GB : Proposed Acquisition of Postcode Anywhere (Holdings) Ltd. (“PCA Predict”)

GB GROUP PLC
('GBG' or the 'Company')

Proposed Acquisition of Postcode Anywhere (Holdings) Ltd. ('PCA Predict')
and
Proposed Vendor Placing of up to [●] Ordinary Shares (the 'Placing Shares)' at [●]pence (the 'Placing Price') to raise up to£[58,000,000](the 'Placing')

GBG (AIM:GBG), the Identity Data Intelligence specialist, is pleased to announce that it has conditionally agreed to acquire the entire issued share capital of PCA Predict, a provider of UK and International address validation and data quality services, for a total consideration of £73,852,423 (the 'Acquisition') which includes £10,387,000 of cash on the balance sheet of PCA Predict. The combination represents a highly complementary capability set alongside GBG's existing solutions: GBG Matchcode360 and GBG Loqate.

Acquisition highlights

• PCA Predict provides scale to position GBG as a leader of UK and International address validation and data quality services, a fundamental component of GBG's Identity Data Intelligence proposition.
• PCA Predict is an easy to deploy SaaS solution adopted by over 9,000 SME customers while GBG Loqate serves channel customers and GBG Matchcode360 is orientated towards enterprise customers.
• PCA Predict is highly complementary with GBG and opens immediate upsell opportunities.
• PCA Predict's UK and International address validation technology fits within GBG Loqate and GBG Matchcode360 infrastructure.
• The Acquisition is expected to be earnings accretive in the first 12 months of consolidated GBG ownership at a level in the high single digit percentages.
• The Acquisition is conditional, inter alia, upon Admission.

Placing highlights

• The £73,852,423 total consideration will be satisfied by the vendor placing of £58,000,000 in Placing Shares and £15,852,423 in cash of which £10,000,000 is to be held in escrow.
• The Company intends to finance the £73,852,423 total consideration for the Acquisition through, the vendor placing of £58,000,000 in Placing Shares, £5,852,423 in existing cash and £10,000,000 borrowings under bank facilities.
• The Placing is being conducted through an accelerated book build process which will be launched immediately. The book build will open with immediate effect following this Announcement.
• The Placing Price represents a discount of approximately 3.4 per cent to the closing mid-market price of GBG's existing ordinary shares of 352 pence on 8 May 2017, being the last practicable date before this announcement.
• It is expected that, if all 17,058,824 Placing Shares are issued, they will represent approximately 12.7 per cent of the Company's existing issued share capital.
• The Placing is conditional, inter alia, upon Admission.
• Further details of the Placing are set out in the appendix to this announcement.

Chris Clark CEO of GBG, commented: 'I am delighted to announce the acquisition of PCA Predict. Bringing together PCA Predict's easy to deploy SaaS platform with our existing in depth GBG Identity Data Intelligence data sets creates a leader in Address Data Intelligence. There is a strong strategic and cultural fit in combining the capabilities of PCA Predict and GBG which will bring significant benefit to our customers. The Board and I are looking forward to the future success of GBG and PCA Predict.'

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 ('MAR').

For further information, please contact:

About GBG

The most profitable and successful organisations recognise the value of understanding the individual identity of their customers and employees. GBG combines this concept of identity with technology to create an environment of trust, so that organisations can employ people and connect, communicate and transact with consumers, safely and responsibly. We call this Identity Data Intelligence.

About PCA Predict

PCA Predict provides UK and International address validation and data quality services. It is headquartered in Worcester, United Kingdom with 50 employees including satellite offices in the US and Germany. With over 9,000 customers, PCA Predict is amarket leader in international onboarding optimisation and data cleansing. All data services are delivered via the cloud, making it easy for PCA Predict's customers to integrate its services and provide them with immediate access to the very latest data updates.

Important notice

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

This announcement does not constitute, or form part of, a prospectus relating to the Company, nor does it constitute or contain any invitation or offer to any person, or any public offer, to subscribe for, purchase or otherwise acquire any shares in the Company or advise persons to do so in any jurisdiction, nor shall it, or any part of it form the basis of or be relied on in connection with any contract or as an inducement to enter into any contract or commitment with the Company.

The content of this announcement has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 ('FSMA'). This announcement has been issued by and is the sole responsibility of the Company. The information in this announcement is subject to change.

This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the 'Securities Act'), and may not be offered or sold, directly or indirectly, in or into the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States. This announcement is not for release, publication or distribution, directly or indirectly, in or into the United States, Australia, Canada, the Republic of South Africa, Japan or any jurisdiction where to do so might constitute a violation of local securities laws or regulations (a 'Prohibited Jurisdiction'). This announcement and the information contained herein are not for release, publication or distribution, directly or indirectly, to persons in a Prohibited Jurisdiction unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction.

This announcement is directed only at persons whose ordinary activities involve them in acquiring, holding, managing and disposing of investments (as principal or agent) for the purposes of their business and who have professional experience in matters relating to investments and: (i) if in a member state of the European Economic Area, are, unless otherwise agreed with the Peel Hunt, qualified investors within the meaning of article 2(1)(e) of the Prospectus Directive ('Qualified Investors'); and (ii) if in the United Kingdom, fall within: (a) article 19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the 'Order'); (b) article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the Order; or (c) any other person to whom it may lawfully be communicated (all such persons together being referred to as 'Relevant Persons'). This announcement must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this announcement relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.

Peel Hunt LLP ('Peel Hunt') is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Peel Hunt is acting solely as nominated adviser, broker and bookrunner exclusively for the Company and no one else in connection with the contents of this announcement and will not regard any other person (whether or not a recipient of this announcement) as its client in relation to the contents of this announcement nor will it be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the contents of this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on Peel Hunt by FSMA or the regulatory regime established thereunder, Peel Hunt accepts no responsibility whatsoever, and makes no representation or warranty, express or implied, for the contents of this announcement including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on behalf of it, the Company or any other person, in connection with the Company and the contents of this announcement, whether as to the past or the future. Peel Hunt accordingly disclaims all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of the contents of this announcement or any such statement.

In connection with the Placing, Peel Hunt and its respective affiliates, acting as investors for their own accounts, may subscribe for or purchase ordinary shares in the Company ('Ordinary Shares') and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such Ordinary Shares and other securities of the Company or related investments in connection with the Placing or otherwise. Accordingly, references to the Ordinary Shares being offered, subscribed, acquired, placed or otherwise dealt in should be read as including any offer to, or subscription, acquisition, placing or dealing by Peel Hunt and any of its respective affiliates acting as investors for their own accounts. In addition, Peel Hunt or its respective affiliates may enter into financing arrangements and swaps in connection with which it or its affiliates may from time to time acquire, hold or dispose of Ordinary Shares. Peel Hunt has no intention to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

Forward-looking Statements

This announcement includes 'forward-looking statements' which include all statements other than statements of historical facts, including, without limitation, those regarding the Company's business strategy, plans and objectives of management for future operations, or any statements proceeded by, followed by or that include the words 'targets', 'believes', 'expects', 'aims', 'intends', 'will', 'may', 'anticipates', 'would', 'could' or similar expressions or negatives thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. No undue reliance should be placed upon forward-looking statements. These forward looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by applicable law or the AIM Rules for Companies.

1. Introduction to the Acquisition of PCA Predict

GBG, the Identity Data Intelligence specialist, is pleased to announce that it has conditionally agreed to acquire the entire issued share capital of PCA Predict, for a total consideration of £73,852,423 which includes £10,387,000 of cash on the balance sheet of PCA Predict. The Acquisition extends the Group's product suite in the UK and International address validation and data quality space.

The £73,852,423 total consideration will consist of the vendor placing of £[58,000,000] Placing Shares, £[15,852,423] in cash. In respect of the cash payment, £10,000,000 is to be held in escrow to cover warranties, indemnities, potential Competition and Markets Authority review and other conditions. The £73,852,423 Acquisition is financed through the vendor placing of £[58,000,000] Placing Shares, £[5,852,423] in existing cash and £10,000,000 borrowings under bank facilities.

1. Background to the Digital Commercial Solutions and Data Quality Tools Markets

Organisations are increasingly looking to transfer technology ownership and risks to software providers and utilise data to build address validation and data quality management services via SaaS capabilities. According to Gartner there is a US$8.1 billion global market in Digital Commerce Solutions and Data Quality Tools within which GBG believes the Total Addressable Market ('TAM') is US$1.0 billion.

1. Acquisition rationale

The Acquisition of PCA Predict provides scale to position GBG as a leader in the UK and International markets for address validation and data quality management services, a fundamental component of GBG's Identity Data Intelligence proposition.

PCA Predict represents a complementary customer base with its easy to deploy SaaS solution adopted by over 9,000 SME customers. This fits well with GBG Loqate's channel customer focus and GBG Matchcode360's enterprise customer service wrap. PCA Predict has over 9,000 customers which represents an opportunity to upsell GBG products.

The Board believes the combined business will have the most complete global access to address intelligence. This provides customers with far more granular reference data than other providers, whilst also overlaying reference data from national postal operations to achieve national address standards and secure valuable mailing discounts.

Technologically, PCA Predict is delivered via an easy to deploy, self-serve SaaS platform. The cost and responsibility for ownership is significantly reduced for end-user customers. Functionality can be integrated in minutes offering wider services such as mobile phone number and email verification as well as card payment verification to build a complete customer identity profile.

1. Financial information on PCA Predict

Notes:

• GBG Equity Analyst Consensus Revenue based on 19% growth on GBG announced Financial Year End March 2016 revenue of £73.4m.
• GBG EBITDA and Adjusted Operating Profit is before amortisation of acquired intangibles, share-based payment charges, exceptional items, net finance costs and tax.
• PCA Predict Adjusted Operating Profit means profits before strategic review cost, reorganisation costs, share-based payment charges, net finance costs and tax. Foreign exchange is trued up at year end. The 12 months to February 2017 excludes foreign exchange impacts.

1. Financial effects of the Acquisition and Placing

The Directors believe that, taking into account the business and prospects of the Enlarged Group, the Acquisition is expected to be high single digit percentage earnings accretive in the first 12 months of consolidated GBG ownership.

1. Integration Strategy

Key management including PCA Predict's Sales Director, CIO and CFO will continue with GBG. The Founders of PCA Predict intend to remain as consultants to the business. In addition, GBG Location Intelligence executives will integrate and execute the post completion strategy of brand and technology unification and will add new data sources to serve the growing interest in the target addressable marketplace of US$1 billion. Synergies are expected to come from cross-selling GBG Identity Data Intelligence services across the PCA Predict customer base and the use of a common technology platform and data sourcing.

1. Details of the proposed Placing

Under the terms of a placing agreement entered into today between Peel Hunt and the Company (the 'Placing Agreement'), Peel Hunt has agreed to use its reasonable endeavours to procure persons to subscribe for the Placing Shares at the Placing Price of [●] pence each to raise up to £[58,000,000] (after expenses) for the Vendors. The Placing Price represents a discount of approximately [●] per cent to the closing mid-market price of shares in the Company at [●] 2017, the latest practicable date prior to the publication of this announcement. If all the Placing Shares are issued, they will represent approximately [●] per cent of the Company's enlarged issued share capital.

The Placing Shares will, following Admission, rank pari passu with the existing issued Ordinary Shares and will have the right to receive all dividends and other distributions declared, made or paid in respect of the issued Ordinary Share capital of the Company following Admission.

The Placing is conditional upon, inter alia, Admission becoming effective and the Placing Agreement becoming unconditional in all respects by no later than 8.00 a.m. on [●] 2017 or such later date (being not later than 8.00 a.m. on [●] 2017) as the Company and Peel Hunt may agree. Application has been made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will occur and that dealings will commence at 8.00 a.m. on [●] 2017.