Half-year Report

RNS Number : 6101U
GB Group PLC
26 November 2019
 

 

 

 

Embargoed until 7.00 a.m.

26 November 2019

 

GB GROUP PLC

("GBG", the "Group" or the "Company")

 

HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019

 

Strategy drives strong financial and operational performance

 

GB Group plc (AIM: GBG), the global identity data intelligence specialist, announces its unaudited results for the six months ended 30 September 2019.

 

Financial highlights

 

 

2019

 

(Restated)*2018

 

Growth

 

Revenue

£94.3m

£58.3m

62%

Adjusted operating profit

£21.5m

£9.8m

119%

Adjusted basic earnings per share

9.0p

5.9p

53%

Profit after tax

£5.7m

£2.9m

100%

Deferred income balance

£32.8m

£28.2m

16%

Net assets

£337.9m

£157.6m

114%

Net (debt)/cash††

£(53.8)m

£18.6m

n/a

 

 

Organic revenue

 

2019

(Restated)*

2018

 

Total Growth

(Restated)* 2018 (CCY)

 

2019 Organic Revenue Growth (CCY)

 

 

 

 

 

 

Total revenue

£94.3m

£58.3m

62%

£58.6m

17%

 

Note: "CCY" indicates figure reported on a constant currency basis.

 

 

*     The results for H1 in the last financial year have been adjusted in this announcement to be consistent with the refinements made for IFRS 15 in the 2019 Annual Report. The adjustment reflects revenue phasing under IFRS 15. The impact of this adjustment re-aligns revenue in the 6 months to 30 September 2018 only and does not impact the reported results for the full year to 31 March 2019. See note 2 to the interim financial statements for further details.

 

Chris Clark, CEO, commented:

 

"I am pleased with the progress we have made against our strategic objectives in the first six months, which has seen us deliver good growth. This was driven by a strong organic performance (helped in part by the accelerated timing of some contracts for our Fraud division), the successful integrations of our acquisitions and ongoing investment to support our differentiation.

 

We had a strong organic growth performance across each of our three key solutions of Location, Identity and Fraud across our core geographies. This performance has also been supported by the successful integrations of VIX Verify and IDology and we are excited about our future prospects and how these businesses will develop and strengthen our propositions.

 

So far the second half of the year has begun in line with our expectations and we remain confident in meeting full year market consensus."

 

Operational highlights and outlook

 

Good international progress

 

·      For the first time, international revenues higher than UK- increasing from 35% to 57% of our total business.

·      Continued growth from new logo wins and existing customers across all focus geographies.

·      Continued recruitment of new business development resource in key markets such as US, Germany and Asia.

 

Enhanced products & data offering

 

 

 

·      Exclusive partnership with NavInfo Europe to provide address data for mainland China.

·      Expansion of data sets including UK Educational Data and Indian Driving License checks.

·      Improved developer experience with launch of our developer portal, improved APIs and new SDKs. 

 

Acquisitions

 

·      Good progress with the integration of the two acquisitions made in H2 of last year, VIX Verify and IDology.

·      Both businesses growing well with sales, data and product integration delivering benefits.

 

People

 

 

·      Employee engagement scores have improved further with 91% saying they would recommend GBG as a great place to work.

·      Key hires in our three core regions of Europe, North America and APAC - covering sales, marketing, product & technology - taking our talented team to over 1,000 people.

 

 

Positive outlook

 

·      The full-year outcome for both revenue and profit is expected to be in line with our expectations.

 

 

Notes:

 

Adjusted operating profit means profit before amortisation of acquired intangibles, share-based payments, exceptional items, interest and tax. This measure is not defined under IFRS but Management believe that this Alternative Performance Measure (APM) is a more appropriate metric to understand the underlying performance of the Group. For more details see "Alternative Performance Measures" in the Interim Consolidated Financial Statements.

 

Adjusted earnings per share is defined as adjusted operating profit less net finance costs and tax divided by the basic weighted average number of ordinary shares of the Company.

 

†† Net (debt)/cash means cash and short-term deposits less loans (excluding unamortised loan arrangement fees).

 

 

- Ends -

 

 

For further information, please contact:

 

GBG

Chris Clark, CEO

Dave Wilson, CFO & COO

 

01244 657333

Peel Hunt LLP (Nominated Adviser and Broker)

Edward Knight

Edward Allsopp

Nick Prowting

 

020 7418 8900

Tulchan Communications LLP

James Macey White

Matt Low

Deborah Roney

 

020 7353 4200

GBG@tulchangroup.com

 

Website

www.gbgplc.com/investors

 

 

 

Presentation and webcast

 

GBG management will be hosting an analyst presentation today (26 November 2019) at 09.00 a.m. GMT at the London Stock Exchange, 10 Paternoster Sq., London EC4M 7LS.

 

Shortly following the presentation, an archived webcast will be available on the Investors page of the Company's website.

 

 

About GBG

 

GBG offers a series of solutions that help organisations quickly validate and verify the identity and location of their customers.

 

Our innovative technology leads the world in location intelligence and fraud detection. Our products are built on an unparalleled breadth of data obtained from over 200 global partners which helps us to verify the identity of 4.4 billion people globally.

 

Our headquarters are in the UK and we have over 1,000 team members across 16 countries. We work with clients in 72 countries including some of the best-known businesses around the world, ranging from US e-commerce giants to Asia's biggest banks and European household brands.

 

To find out more about how we help our clients establish trust with their customers, visit www.gbgplc.com, follow us on Twitter @gbgplc, or read more in our newsroom: www.gbgplc.com/newsroom 

 

 

 

Chairman's Statement

 

GBG performed well in the first half of the year. We are making good progress in executing our strategy for growth and remain committed to making the investments that will help us develop further in the future.

 

Financial performance

Revenue and adjusted operating profit are both £0.6 million ahead of the performance detailed in the pre-close trading update issued on 24 October 2019.

 

Total revenue for the period was up 62% at £94.3 million - reflecting our recent acquisitions, which supplemented our underlying trading across our key solution areas within Location, Identity and Fraud. On a constant currency basis, organic revenues have increased by 17%. Our organic growth was complemented by the successful integrations of VIX Verify and IDology and the favourable timing of some contracts for our Fraud division, which were completed in the first six months.

 

Adjusted operating profit of £21.5 million represents an increase of 119% on last year, again driven by strong organic growth and our recent acquisitions.

 

Profit after tax was £5.7 million (2018: £2.9 million) after taking account of £11.7 million of costs associated with the amortisation of acquired intangibles, share-based payments and exceptional items (2018: £6.1 million). Of these costs, £11.4 million (2018: £5.0 million) were non-cash items.

 

Our balance sheet remains strong. At 30 September 2019, our net debt balance was £53.8 million (2018: £18.6 million net cash) as the acquisitions of VIX Verify and IDology in the second half of the last financial year were supported by debt. Net debt levels have improved by £12.5 million since 31 March 2019, including a £10.4 million repayment of borrowings in the period. Net assets increased to £337.9 million (2018: £157.6 million).

 

Compared to 30 September 2018, revenue deferred to future periods is up by £4.6 million to £32.8 million, an increase of 16%.

 

GBG has a high EBITDA to cash conversion ratio. Group operating activities before tax payments generated £23.8 million of cash and cash equivalents (2018: £10.4 million) and an adjusted EBITDA to cash conversion ratio of 104% (2018: 105%).

 

Achievements and strategic developments

Our customers rely on our digital solutions to transact safely and securely online and growth in demand is driven by increasing levels of online fraud and ever more stringent compliance regulations.

 

We have continued to develop our international capabilities, focusing on our strengths in Location, Identity and Fraud and prioritising our core markets of Europe, North America and APAC. By putting this focus on our international strategy, it is pleasing to note that GBG's international revenues are now higher than the UK for the first time - this has been a strategic aim of GBG for a number of years.

 

Loqate, our location business, performed well with new customer wins including: John Lewis Partnership (a GBG Connexus customer) in Europe; GNC in North America; China Minsheng Bank (a long standing GBG fraud customer) and Bank of Beijing in APAC. We have continued to enrich our global data portfolio, including a partnership with NavInfo Europe to provide address data for mainland China.

 

Demand from the financial services and gaming sectors has driven strong growth for our identity business.  We have seen more business from existing customers and have won new customers such as William Hill, KPMG and Totesport. We also launched a number of new data sources such as the UK Educational and Indian Driving Licences datasets to further improve match rates and broaden coverage. Investment in SDKs (software development kits) and additional data sources remains a priority.

 

In the fraud space we have built on existing commercial relationships and won new customers in Europe with BNP Paribas, Arval and Standard Life. In the APAC region we have extended business with AmBank in Malaysia and Citi in Indonesia and Taiwan.

 

The Information Commissioner's Office, the data industry regulator in the UK, announced in November 2018 that it was conducting audits on a number of companies to understand the use of data in their services. GBG was included in this review and we are working with the Commissioner to provide information and clarify the role some of our products play in the data ecosystem.  We will keep the market informed of any material developments.  

 

 

Acquisitions

Last year we acquired VIX Verify and IDology (our largest acquisition to date). The priority for the first half of this year has been their integration into the Group and I am pleased to report good progress.

 

VIX Verify is performing well, growing with key accounts such as TabCorp and HSBC and winning new business including Victoria University and KC Securities. We are also developing business opportunities in our identity and fraud portfolios with joint accounts such as FlexiGroup.

 

IDology has maintained good momentum with its existing clients in the financial and technology sectors and has won new clients such as NextGate in the health sector. We have invested in additional business development resource and have a strong pipeline of deals. Our commitment to product innovation is reflected by the enhancement of features and refinement of machine learning techniques and we have also completed and launched the integration of GBG Loqate's data into IDology's ExpertID solution.

 

People

Gallup conducted our latest global employee survey in September 2019. 92% of all of our employees completed the survey and our employee engagement scores were at a new high, with 91% of team members saying that they would recommend GBG as a great place to work. We are all naturally very pleased with these results and our managers will use the response data and Gallup's benchmarking to improve our employee experience.

 

We have strengthened our talent with key hires across our three core regions (covering sales, marketing, product & technology). We are also rolling out internal programmes to ensure GBG has a rich pool of high potential talent for the future.

 

Outlook

It has been a good start to the year with strong organic performance in each of our three key solutions and across each of our core geographies. GBG has a strong management team supported by a diverse group of highly engaged and talented employees. Our acquisitions are integrating well and will strengthen the GBG customer proposition and help grow the business further. Consequently, your Board remains confident about meeting full-year consensus for revenue and profit.

 

 

 

 

 

 

David Rasche

Chairman

 

 

 

 

Interim Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2019

Unaudited

             

 

Note

 

 

6 months to

30 September

 

Restated#

6 months to

30 September

 

 

Year to

31 March

 

 

 

2019

 

2018

 

2019

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

Revenue

6

 

94,338

 

58,329

 

143,504

 

 

 

 

 

 

 

 

Cost of sales

 

 

(26,064)

 

(13,963)

 

(36,060)

 

 

 

 

 

 

 

 

Gross profit

 

 

68,274

 

44,366

 

107,444

 

 

 

 

 

 

 

 

Operating expenses before amortisation of acquired intangibles,

equity-settled share-based payments and exceptional items

 

 

 

(46,779)

 

 

(34,534)

 

 

(75,413)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit before amortisation of acquired intangibles, equity-settled share-based payments and exceptional items (adjusted operating profit)

6

 

21,495

 

9,832

 

32,031

 

 

 

 

 

 

 

 

Amortisation of acquired intangibles

11

 

(9,665)

 

(4,077)

 

(10,316)

 

 

 

 

 

 

 

 

Equity-settled share-based payments

13

 

(1,695)

 

(964)

 

(2,287)

 

 

 

 

 

 

 

 

Exceptional items

5

 

(301)

 

(1,030)

 

(4,003)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

6

 

9,834

 

3,761

 

15,425

 

 

 

 

 

 

 

 

Finance revenue

 

 

24

 

29

 

31

 

 

 

 

 

 

 

 

Finance costs

 

 

(1,236)

 

(216)

 

(720)

 

 

 

 

 

 

 

 

Profit before tax

 

 

8,622

 

3,574

 

14,736

 

 

 

 

 

 

 

 

Income tax charge

7

 

(2,886)

 

(699)

 

(2,583)

 

 

 

 

 

 

 

 

Profit for the period attributable to equity holders of the parent

 

 

5,736

 

2,875

 

12,153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange differences on retranslation of foreign operations (net of tax)*

 

 

15,017

 

968

 

(3,702)

 

 

 

 

 

 

 

 

Total comprehensive income for the period attributable to equity holders of the parent

 

 

20,753

 

 

3,843

 

 

8,451

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

     - basic earnings per share for the period

8

 

3.0p

 

1.9p

 

7.7p

     - diluted earnings per share for the period

8

 

2.9p

 

1.8p

 

7.6p

     - adjusted basic earnings per share for the period

8

 

9.0p

 

5.9p

 

18.2p

     - adjusted diluted earnings per share for the period

8

 

8.9p

 

5.8p

 

17.9p

 

 

* Upon disposal of a foreign operation, the associated element will be recycled to the Income Statement

# See note 2

 

 

 

 

Interim Consolidated Statement of Changes in Equity        

For the six months ended 30 September 2019

Unaudited

 

 

 

 

Equity

share

capital

 

 

Share premium

 

 

 

Merger reserve

 

 

Capital redemption reserve

 

Foreign currency translation reserve

 

 

 

Retained earnings

 

 

 

Total

equity

 

Note

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 April 2018

 

3,817

 

104,814

 

6,575

 

3

 

891

 

40,594

 

156,694

Profit for the period (restated) #

2

-

 

-

 

-

 

-

 

-

 

2,875

 

2,875

Other comprehensive income

 

-

 

-

 

-

 

-

 

968

 

-

 

968

Total comprehensive income for the period

 

-

 

-

 

-

 

-

 

968

 

2,875

 

3,843

Issue of share capital

 

11

 

435

 

-

 

-

 

-

 

-

 

446

Share-based payments charge

 

-

 

-

 

-

 

-

 

-

 

964

 

964

Tax on share options

 

-

 

-

 

-

 

-

 

-

 

(343)

 

(343)

Equity dividend

 

-

 

-

 

-

 

-

 

-

 

(4,049)

 

(4,049)

Balance at 30 September 2018

 

3,828

 

105,249

 

6,575

 

3

 

1,859

 

40,041

 

157,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

-

 

-

 

-

 

-

 

-

 

9,278

 

9,278

Other comprehensive income

 

-

 

-

 

-

 

-

 

(4,670)

 

-

 

(4,670)

Total comprehensive income for the period

 

-

 

-

 

-

 

-

 

(4,670)

 

9,278

 

4,608

Issue of share capital

 

993

 

159,174

 

-

 

-

 

-

 

-

 

160,167

Share issue costs

 

-

 

(3,274)

 

-

 

-

 

-

 

-

 

(3,274)

Share-based payments charge

 

-

 

-

 

-

 

-

 

-

 

1,323

 

1,323

Tax on share options

 

-

 

-

 

-

 

-

 

-

 

1,081

 

1,081

Balance at 1 April 2019 (as reported)

 

4,821

 

261,149

 

6,575

 

3

 

(2,811)

 

51,723

 

321,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adoption of IFRS 16

2

-

 

-

 

-

 

-

 

-

 

(992)

 

(992)

Balance at 1 April 2019 (restated)

 

4,821

 

261,149

 

6,575

 

3

 

(2,811)

 

50,731

 

320,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

-

 

-

 

-

 

-

 

-

 

5,736

 

5,736

Other comprehensive income

 

-

 

-

 

-

 

-

 

15,017

 

-

 

15,017

Total comprehensive income for the period

 

-

 

-

 

-

 

-

 

15,017

 

5,736

 

20,753

Issue of share capital

16

25

 

302

 

-

 

-

 

-

 

-

 

327

Share-based payments charge

13

-

 

-

 

-

 

-

 

-

 

1,695

 

1,695

Tax on share options

 

-

 

-

 

-

 

-

 

-

 

416

 

416

Equity dividend

9

-

 

-

 

-

 

-

 

-

 

(5,782)

 

(5,782)

Balance at 30 September 2019

 

4,846

 

261,451

 

6,575

 

3

 

12,206

 

52,796

 

337,877

 

 

 

# See note 2

 

Interim Consolidated Balance Sheet     

As at 30 September 2019

Unaudited

 

 

Note

 

 

As at

30 September

 

Restated#

As at

30 September

 

 

As at

31 March

 

 

 

2019

 

2018

 

2019

 

 

 

£'000

 

£'000

 

£'000

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment

10

 

4,695

 

4,434

 

4,815

Right-of-use assets

2

 

5,494

 

-

 

-

Intangible assets

11

 

425,891

 

157,991

 

420,137

Investments

 

 

-

 

-

 

411

Deferred tax asset

 

 

6,454

 

4,171

 

8,222

 

 

 

 

 

 

 

 

 

 

 

442,534

 

166,596

 

433,585

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Inventories

 

 

263

 

395

 

341

Trade and other receivables

 

 

49,302

 

31,470

 

54,874

Cash and short-term deposits

 

 

23,267

 

27,507

 

21,189

Current tax

 

 

413

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

73,245

 

59,372

 

76,404

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

515,779

 

225,968

 

509,989

 

 

 

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital and reserves

 

 

 

 

 

 

 

Equity share capital

16

 

4,846

 

3,828

 

4,821

Share premium

16

 

261,451

 

105,249

 

261,149

Merger reserve

 

 

6,575

 

6,575

 

6,575

Capital redemption reserve

 

 

3

 

3

 

3

Foreign currency translation reserve

 

 

12,206

 

1,859

 

(2,811)

Retained earnings

 

 

52,796

 

40,041

 

51,723

 

 

 

 

 

 

 

 

Total equity attributable to equity holders of the parent

 

 

337,877

 

157,555

 

321,460

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

Loans

14

 

75,543

 

8,065

 

85,447

Lease liabilities

2

 

4,433

 

-

 

-

Provisions

12

 

1,137

 

514

 

528

Deferred revenue

 

 

880

 

372

 

1,184

Deferred tax liability

 

 

28,903

 

7,447

 

29,548

 

 

 

110,896

 

16,398

 

116,707

Current liabilities

 

 

 

 

 

 

 

Loans

14

 

1,054

 

806

 

1,441

Lease liabilities

2

 

1,992

 

-

 

-

Provisions

12

 

-

 

25

 

-

Trade and other payables

 

 

32,027

 

22,680

 

33,508

Deferred revenue

 

 

31,933

 

27,839

 

35,453

Contingent consideration

18

 

-

 

-

 

79

Current tax

 

 

-

 

665

 

1,341

 

 

 

 

 

 

 

 

 

 

 

67,006

 

52,015

 

71,822

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

177,902

 

68,413

 

188,529

 

 

 

 

 

 

 

 

TOTAL EQUITY AND LIABILITIES

 

 

515,779

 

225,968

 

509,989

# See note 2

 

Interim Consolidated Cash Flow Statement

For the six months ended 30 September 2019

Unaudited

 

 

Note

 

 

6 months to

30 September

2019

 

Restated#

6 months to

30 September

2018

 

 

Year to

31 March

2019

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

Group profit before tax

 

 

8,622

 

3,574

 

14,736

 

 

 

 

 

 

 

 

Adjustments to reconcile Group profit before tax to net cash flows

 

 

 

 

 

 

 

Finance revenue

 

 

(24)

 

(29)

 

(31)

Finance costs

 

 

1,236

 

216

 

720

Depreciation of property, plant and equipment

10

 

889

 

771

 

1,544

Depreciation of right-of-use assets

2

 

935

 

-

 

-

Amortisation of intangible assets

11

 

9,722

 

4,318

 

10,821

Loss on disposal of plant and equipment

 

 

-

 

-

 

46

Loss on disposal of intangible assets

 

 

259

 

47

 

-

Share-based payments

13

 

1,695

 

964

 

2,287

Decrease in provisions

 

 

-

 

-

 

(25)

Decrease in inventories

 

 

78

 

4

 

58

Decrease/(increase) in receivables

 

 

5,693

 

6,664

 

(9,904)

(Decrease)/increase in payables

 

 

(5,261)

 

(6,131)

 

7,527

 

 

 

 

 

 

 

 

Cash generated from operations

 

 

23,844

 

10,398

 

27,779

Income tax paid

 

 

(4,011)

 

(1,092)

 

(2,930)

 

 

 

 

 

 

 

 

Net cash generated from operating activities

 

 

19,833

 

9,306

 

24,849

 

 

 

 

 

 

 

 

Cash flows (used in)/from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of subsidiaries, net of cash acquired

17

 

(82)

 

-

 

(255,107)

Purchase of plant and equipment

10

 

(422)

 

(520)

 

(1,453)

Purchase of software

11

 

(29)

 

(157)

 

(172)

Proceeds from disposal of plant and equipment

 

 

6

 

-

 

6

Finance revenue

 

 

24

 

29

 

31

 

 

 

 

 

 

 

 

Net cash flows used in investing activities

 

 

(503)

 

(648)

 

(256,695)

 

Cash flows (used in)/from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance costs paid

 

 

(1,081)

 

(216)

 

(720)

Proceeds from issue of shares

16

 

327

 

446

 

160,613

Share issue costs

16

 

-

 

-

 

(3,274)

Proceeds from new borrowings

14

 

-

 

-

 

110,447

Repayment of borrowings

14

 

(10,400)

 

(406)

 

(32,807)

Repayment of lease liabilities

 

 

(1,051)

 

-

 

-

Dividends paid to equity shareholders

9

 

(5,782)

 

(4,049)

 

(4,049)

 

 

 

 

 

 

 

 

Net cash flows (used in)/ from financing activities

 

 

(17,987)

 

(4,225)

 

230,210

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

 

1,343

 

4,433

 

(1,636)

Effect of exchange rates on cash and cash equivalents

 

 

735

 

321

 

72

 

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the period

 

 

21,189

 

22,753

 

22,753

 

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the period

 

 

23,267

 

27,507

 

21,189

 

# See note 2

 

Notes to the Interim Report

 

1.  CORPORATE INFORMATION

 

The interim condensed consolidated financial statements of GB Group plc ('the Group') for the six months ended 30 September 2019 were authorised for issue in accordance with a resolution of the directors on 25 November 2019.  GB Group plc is a public limited company incorporated in the United Kingdom whose shares are publicly traded on the Alternative Investment Market (AIM) of the London Stock Exchange.

 

2.  BASIS OF PREPARATION AND ACCOUNTING POLICIES

 

Basis of Preparation

These interim condensed consolidated financial statements for the six months ended 30 September 2019 have been prepared in accordance with IAS 34 'Interim Financial Reporting'.  The annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union.

 

The interim condensed consolidated financial statements are presented in the Group's functional currency of pounds Sterling and all values are rounded to the nearest thousand (£'000) except when otherwise indicated.

 

Following review of future forecasts and applying reasonable sensitivities, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, the Board continues to adopt the going concern basis in preparing the interim financial statements.

 

The interim condensed consolidated financial statements do not constitute statutory financial statements as defined in section 435 of the Companies Act 2006 and therefore do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 March 2019.  The financial information for the preceding year is based on the statutory financial statements for the year ended 31 March 2019.  These financial statements, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies.  These financial statements did not require a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

 

Accounting Policies

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 March 2019, except for the adoption of new standards effective for the Group from 1 April 2019.  The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

 

Prior Period Restatement

Since the September 2018 interim financial statements were produced, the Group refined its assessment of the impact of IFRS 15 'Revenue from Contracts with Customers' with the finalised adjustments fully reflected in the March 2019 Annual Report and Accounts. The September 2018 figures in these interim accounts have been restated to reflect the phasing of these refinements on the first half results. The figures as at 1 April 2018 and 1 April 2019 remain as presented in the 2019 Annual Report and Accounts.  The impact of the refinements on the September 2018 figures is presented below:

 

 

As previously reported

 

Unwind of IFRS 15 refinement

 

As restated

 

£'000

 

£'000

 

£'000

Income Statement

 

 

 

 

 

Revenue

57,279

 

1,050

 

58,329

Cost of sales                                  

(13,963)

 

-

 

(13,963)

Gross margin

43,316

 

1,050

 

44,366

 

 

 

 

 

 

Profit before tax

2,524

 

1,050

 

3,574

Income tax charge

(499)

 

(200)

 

(699)

Profit for the period attributable to equity holders of the parent

2,025

 

850

 

2,875

 

 

As previously reported

Impact of IFRS 15 adoption on 1 April 2018*

Unwind of IFRS 15 refinement

As restated

 

 

£'000

£'000

£'000

£'000

Balance Sheet

 

 

 

 

 

Deferred tax asset

 

3,930

241

-

4,171

Current tax

 

(465)

-

(200)

(665)

Deferred revenue (within current liabilities)

 

(27,590)

(1,299)

1,050

(27,839)

Net assets impact

 

 

(1,058)

850

 

                     

 

* as reported in the 31 March 2019 Annual Report

2.  BASIS OF PREPARATION AND ACCOUNTING POLICIES (continued)

 

New standards, amendments and interpretations adopted by the Group

The Group has applied IFRS 16 'Leases' for the first time in these interim results. The nature and effect of these changes are described below.

 

IFRS 16 'Leases' supersedes IAS 17 'Leases', IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the substance of transactions involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosures of leases and requires lessees to account for most leases under a single on-balance sheet model.

 

The Group has adopted IFRS 16 using the modified retrospective method of adoption with the date of initial application of 1 April 2019. Under this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognised in retained earnings at the date of initial application. Comparatives are not restated under this method of adoption.  The lease liability is calculated at the present value of remaining future payments using the related incremental borrowing rates at 1 April 2019.  The right-of-use asset is calculated from the lease commencement date, as if IFRS 16 had always been applied using the incremental borrowing rates at 1 April 2019.  The Group also elected to use transition expedient allowing the standard to be applied only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application.  The Group also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option ('short-term leases'), and lease contracts for which underlying asset is of low value ('low value assets').

 

The effect of adoption IFRS 16 is as follows:

 

Impact on the statement of financial position as at 1 April 2019:

 

 

As previously reported

Impact of adoption of IFRS 16

Including adoption of IFRS 16

 

 

£'000

£'000

£'000

Assets

 

 

 

 

Property, plant and equipment

 

4,815

320

5,135

Right-of-use assets                                  

 

-

5,491

5,491

Intangible assets

 

420,137

-

420,137

Investments

 

411

-

411

Deferred tax assets

 

8,222

144

8,366

Current assets

 

76,404

-

76,404

Total assets

 

509,989

5,955

515,944

 

 

 

 

 

Equity

 

 

 

 

Share capital and share premium

 

265,970

-

265,970

Other reserves

 

3,767

-

3,767

Retained earnings

 

51,723

(992)

50,731

Total equity

 

321,460

(992)

320,468

 

 

 

 

 

Liabilities

 

 

 

 

Interest-bearing loans and borrowings

 

86,888

-

86,888

Lease liabilities

 

-

6,382

6,382

Trade payables and other liabilities

 

70,752

565

71,317

Current tax

 

1,341

-

1,341

Deferred tax

 

29,548

-

29,548

Total liabilities

 

188,529

6,947

195,476

   

Impact on the interim consolidated statement of comprehensive income for the six months ended 30 September 2019:

 

 

 

 

 

£'000

 

 

 

 

 

Increased depreciation expense (included in operating expenses)                                  

 

 

(935)

Decreased rent expense (included in operating expenses)

 

 

1,066

Operating profit

 

 

 

131

Increased finance costs

 

 

 

(155)

Decreased income tax expense

 

 

 

4

Profit for the period

 

 

 

(20)

 

 

 

 

2.  BASIS OF PREPARATION AND ACCOUNTING POLICIES (continued)

 

Impact on the interim consolidated cash flow statement as at 30 September 2019:

 

 

 

As previously reported

Impact of adoption of IFRS 16

Including adoption of IFRS 16

 

 

£'000

£'000

£'000

 

 

 

 

 

Net cash generated from operating activities                                  

 

18,782

1,051

19,833

Net cash used in investing activities

 

(503)

-

(503)

Net cash used in financing activities

 

(16,936)

(1,051)

(17,987)

Impact of exchange rates

 

735

-

735

Net increase in cash and cash equivalents

 

2,078

-

2,078

 

Summary of new accounting policies

Set out below are the new accounting policies of the Group upon adoption of IFRS 16:

 

Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made on or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.

 

Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.

 

The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.

 

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

 

Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below £5,000).  Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.

 

Significant judgement in determining the lease term of contracts with renewal options

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

 

 

 

 

 

 

 

 

 

2.  BASIS OF PREPARATION AND ACCOUNTING POLICIES (continued)

 

Amounts recognised in the statement of financial position and in the consolidated statement of comprehensive income

 

Set out below, are the carrying amounts of the Group's right-of-use assets and lease liabilities and the movements during the period:

 

 

Right-of-use assets

 

Lease liabilities

 

Property

 

Other equipment

 

Total

 

Total

 

£'000

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

As at 1 April 2019

5,475

 

16

 

5,491

 

6,382

Additions

864

 

-

 

864

 

864

Depreciation expense

(930)

 

(5)

 

(935)

 

-

Interest expense

-

 

-

 

-

 

155

Payments

-

 

-

 

-

 

(1,051)

Foreign currency adjustment

74

 

-

 

74

 

75

As at 30 September 2019

5,483

 

11

 

5,494

 

6,425

 

The lease liabilities as at 1 April 2019 can be reconciled to the operating lease commitments as of 31 March 2019 as follows:

 

 

£'000

 

 

Operating lease commitments as at 31 March 2019

5,307

Less: discounting of future lease commitments

(361)

Discounted operating lease commitments at 1 April 2019

4,946

Less: Commitments relating to short-term leases

(74)

Less: Commitments relating to leases of low value assets

(10)

Add: Payments in optional extension periods not recognised as at 31 March 2019

1,520

Lease liabilities as at 1 April 2019

6,382

 

 

Weighted average incremental borrowing rate as at 1 April 2019

4.01%

 

Judgements and Estimates

 

Full details of significant accounting judgements, estimates and assumptions used in the application of the Group's accounting policies can be found in the Annual Report and Accounts for the year ended 31 March 2019.

 

3.  CYCLICALITY

 

The profile of our software licence renewal dates has historically resulted in profitability in this area of the business being higher in the second half of the year.

 

4.  RISKS AND UNCERTAINTIES

 

Management identifies and assesses risks to the business using an established control model.  The Group has a number of exposures which can be summarised as follows: failure to comply with regulations and laws; increasing competition and lack of global reach; non-supply by a major supplier; loss of data systems despite disaster recovery & business continuity plans; cyber attack; inability to meet new product development and scalability challenges; loss of intellectual property; and ineffective succession planning and skills retention. These risks and uncertainties facing our business were reported in detail in the 2019 Annual Report and Accounts and all of them are monitored closely by the Group.

 

The outcome of the UK referendum on EU membership has caused uncertainty in both the political and economic environments in which we operate. Although headquartered in the UK, GBG has an established presence internationally, which comprises over half of our Group revenues. We believe our global infrastructure will assist the Group in its response to the ultimate changes in trading arrangements between the UK and the EU. Our business model means that we are comparatively well-placed to manage the consequences of the result and of its effect on the economic environment. However, there is the potential for our costs to increase, for example, through any changes required to our systems to reflect new taxes; regulatory risk to increase as a result of any future divergence with the EU regime; and supplier disruption to occur as a result of challenges in suppliers' own organisations and supply chains. At this time, the outcome of Brexit negotiations and post-Brexit arrangements remains unclear and as such, like all companies, we continue to monitor the situation and manage the practical implications as they occur.

 

 

5. EXCEPTIONAL ITEMS

 

 

6 months to

30 September

2019

 

6 months to

30 September

2018

 

Year to

31 March

2019

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Costs associated with staff reorganisations

301

 

132

 

256

Acquisition related costs

-

 

898

 

3,747

 

301

 

1,030

 

4,003

 

 

Costs associated with staff reorganisations in both years primarily relate to exit costs of personnel leaving the business on an involuntary basis due to reorganisations within our operating divisions as a result of integrating acquisitions. Due to the nature of these costs, management deem them to be exceptional in order to better reflect our underlying performance.

 

Acquisition related costs of £898,000 in the prior six month period include, but are not limited to, those incurred in relation to the acquisition of VIX Verify Global Pty Ltd. Such costs include those directly attributable to the transaction and exclude operating or integration costs relating to an acquired business, and due to the size and nature of these costs, management consider that they would distort the Group's underlying business performance. The acquisition related costs for the year to 31 March 2019 included £2.4 million in relation to the acquisition of IDology Inc. in February 2019.

 

 

6.  SEGMENTAL INFORMATION

 

In order to reflect how the Group is presenting its lines of business to its stakeholders going forward, the naming and structure of the operating segments were amended with effect from 1 April 2019. Going forward 'Fraud, Risk & Compliance' has been separated into two new segments - 'Identity' and 'Fraud'. The 'Location & Customer Intelligence' segment has been renamed as 'Location'.  Accordingly, the comparative segmental reporting has been restated.

 

The Group's operating segments are internally reported to the Group's Chief Executive Officer as three operating segments: Location, Identity and Fraud.  Included within 'Unallocated' is the revenue and profit of the marketing services business (previously within Location & Customer Intelligence), as well as group operating costs such as compliance, finance, legal, people team, information security, directors' remuneration and PLC costs. Group operating costs were £5.6 million in the 6 months to 30 September 2019 (2018: £4.9 million).

 

The measure of performance of those segments that is reported to the Group's Chief Executive Officer is adjusted operating profit, being profits before amortisation of acquired intangibles, equity-settled share-based payments, exceptional items, net finance costs and tax, as shown below. 

 

 

 

 

 

 

Fraud

 

 

 

 

 

 

Identity

 

 

 

 

 

 

Location

 

 

 

 

 

 

Unallocated

Total

6 months to

30 September 2019

Six months ended 30 September 2019

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

Licence

15,927

 

3,669

 

13,689

 

-

 

33,285

Transactional

-

 

45,552

 

8,408

 

-

 

53,960

Services

895

 

1,972

 

115

 

4,111

 

7,093

Total revenue

16,822

 

51,193

 

22,212

 

4,111

 

94,338

Adjusted operating profit

5,403

 

15,780

 

6,541

 

(6,229)

 

21,495

Amortisation of acquired intangibles

(260)

 

(7,214)

 

(2,010)

 

(181)

 

(9,665)

Share-based payments charge

-

 

-

 

-

 

(1,695)

 

(1,695)

Exceptional items

-

 

-

 

-

 

(301)

 

(301)

Operating profit

5,143

 

8,566

 

4,531

 

(8,406)

 

9,834

Finance revenue

 

 

 

 

 

 

24

 

24

Finance costs

 

 

 

 

 

 

(1,236)

 

(1,236)

Income tax expense

 

 

 

 

 

 

(2,886)

 

(2,886)

Profit for the period

 

 

 

 

 

 

 

 

5,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.  SEGMENTAL INFORMATION (continued)

 

 

 

 

 

 

(Restated) #

Fraud

 

 

 

 

 

(Restated)

Identity

 

 

 

 

 

(Restated) #

Location

 

 

 

 

 

(Restated)

Unallocated

(Restated) #

Total

6 months to

30 September 2018

Six months ended 30 September 2018

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

Licence

12,172

 

3,085

 

12,427

 

-

 

27,684

Transactional

-

 

18,501

 

6,705

 

-

 

25,206

Services

433

 

297

 

116

 

4,593

 

5,439

Total revenue

12,605

 

21,883

 

19,248

 

4,593

 

58,329

Adjusted operating profit

2,443

 

5,534

 

5,891

 

(4,036)

 

9,832

Amortisation of acquired intangibles

(398)

 

(1,056)

 

(2,331)

 

(292)

 

(4,077)

Share-based payments charge

-

 

-

 

-

 

(964)

 

(964)

Exceptional items

-

 

-

 

-

 

(1,030)

 

(1,030)

Operating profit

2,045

 

4,478

 

3,560

 

(6,322)

 

3,761

Finance revenue

 

 

 

 

 

 

29

 

29

Finance costs

 

 

 

 

 

 

(216)

 

(216)

Income tax expense

 

 

 

 

 

 

(499)

 

(699)

Profit for the period

 

 

 

 

 

 

 

 

2,875

 

 

 

(Restated)

Fraud

 

 

(Restated)

Identity

 

 

(Restated)

Location

 

 (Restated)

Unallocated

 

(Restated)

Total

Year to 31 March 2019

Year ended 31 March 2019

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

Licence

27,644

 

12,137

 

35,221

 

-

 

75,002

Transactional

-

 

45,459

 

10,732

 

-

 

56,191

Services

1,740

 

633

 

320

 

9,618

 

12,311

Total revenue

29,384

 

58,229

 

46,273

 

9,618

 

143,504

Adjusted operating profit

9,029

 

15,219

 

16,683

 

(8,900)

 

32,031

Amortisation of acquired intangibles

(792)

 

(4,372)

 

(4,662)

 

(490)

 

(10,316)

Share-based payments charge

-

 

-

 

-

 

(2,287)

 

(2,287)

Exceptional items

-

 

-

 

-

 

(4,003)

 

(4,003)

Operating profit

8,237

 

10,847

 

12,021

 

(15,680)

 

15,425

Finance revenue

 

 

 

 

 

 

31

 

31

Finance costs

 

 

 

 

 

 

(720)

 

(720)

Income tax expense

 

 

 

 

 

 

(2,583)

 

(2,583)

Profit for the period

 

 

 

 

 

 

 

 

12,153

 

 

 

 

 

 

 

 

 

 

# In addition to the restatement due to the change of segments explained at the start of this note, these figures have also been adjusted for the refinement of IFRS 15 detailed in note 2.

 

7.  TAXATION

 

The Group calculates the period income tax expense using a best estimate of the tax rate that would be applicable to the expected total earnings for the year ending 31 March 2020. The effective tax has increased due to the weighting of profits generated in overseas subsidiaries.

 

 

8.  EARNINGS PER ORDINARY SHARE

 

Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the basic weighted average number of ordinary shares in issue during the period.

 

 

 

6 months to 30 September 2019

 

(Restated) #

6 months to 30 September 2018

 

 

Year to

31 March 2019

 

£'000

 

Pence per

share

 

£'000

 

Pence per

share

 

£'000

 

Pence per

share

 

 

 

 

 

 

 

 

 

 

 

 

Profit attributable to equity holders of the Company

 

5,736

 

 

3.0

 

 

2,875

 

 

1.9

 

 

12,153

 

 

7.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

Diluted earnings per share amounts are calculated by dividing the profit for the period attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

 

 

30 September

2019

 

30 September

2018

 

31 March

2019

 

No.

 

No.

 

No.

 

 

 

 

 

 

Basic weighted average number of shares in issue

193,190,284

 

152,793,746

 

158,051,687

Dilutive effect of share options

2,816,694

 

3,368,711

 

2,754,605

Diluted weighted average number of shares in issue

196,006,978

 

 

160,806,292

 

 

 

 

6 months to 30 September 2019

 

(Restated) #

6 months to 30 September 2018

 

 

Year to

31 March 2019

 

 

 

£'000

 

Pence per share

 

 

 

£'000

 

Pence per share

 

 

 

£'000

 

Pence per share

 

 

 

 

 

 

 

 

 

 

 

 

Profit attributable to equity holders of the Company

 

5,736

 

 

2.9

 

 

2,875

 

 

1.8

 

 

12,153

 

 

7.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted

Adjusted earnings per share is defined as adjusted operating profit less net finance costs and tax divided by the basic weighted average number of ordinary shares of the Company.

 

 

 

6 months to

30 September 2019

 

(Restated) #

6 months to

30 September 2018

 

 

Year to

31 March 2019

 

 

 

 

£'000

 

Basic

pence per

share

 

Diluted

pence per

share

 

 

 

 

£'000

 

Basic

pence per

share

 

Diluted

pence per

share

 

 

 

 

£'000

 

Basic

pence per

share

 

Diluted

pence per

share

 

Adjusted operating profit

 

21,495

 

 

11.1

 

 

11.0

 

 

9,832

 

 

6.5

 

 

6.4

 

 

32,031

 

 

20.3

 

 

19.9

Less net finance costs

(1,212)

 

(0.6)

 

(0.6)

 

(187)

 

(0.1)

 

(0.1)

 

(689)

 

(0.4)

 

(0.4)

Less tax

(2,886)

 

(1.5)

 

(1.5)

 

(699)

 

(0.5)

 

(0.5)

 

(2,583)

 

(1.7)

 

(1.6)

Adjusted earnings

17,397

 

9.0

 

8.9

 

8,946

 

5.9

 

5.8

 

28,759

 

18.2

 

17.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payments, exceptional items, net finance costs and tax. 

# See note 2

 

9.  DIVIDENDS PAID AND PROPOSED

 

 

6 months to

30 September

2019

 

6 months to

30 September

2018

 

Year to

31 March

2019

 

£'000

 

£'000

 

£'000

Declared and paid during the period

 

 

 

 

 

Final dividend for 2019: 2.99p per share (2018: 2.65p per share)

5,782

 

4,049

 

4,049

 

 

 

 

 

 

Proposed for approval at AGM (not recognised as a liability at 31 March)

 

 

 

 

 

Final dividend for 2019: 2.99p per share

-

 

-

 

5,766

 

 

10.  PLANT AND EQUIPMENT

 

During the six months ended 30 September 2019, the Group acquired plant and equipment with a cost of £422,000 (2018: £520,000) and £320,000 associated with dilapidation estimates.

 

Depreciation provided during the six months ended 30 September 2019 was £889,000 (2018: £771,000).

 

Assets with a net book value of £6,000 were disposed of during the six months ended 30 September 2019 (2018: £5,000).

 

11.  INTANGIBLE ASSETS 

 

 

Customer

relationships

£'000

 

Other acquisition intangibles

£'000

 

Total acquisition intangibles

£'000

 

 

 

Goodwill

£'000

 

 

Purchased

software

£'000

 

Internally developed software

£'000

 

 

 

Total

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 April 2018

45,926

 

16,739

 

62,665

 

116,465

 

2,118

 

1,771

 

183,019

Additions - purchased software

-

 

-

 

-

 

-

 

157

 

-

 

157

Disposals

-

 

-

 

-

 

-

 

(67)

 

-

 

(67)

Foreign exchange adjustments

202

 

85

 

287

 

667

 

2

 

-

 

956

At 30 September 2018

46,128

 

16,824

 

62,952

 

117,132

 

2,210

 

1,771

 

184,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions - business combinations

73,212

 

21,615

 

94,827

 

178,651

 

-

 

-

 

273,478

Additions - purchased software

-

 

-

 

-

 

-

 

15

 

-

 

15

Foreign exchange adjustments

(1,280)

 

(413)

 

(1,693)

 

(3,260)

 

28

 

 

 

(4,925)

At 31 March 2019

118,060

 

38,026

 

156,086

 

292,523

 

2,253

 

1,771

 

452,633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions - business combinations

-

 

-

 

-

 

301

 

-

 

-

 

301

Additions - purchased software

-

 

-

 

-

 

-

 

29

 

-

 

29

Disposals

-

 

-

 

-

 

-

 

(259)

 

-

 

(259)

Foreign exchange adjustments

4,125

 

1,288

 

5,413

 

10,325

 

10

 

-

 

15,748

At 30 September 2019

122,185

 

39,314

 

161,499

 

303,149

 

2,033

 

1,771

 

468,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation and impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 April 2018

10,869

 

7,871

 

18,740

 

-

 

1,195

 

1,712

 

21,647

Amortisation during the period

2,393

 

1,684

 

4,077

 

-

 

217

 

24

 

4,318

Disposals

-

 

-

 

-

 

-

 

(20)

 

-

 

(20)

Foreign exchange adjustments

63

 

65

 

128

 

-

 

1

 

-

 

129

At 30 September 2018

13,325

 

9,620

 

22,945

 

-

 

1,393

 

1,736

 

26,074

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation during the period

3,386

 

2853

 

6,239

 

-

 

251

 

13

 

6,503

Foreign exchange adjustments

(41)

 

(34)

 

(75)

 

-

 

(6)

 

-

 

(81)

At 31 March 2019

16,670

 

12,439

 

29,109

 

-

 

1,638

 

1,749

 

32,496

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation during the period

6,080

 

3,585

 

9,665

 

-

 

49

 

8

 

9,722

Foreign exchange adjustments

470

 

(134)

 

336

 

-

 

7

 

-

 

343

At 30 September 2019

23,220

 

15,890

 

39,110

 

-

 

1,694

 

1,757

 

42,561

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 September 2018

32,803

 

7,204

 

40,007

 

117,132

 

817

 

35

 

157,991

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 March 2019

101,390

 

25,587

 

126,977

 

292,523

 

615

 

22

 

420,137

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 September 2019

98,965

 

23,424

 

122,389

 

303,149              

 

339               

 

14                 

 

425,891                  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11.  INTANGIBLE ASSETS (continued)

 

Goodwill arose on the acquisition of GB Mailing Systems Limited, e-Ware Interactive Limited, Data Discoveries Holdings Limited, Advanced Checking Services Limited, Capscan Parent Limited, TMG.tv Limited, CRD (UK) Limited, DecTech Solutions Pty Ltd, CDMS Limited, Loqate Inc., ID Scan Biometrics Limited, Postcode Anywhere (Holdings) Limited, VIX Verify Global Pty Limited and IDology Inc. Under IFRS, goodwill is not amortised and is tested annually for impairment.

 

Intangible assets categorised as 'other acquisition intangibles' include asset such as non-compete clauses and software technology.

 

 

12. PROVISIONS

 

6 months to

30 September

2019

 

6 months to

30 September

2018

 

Year to

31 March

2019

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Long service award

572

 

514

 

528

Dilapidation provisions

565

 

25

 

-

 

1,137

 

539

 

528

Analysed as:

 

 

 

 

 

Amounts falling due within 12 months

-

 

25

 

-

Amounts falling due after one year

1,137

 

514

 

528

 

1,137

 

539

 

528

 

13.  SHARE-BASED PAYMENTS

 

The Group operates Executive Share Option Schemes under which executive directors, managers and staff of the Group are granted options over shares.

 

During the six months ended 30 September 2019, the following share options were granted to executive directors and staff.

 

 

Scheme

 

Date

 

No. of options

 

 

Exercise price

 

 

Fair value

LTIP

12 July 2019

754,560

 

2.5p

 

541.0p

SAYE (3 Year)

6 August 2019

257,951

 

444.0p

 

179.0p

SAYE (5 Year)

6 August 2019

106,061

 

444.0p

 

204.0p

Matching options

17 September 2019

454,083

 

2.5p

 

532.0p

 

The charge recognised from equity-settled share-based payments in respect of employee services received during the period was £1,695,000 (2018: £964,000).

 

14.  LOANS

 

In February 2019, the Group refinanced its existing revolving facility and the total facility was increased to £110,000,000, with a further £30,000,000 accordion option. The facility now expires in February 2022. The existing liability of £17,000,000 was repaid at the point of the refinancing with a simultaneous drawdown of £101,000,000 (net increase of £84,000,000), which was used to part fund the IDology acquisition. A further repayment of £15,000,000 was made in March 2019. During the period a repayment of £10,000,000 was made in relation to this loan. The outstanding balance on this facility at 30 September 2019 was £76,000,000 (31 March 2018: £86,000,000).

 

This debt bears an initial interest rate of LIBOR + 1.50%. This interest rate is subject to an increase of 0.25% should the business exceed certain leverage conditions.

 

In April 2014, the Group secured an Australian dollar three year term loan of AUS$10,000,000.  The debt bears an interest rate of +1.90% above the Australian Dollar bank bill interest swap rate ('BBSW'). During the year ending 31 March 2018, this term loan was extended from its original maturity of April 2017 to November 2019.  Security on the debt is provided by way of an all asset debenture. During the period, £400,000 (2018: £406,000) was repaid in relation to the Australian dollar term loan, with the balance of £1,054,000 due in November 2019.

 

 

 

 

 

 

 

30 September

2019

 

30 September

2018

 

31 March

2019

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Opening bank loan

86,888

 

9,248

 

9,248

New borrowings

-

 

-

 

110,447

Repayment of borrowings

(10,400)

 

(406)

 

(32,804)

Unwinding of loan amortisation fee

96

 

-

 

-

Foreign currency translation adjustment

13

 

29

 

(3)

Closing bank loan

76,597

 

8,871

 

86,888

 

 

 

 

 

 

Analysed as:

 

 

 

 

 

Amounts falling due within 12 months

1,054

 

806

 

1,441

Amounts falling due after one year

75,543

 

8,065

 

85,447

 

76,597

 

8,871

 

86,888

 

Included within the closing bank loan balance above is £457,000 of unamortised loan arrangement fees (2018: £nil). This amount is not included in the definition of net debt.

 

15.  RELATED PARTY TRANSACTIONS

 

During the period, the Group has not entered into transactions, in the ordinary course of business, with other related parties (2018: £Nil). 

 

Compensation of key management personnel (including directors)

 

 

6 months to

30 September

2019

 

 

6 months to

30 September

2018

 

Year to

31 March

2019

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Short-term employee benefits

1,138

 

721

 

3,290

Post-employment benefits

37

 

36

 

72

Fair value of share options awarded

2,416

 

-

 

1,826

 

3,591

 

757

 

5,188

 

16.  EQUITY SHARE CAPITAL

 

During the period 1,002,431 (2018: 444,844) ordinary shares with a nominal value of 2.5p were issued for an aggregate cash consideration of £327,009 (2018: £446,138).  The cost associated with the issue of shares was £Nil (2018: £Nil).

 

 

30 September

2019

 

30 September

2018

 

31 March

2019

 

£'000

 

£'000

 

£'000

Issued

 

 

 

 

 

Allotted, called up and fully paid

4,846

 

3,828

 

4,821

Share premium

261,451

 

105,249

 

261,149

 

266,297

 

109,077

 

265,970

 

 

 

 

 

 

 

 

 

17.  BUSINESS COMBINATIONS

 

Acquisitions in the period ended 30 September 2019

 

There were no acquisitions in the period to 30 September 2019.

 

Fair value adjustments - IDology

 

On 13 February 2019, the Group acquired 100% of the voting shares of IDology Inc. ('IDology'). Under IFRS 3, an acquirer has a maximum period of 12 months to finalise the acquisition accounting for a business combination. During the current period the provisional fair values included in the acquisition accounting applied in the 31 March 2019 financial statements have been amended as set out below.  The adjustment to the investment balance relates to a non-listed equity investment, and both adjustments have been made in light of better information now available to management.  The adjustments are immaterial and as such have not been posted back retrospectively into the balance sheet as at acquisition.

 

 

 

Provisional fair value recognised on acquisition

 

 

Adjustments during the period to

30 September 2019

 

Final fair value recognised on acquisition

 

 

£'000

 

£'000

 

£'000

Assets

 

 

 

 

 

 

Technology intellectual property

 

16,076

 

-

 

16,076

Customer relationships

 

65,976

 

-

 

65,976

Non-compete agreements

 

4,360

 

-

 

4,360

Investments

 

419

 

(419)

 

-

Plant and equipment

 

152

 

-

 

152

Deferred tax asset

 

3,955

 

-

 

3,955

Trade and other receivables

 

4,436

 

118

 

4,554

Cash

 

1,033

 

-

 

1,033

Trade and other payables

 

(1,993)

 

-

 

(1,993)

Corporation tax liability

 

(81)

 

-

 

(81)

Deferred tax liabilities

 

(21,733)

 

-

 

(21,733)

Total identifiable net assets at fair value

 

72,600

 

(301)

 

72,299

Goodwill arising on acquisition

 

163,143

 

301

 

163,444

Total purchase consideration transferred

 

235,743

 

-

 

235,743

 

No adjustments were required to the provisional fair values related to the VIX Verify acquisition in October 2018.

 

Contingent consideration - IDology

 

The final payment due in relation to the IDology acquisition was made during the period. This payment of £82,000 was included within the contingent consideration liability at 31 March 2019 at a value of £79,000. The variance was due to exchange rate fluctuations between the acquisition date and the final payment date.

 

Acquisitions in the period ended 30 September 2018

 

There were no acquisitions in the period to 30 September 2018.

 

 

 

18.  CONTINGENT CONSIDERATION

 

LIABILITIES

 

30 September

2019

 

30 September

2018

 

31 March

2019

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Opening

79

 

45

 

45

Recognition on the acquisition of subsidiary undertakings

-

 

-

 

79

Foreign exchange movement

3

 

-

 

                    -

Settlement of consideration

(82)

 

(45)

 

(45)

Closing

-

 

-

 

79

 

 

 

 

 

 

 

 

 

 

 

 

 

Analysed as:

 

 

 

 

 

Amounts falling due within 12 months

-

 

-

 

79

Amounts falling due after one year

-

 

-

 

-

 

-

 

-

 

79

 

 

The contingent consideration at 31 March 2019 related to the IDology acquisition. This amount was paid during the period.

 

19.  FINANCIAL INSTRUMENTS - FAIR VALUE MEASUREMENT

 

The objectives, policies and strategies pursued by the Group in relation to financial instruments are described within the 2019 Annual Report.  Set out below is an overview of financial instruments, other than cash and short-term deposits, held by the Group:

 

 

30 September 2019

 

30 September 2018

 

31 March 2019

 

 

Loans and receivables

Fair Value through OCI

Fair value profit or

loss

 

 

Loans and receivables

Fair value through OCI

Fair value profit or

loss

 

 

Loans and receivables

Fair value through OCI

Fair value profit or loss

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

£000s

£'000

 

 

 

 

 

 

 

 

 

 

 

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

Non-listed equity investment                                           

-

-

-

 

 

 

 

 

-

411

-

Trade and other receivables

38,433

-

-

 

26,279

-

-

 

45,996

-

-

Total current

38,433

-

-

 

26,279

-

-

 

45,996

411

-

 

 

 

 

 

 

 

 

 

 

 

 

Total financial assets

38,433

-

-

 

26,279

-

-

 

45,996

411

-

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

Loans

75,543

-

-

 

8,065

-

-

 

85,447

-

-

Total non-current

75,543

-

-

 

8,065

-

-

 

85,447

-

-

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other payables

32,027

-

-

 

23,053

-

-

 

33,508

-

-

Loans

1,054

-

-

 

806

-

-

 

1,441

-

-

Contingent consideration

-

-

-

 

-

 

-

 

-

-

79

Total current

33,081

-

-

 

23,859

-

-

 

34,949

-

79

 

 

 

 

 

 

 

 

 

 

 

 

Total financial liabilities

108,624

-

-

 

31,924

-

-

 

120,396

-

79

 

Trade and other receivables exclude the value of any prepayments or accrued income.  Trade and other payables exclude the value of deferred income.  All financial assets and liabilities have a carrying value that approximates to fair value. For trade and other receivables, allowances are made within the book value for credit risk.  The Group does not have any derivative financial instruments.

 

 

 

 

 

19.  FINANCIAL INSTRUMENTS - FAIR VALUE MEASUREMENT (continued)

 

Contingent consideration

The fair value of contingent consideration is the present value of expected future cash flows based on latest forecasts of future performance.

 

30 September

2019

 

30 September

2018

 

31 March

2019

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Fair value within current liabilities:

 

 

 

 

 

Contingent consideration

-

 

-

 

79

 

 

 

 

 

 

 

Financial assets

 

Trade and other receivables exclude the value of any prepayments or accrued income. Trade and other payables exclude the value of deferred income (£32.8 million at 30 September 2019). All financial assets and liabilities have a carrying value that approximates to fair value. The Group does not have any derivative financial instruments.

 

Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. Trade receivables are non-interest bearing and are generally on 14 to 60 day terms.

 

Financial liabilities

The Group has an Australian dollar three year term loan of AUS$10,000,000 maturing in November 2019.  The debt bears an interest rate of +1.90% above the Australian Dollar bank bill interest swap rate ('BBSW').

 

The Group has a 3 year revolving credit facility agreement expiring in February 2022.  The facility is subject to a limit of £110,000,000 and bears an initial interest rate of LIBOR +1.50%.

 

The facilities are secured by way of an all asset debenture.

 

The Group is subject to a number of covenants in relation to its borrowings which, if breached, would result in loan balances becoming immediately repayable.  These covenants specify certain maximum limits in terms of the following:

 

·      Leverage

·      Interest cover

 

At 30 September 2019, 31 March 2019 and 30 September 2018 the Group was not in breach of any bank covenants.

 

20.  CONTINGENCIES

 

In November 2018, the Information Commissioner's Office (the data industry regulator in the UK) announced that it was conducting audits on a number of companies to understand the use of data in their respective services under the new EU General Data Protection Regulation (GDPR). The Group is included in this audit process and is working with the Commissioner to provide information and clarify the role some of the Group's products play in the data ecosystem. The audits have yet to be concluded and as yet we do not know what the final outcome will be, but it may require some changes to certain processes in parts of our UK operations. At this point we do not expect this to result in a material financial impact to the Group.

 

 

 

ALTERNATIVE PERFORMANCE MEASURES

 

Management assess the performance of the Group using a variety of alternative performance measures. In the discussion of the Group's reported operating results, alternative performance measures are presented to provide readers with additional financial information that is regularly reviewed by management. However, this additional information presented is not uniformly defined by all companies including those in the Group's industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, certain information presented is derived from amounts calculated in accordance with IFRS but is not itself an expressly permitted GAAP measure. Such measures are not defined under IFRS and are therefore termed 'non-GAAP' measures and should not be viewed in isolation or as an alternative to the equivalent GAAP measure.

 

The Group's consolidated statement of comprehensive income and segmental analysis separately identify trading results before certain items. The directors believe that the presentation of the Group's results in this way is relevant to an understanding of the Group's financial performance, as such items are identified by virtue of their size, nature or incidence. This presentation is consistent with the way that financial performance is measured by management and reported to the Board and assists in providing a meaningful analysis of the trading results of the Group. In determining whether an event or transaction is presented separately, management considers quantitative as well as qualitative factors such as the frequency or predictability of occurrence. Examples of charges or credits meeting the above definition and which have been presented separately in the current and/or prior years include amortisation of acquired intangibles, share-based payments charges, acquisition related costs and business restructuring programmes. In the event that other items meet the criteria, which are applied consistently from year to year, they are also presented separately.

 

The following are the key non-GAAP measures used by the Group:

 

Organic Growth

Organic growth is defined by the Group as year-on-year continuing revenue growth, excluding acquisitions which are included only after the first anniversary following their purchase.

 

Constant Currency

Constant currency means that non-Sterling revenue in the comparative period is translated at the same exchange rate applied to the current year non-Sterling revenue. This therefore eliminates the impact of fluctuations in exchange rates on underlying performance.

 

Adjusted Operating Profit

Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payment charges, exceptional items, net finance costs and tax.

 

Adjusted EBITDA

Adjusted EBITDA means operating profit before depreciation, amortisation, share-based payment charges, exceptional items, net finance costs and tax.

 

Adjusted Earnings

Adjusted earnings represents adjusted operating profit less net finance costs and tax.

 

Adjusted Earnings Per Share ('Adjusted EPS')

Adjusted EPS represents adjusted earnings divided by a weighted average number of shares in issue, and is disclosed to indicate the underlying profitability of the Group.

 

Net cash generated by operating activities before working capital movements

Net cash generated by operating activities before working capital movements means net cash generated from operations in the Consolidated Cash Flow Statement before the movement in provisions, inventories, trade and other receivables and trade and other payables.

 

 

 

 

Independent Review Report to GB Group plc

 

Introduction

 

We have been engaged by the Company to review the condensed set of consolidated financial statements in the half-yearly financial report for the 6 months ended 30 September 2019 which comprises Interim Consolidated Statement of Comprehensive Income, Interim Consolidated Statement of Changes in Equity, Interim Consolidated Balance Sheet, Interim Consolidated Cash Flow Statement and the related explanatory notes 1 to 20.  We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of consolidated financial statements.

 

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

 

Directors' Responsibilities

 

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with International Accounting Standards 34 'Interim Financial Reporting' as adopted by the European Union.

 

As disclosed in note 2, the annual financial statements of the company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of consolidated financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standards 34 'Interim Financial Reporting' as adopted by the European Union. 

 

Our Responsibility

 

Our responsibility is to express to the Company a conclusion on the condensed set of consolidated financial statements in the half-yearly financial report based on our review.

 

Scope of Review

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated financial statements in the half-yearly financial report for the 6 months ended 30 September 2019 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union.

 

 

 

Ernst & Young LLP

Liverpool

25 November 2019

 

 

 

The maintenance and integrity of the GB Group plc web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial information since it was initially presented on the web site.

 

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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GB Group (GBG)
UK 100

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