance leases.

35.0

Shares in issue

194.2m

Free float

98.7%

Code

GBG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

27.8

(8.6)

9.3

Rel (local)

16.6

24.2

43.6

52-week high/low

800p

474p

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, GB operates across 16 countries, has customers in 72 countries and generates more than 57% of revenues internationally.

Next events

FY20 results

June

Analyst

Katherine Thompson

+44 (0)20 3077 5730

GB Group is a research client of Edison Investment Research Limited

GB Group’s (GBG’s) year-end trading update confirmed a strong performance in FY20, despite COVID-19 restrictions in Asia Pacific having a modest impact in Q4. Although the lockdown restrictions are boosting demand for online products and services, not all verticals are benefiting (eg travel, transport). We have revised our FY21 and FY22 forecasts to reflect lower levels of usage-based revenues and new business as well as reductions to operating costs. We estimate that the company has ample funds to manage through the disruption and in the longer-term should be a beneficiary of increasing amounts of business shifting online.

Year end

Revenue (£m)

EBITA*
(£m)

PBT*
(p)

Diluted EPS*
(p)

DPS
(p)

P/E
(x)

03/18

119.7

26.3

25.8

13.5

2.7

48.9

03/19

143.5

32.0

31.3

15.4

3.0

42.7

03/20e

198.9

47.0

43.7

17.1

0.0

38.4

03/21e

174.6

29.9

27.0

10.6

2.0

62.1

03/22e

187.4

37.9

35.3

13.8

2.6

47.7

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

FY20 beats expectations despite COVID-19 disruption

GBG expects to report FY20 revenues of £199m (+38.7% y-o-y, +10.6% organic constant currency) and EBITA of £47m, ahead of both our and consensus forecasts. This was despite revenues in Asia Pacific seeing a modest negative effect from COVID-19 restrictions since January. Net debt declined by 47% y-o-y to £35m (net debt/EBITDA 0.7x). The company has put processes in place to service customers remotely and is implementing a series of measures to control the cost base and manage cash during the crisis, including not paying a dividend for FY20.

Reflecting weaker demand in FY21

GBG is seeing mixed performance across products, verticals and geographies. Usage-related revenues are likely to be hit by substantially weaker end-customer demand in verticals such as travel, leisure and transport and mixed levels of demand in other verticals such as gaming and ecommerce. We would also expect lower levels of new business until lockdown restrictions are lifted and customers have more visibility on their own businesses. We have reduced our forecasts to reflect a revenue decline of 12.2% in FY21 before a partial recovery to growth of 7.3% in FY22. This results in a cut to our normalised diluted EPS forecasts of 40.6% and 29.9% respectively. Despite these cuts, we continue to forecast a reduction in net debt, shifting to net cash by the end of FY22, and with access to an additional £105m of debt, the company should be well funded to weather the disruption.

Valuation: Reflects long-term growth prospects

Using a reverse DCF and our revised forecasts for FY21/FY22, we estimate that the share price is factoring in mid-teens revenue growth and operating margins of c 23% from FY23, at the upper end of pre-COVID-19 expectations.

FY20 trading update

GBG has issued a trading update that confirms it expects to report the following for FY20. Revenues are expected to be 3.3% ahead of our forecast and 1.4% ahead of consensus. At the EBITA level, GBG also expects to report ahead of our and consensus forecasts, with a margin of 23.6% compared to our 22.8% forecast. Net debt reduced faster than we forecast and the company noted that net debt/EBITDA was 0.7x at year-end (down from 1.9x a year ago). GBG reported that organic revenues of £158m increased 10.6% y-o-y on a constant currency basis.

Exhibit 1: GBG FY20 trading update

£m

FY20e

FY20e

FY20a

Diff

Diff

y-o-y

y-o-y

Edison

Consensus

Edison

Consensus

Reported

Organic constant currency

Revenues

192.6

196.3

199.0

3.3%

1.4%

38.7%

10.6%

EBITA*

44.0

44.6

47.0

6.8%

5.4%

46.7%

EBITA margin

22.8%

22.7%

23.6%

Net debt

41.0

N/A

35.0

-14.6%

Source: GB Group, Edison Investment Research *Excludes amortisation of acquired intangibles, exceptional items and share-based payments.

COVID-19 limited impact on FY20 performance

The company noted that it started to see the impact of COVID-19 restrictions in China from January and more broadly in Asia Pacific from February, with a modest negative effect on revenues. This implies that group organic growth would have been higher than 10.6% without the pandemic. The group’s Chinese operations are now coming out of shutdown.

Factors influencing customer demand in FY21

The company noted that it is seeing mixed performance across customer verticals, products and geography. Some business areas continue to experience growth while others are seeing a decline in demand.

GBG sells its services in three ways: as a licence (typically renewable annually), based on transactions processed (eg ID checks, location look-ups), or via project/services. In FY19, revenues were split out as 52% from licences, 39% from transactions and 9% from services. The split varies by division as follows:

Exhibit 2: Revenue by type per division, FY19

Fraud

Identity

Location

Unallocated

Group

Licences

94%

21%

76%

0%

52%

Transactions

0%

78%

23%

0%

39%

Services

6%

1%

1%

100%

9%

FY20e revenue contribution

16%

54%

26%

4%

100%

Source: GB Group

We would expect the Fraud division to be relatively better off in FY21 as the bulk of its revenues are generated from licences and it has a large proportion of revenues from Asia Pacific. While some customers may decide not to renew licences, we estimate that the majority are likely to retain them in anticipation of business recovering.

The Identity business, which we estimate generates around half of group revenues, has the highest proportion of usage-based revenues. As customers see reducing demand from their end customers, this will reduce the revenues earned by GBG.

The Location business has around a quarter of revenues from usage-based contracts so should see less impact from lower demand.

The chart below shows the split of H120 revenues by vertical:

Exhibit 3: GB Group revenues by vertical, H120

Source: GB Group

Certain verticals are seeing a substantial drop in demand, such as travel and leisure, motor and transport, and this is likely to affect transaction revenues for both the identity and location businesses. The financial services sector is likely to see lower demand for new products/accounts in the short term while end customers focus on retaining their jobs and preserving their cash. Other segments such as retail & e-commerce and gaming are seeing mixed performance. While online retail demand is much higher, not all retailers are able to cope with demand for both supply chain and staff safety reasons and are gating or suspending online business. Certain types of online gaming are likely to see increased demand (casinos, poker) as people have more time at home, but on the other hand, there is no sport to bet on. The government segment could see increased numbers applying to various departments for economic support. Demand for new employee checks is likely to fall as companies institute hiring freezes.

Company response to COVID-19

The company is taking various measures to manage its way through the crisis:

■

Staff are working remotely, providing support to customers and, where there is customer demand, selling remotely.

■

Staff pay is frozen, accrued bonuses for executive management for FY20 will be suspended and only essential recruitment will be allowed.

■

Project spend is being assessed and only those projects vital to the company’s long-term performance will be undertaken.

■

The company will not pay a dividend for FY20 – we had estimated this would cost £6.5m in FY21.

Outlook and changes to forecasts

The company is not in a position to give guidance for FY21. We have revised our forecasts to reflect the following:

■

We have upgraded our FY20 estimates to match the revenue and EBITA disclosed in the trading update,

■

We have reduced our FY21 and FY22 revenue forecasts by 18.3% and 21.1% respectively. We assume that Identity sees a bigger reduction as it has more exposure to usage-based contracts, while Fraud is much less affected due to the location of its customer base and because it is license-based. Overall, we forecast a 12.2% revenue decline in FY21. We assume the business starts to recover in FY22 and factor in growth of 7.3%.

■

We maintain gross margins and assume that the company is able to reduce its cost base through the measures discussed above. This results in a reduction in our EBITA forecast of 38.2% in FY21 and 28.5% in FY22.

■

We have cut our FY20 dividend forecast to zero and reduced our dividend forecast for FY21 from 3.8p to 2.0p and for FY22 from 4.3p to 2.6p, maintaining a c 20% pay-out ratio. Clearly, if the decline in business is worse than we are forecasting, the FY21 dividend could also be at risk.

■

Assuming the company is able to cut its cost base and achieve our EBITA forecasts, we expect net debt to reduce by £22m over the year (previous forecast was for a £27m reduction). This equates to a net debt/EBITDA ratio of 0.4x by the end of FY21. The company noted that it has debt headroom of £75m plus an unused £30m accordion.

Exhibit 4: Changes to forecasts

£m

FY20e

FY20e

 

 

FY21e

FY21e

 

 

FY22e

FY22e

 

 

previous

new

change

y-o-y

old

new

change

y-o-y

old

new

change

y-o-y

Revenues

192.6

198.9

3.3%

38.6%

213.9

174.6

(18.3%)

(12.2%)

237.5

187.4

(21.1%)

7.3%

Gross profit

139.6

144.2

3.3%

34.2%

155.5

127.0

(18.3%)

(12.0%)

173.4

136.8

(21.1%)

7.7%

Gross margin

72.5%

72.5%

0.0%

(2.4%)

72.7%

72.7%

0.0%

0.2%

73.0%

73.0%

0.0%

0.3%

EBITDA

47.9

50.8

6.1%

49.1%

52.4

33.9

(35.3%)

(33.2%)

57.2

42.1

(26.4%)

24.1%

EBITDA margin

24.9%

25.5%

0.7%

1.8%

24.5%

19.4%

(5.1%)

(6.1%)

24.1%

22.5%

(1.6%)

3.0%

EBITA

44.0

47.0

6.6%

46.6%

48.4

29.9

(38.2%)

(36.3%)

53.0

37.9

(28.5%)

26.7%

EBITA margin

22.9%

23.6%

0.7%

1.3%

22.6%

17.1%

(5.5%)

(6.5%)

22.3%

20.2%

(2.1%)

3.1%

PBT

40.8

43.7

7.2%

39.4%

45.5

27.0

(40.6%)

(38.1%)

50.4

35.3

(29.9%)

30.7%

EPS - normalised, diluted (p)

16.0

17.1

7.2%

11.2%

17.8

10.6

(40.6%)

(38.2%)

19.7

13.8

(29.9%)

30.4%

EPS - reported (p)

7.4

8.6

15.8%

11.4%

10.2

2.8

(72.1%)

(66.9%)

12.2

6.2

(48.9%)

119.8%

Net debt/(cash)

47.5

41.6

(12.4%)

(37.3%)

20.2

20.0

(1.1%)

(51.8%)

(10.3)

1.5

(114.8%)

(92%)

Net debt/(cash) excl. lease liabilities

41.0

35.2

(14.4%)

(47.0%)

13.8

13.6

(1.6%)

(61.3%)

(16.7)

(5.9)

(64.9%)

(143%)

Net debt/EBITDA (x)

1.0

0.7

0.4

0.4

N/A

N/A

Source: Edison Investment Research

Valuation

The table below shows GBG’s valuation metrics versus ID management peers.

Exhibit 5: Peer valuation metrics

Rev growth (%)

EBIT margin

EV/Sales

EV/EBIT

P/E

Div yield

Yr1

Yr2

Yr1

Yr2

Yr1

Yr2

Yr1

Yr2

Yr1

Yr2

Yr1

Yr2

GBG

(12.2)

7.3

17.1

20.2

7.5

7.0

43.9

34.6

62.1

47.7

0.3

0.4

Ave ID Management

5.8

7.8

20.9

24.4

2.3

2.0

66.4

22.5

-50.6

29.5

1.8

2.1

Median ID Management

4.0

6.0

24.7

26.0

2.1

1.8

15.4

15.0

17.7

21.4

1.6

2.0

Source: Edison Investment Research, Refinitiv (as at 21 April) Note: Yr 1 for GBG is FY21e

GBG trades at a premium to its ID management peer group on a P/E basis, reflecting its strong growth track record and high recurring revenues. Comparison against peer valuations at this point is complicated by the fact that not all peers have updated the market in relation to COVID-19.

Using our new forecasts and rolling forward by a year to start from FY21, we have performed a reverse DCF to calculate the assumptions being factored into the share price. Using a WACC of 7.5% and a long-term growth rate of 3%, we estimate the current share price is factoring in revenue growth of 14.2% per year from FY23 with an EBIT margin of 23%. This is at the upper end of the group’s revenue and margin targets pre-COVID-19 and is not unrealistic considering the ongoing shift to online for both consumers and businesses.

Exhibit 6: Financial summary

£'000s

2015

2016

2017

2018

2019

2020e

2021e

2022e

March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

57,283

73,401

87,468

119,702

143,504

198,929

174,635

187,379

Cost of Sales

(16,448)

(17,606)

(20,302)

(27,092)

(36,060)

(54,706)

(47,675)

(50,592)

Gross Profit

40,835

55,795

67,166

92,610

107,444

144,224

126,959

136,787

EBITDA

 

 

11,844

14,772

18,734

28,741

34,080

50,810

33,940

42,124

Operating Profit (before amort. and except.)

10,790

13,428

17,006

26,311

32,031

46,962

29,909

37,902

Acquired intangible amortisation

(1,986)

(2,501)

(4,022)

(7,885)

(10,316)

(19,300)

(17,100)

(16,500)

Exceptionals

(1,629)

(94)

(1,410)

(2,143)

(4,003)

(301)

0

0

Share of associate

(10)

0

0

0

0

0

0

0

Share based payments

(971)

(1,245)

(994)

(2,375)

(2,287)

(2,516)

(2,767)

(3,044)

Operating Profit

6,194

9,588

10,580

13,908

15,425

24,845

10,042

18,358

Net Interest

(266)

(270)

(498)

(508)

(689)

(3,280)

(2,880)

(2,580)

Profit Before Tax (norm)

 

 

10,524

13,158

16,508

25,803

31,342

43,682

27,029

35,322

Profit Before Tax (FRS 3)

 

 

5,928

9,318

10,082

13,400

14,736

21,565

7,162

15,778

Tax

(1,127)

(178)

668

(2,746)

(2,583)

(4,960)

(1,647)

(3,629)

Profit After Tax (norm)

8,314

10,395

13,206

20,642

24,760

33,635

20,813

27,198

Profit After Tax (FRS 3)

4,801

9,140

10,750

10,654

12,153

16,605

5,515

12,149

Average Number of Shares Outstanding (m)

119.1

122.7

131.6

150.6

158.1

193.8

194.5

195.0

EPS - normalised (p)

 

 

7.0

8.5

10.0

13.7

15.7

17.4

10.7

14.0

EPS - normalised and fully diluted (p)

 

6.7

8.2

9.9

13.5

15.4

17.1

10.6

13.8

EPS - (IFRS) (p)

 

 

4.0

7.4

8.2

7.1

7.7

8.6

2.8

6.2

Dividend per share (p)

1.9

2.1

2.4

2.7

3.0

0.0

2.0

2.6

Gross Margin (%)

71.3

76.0

76.8

77.4

74.9

72.5

72.7

73.0

EBITDA Margin (%)

20.7

20.1

21.4

24.0

23.7

25.5

19.4

22.5

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

18.8

18.3

19.4

22.0

22.3

23.6

17.1

20.2

BALANCE SHEET

Fixed Assets

 

 

51,238

59,364

105,653

170,284

433,585

428,113

409,883

392,161

Intangible Assets

45,296

54,113

98,753

161,372

420,137

411,363

394,163

377,563

Tangible Assets

2,829

2,234

2,856

4,700

4,815

10,296

9,266

8,144

Other fixed assets

3,113

3,017

4,044

4,212

8,633

6,454

6,454

6,454

Current Assets

 

 

33,186

36,189

48,914

61,121

76,404

111,696

120,335

140,487

Debtors

17,408

23,774

30,569

37,969

54,874

73,007

64,091

68,768

Cash

15,778

12,415

17,618

22,753

21,189

38,348

55,903

71,377

Other

0

0

727

399

341

341

341

341

Current Liabilities

 

 

(30,784)

(32,559)

(44,444)

(56,942)

(71,822)

(90,436)

(81,132)

(80,758)

Creditors

(24,305)

(30,927)

(36,436)

(56,100)

(70,302)

(87,390)

(78,086)

(77,712)

Contingent consideration

(5,733)

(1,050)

(7,122)

(45)

(79)

0

0

0

Short term borrowings

(746)

(582)

(886)

(797)

(1,441)

(3,046)

(3,046)

(3,046)

Long Term Liabilities

 

 

(7,506)

(6,593)

(15,940)

(16,711)

(116,707)

(103,358)

(94,789)

(86,294)

Long term borrowings

(3,643)

(3,160)

(11,499)

(8,451)

(85,447)

(76,880)

(72,880)

(68,880)

Contingent consideration

(895)

0

0

0

0

0

0

0

Other long term liabilities

(2,968)

(3,433)

(4,441)

(8,260)

(31,260)

(26,478)

(21,909)

(17,414)

Net Assets

 

 

46,134

56,401

94,183

157,752

321,460

346,015

354,297

365,596

CASH FLOW

Operating Cash Flow

 

 

11,684

13,397

16,305

31,620

27,779

51,064

33,551

37,073

Net Interest

(266)

(282)

(498)

(545)

(689)

(3,256)

(2,880)

(2,580)

Tax

(337)

(248)

(2,193)

(3,247)

(2,930)

(10,047)

(6,217)

(8,124)

Capex

(2,011)

(1,762)

(2,227)

(2,018)

(1,625)

(2,800)

(2,900)

(3,000)

Acquisitions/disposals

(18,672)

(12,263)

(36,840)

(70,363)

(255,101)

(82)

0

0

Financing

10,954

790

24,755

56,668

157,339

327

0

0

Dividends

(1,955)

(2,277)

(2,775)

(3,582)

(4,049)

(5,782)

0

(3,894)

Net Cash Flow

(603)

(2,645)

(3,473)

8,533

(79,276)

29,424

21,554

19,474

Opening net debt/(cash)

 

 

(11,846)

(11,389)

(8,673)

(5,233)

(13,505)

65,699

41,578

20,023

Finance leases initiated

0

0

0

0

0

(6,425)

0

0

Other

146

(71)

33

(261)

72

1,122

0

0

Closing net debt/(cash)

 

 

(11,389)

(8,673)

(5,233)

(13,505)

65,699

41,578

20,023

549

Source: GB Group, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by GBG Group and prepared and issued by Edison, in consideration of a fee payable by GBG 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.

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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 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). 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

This document is prepared and provided by Edison 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.

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.

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

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 GBG Group and prepared and issued by Edison, in consideration of a fee payable by GBG 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 research department of Edison 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 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). 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

This document is prepared and provided by Edison 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.

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.

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

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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