Half Yearly Report

RNS Number : 0052X

GB Group PLC

30 November 2010

 



Embargoed until 7.00 a.m.

30 November 2010

GB Group PLC

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

Half Yearly Results for the Six Months Ended 30 September 2010

GB Group plc, the identity management specialist, is pleased today to announce its half yearly results for the six months ended 30 September 2010.

Financial Highlights

·     Group revenues increased by 10% to £11.6 million (2009: £10.5 million).

·     Group profit before interest and tax¹ increased by 151% to £746,000 (2009: £297,000).

·     Cash balances at 30 September 2010 were stable at £4.64 million (2009: £4.28 million) after the payment of the increased final dividend of 1.2p per share in August 2010.

·     Results were in line with the revised, upgraded market expectations announced in October 2010.

¹ Profit before interest and tax is profit before interest, taxation, exceptional costs and share-based payments

Operational Highlights

·     David Rasche to be appointed Chairman.

·     Increasing demand for DataSolutions' services.  

·     DataAuthentication benefiting from clients' move to electronic identity verification.

·     New contract wins with Homeserve, National Fraud Intelligence Bureau, the Department of Energy and Climate Change, Creation Finance and FLM Loans.

Richard Law, GB Group's Chief Executive, commented:

"GB Group has delivered a set of strong results underpinned by progressive revenue development, continued investment and strong cash flows. We have enhanced the Group's potential in line with our vision for growth and the positive progress that was seen in the first half has continued during our third quarter to date.

"Both myself and the Board would like to thank John Walker-Haworth for the contribution he has made.  His insight and experience have been invaluable to the Company and to the people fortunate enough to work with him. We wish him the best of success with his future endeavours".

-Ends-

For further information, please contact:

GB Group plc	01244 657333
Richard Law, Chief Executive Dave Wilson, Finance Director
Peel Hunt Ltd (Nominated Adviser and Broker) Richard Kauffer Daniel Harris	0207 418 8900
Weber Shandwick Financial Nick Oborne Clare Thomas	020 7067 0700
Website	www.gb.co.uk

Notes to Editors

About GB Group plc

The most successful organisations recognise the value of understanding your individual identity - who you are, what you need and what you like. GB combines this concept of identity with technology to create an environment of trust so that organisations can connect, communicate and transact with consumers safely, responsibly and profitably. We call this Identity Management.

GB Group has three complementary Identity Management offerings:

·  Identity Verification: combating ID fraud, money laundering and under-age gambling.

·  Identity Capture, Maintenance and Tracing: providing accurate and up-to-date customer information for your contact strategy.

·  Identity-based Marketing: understanding, targeting and retaining profitable customers.

This enables our clients to make informed business decisions based on a thorough knowledge of consumer identity and behaviour, leading to more effective communication and interaction with the customer.

GB Group is listed on the London Stock Exchange (GBG). For more information, please visit GB Group's website: www.gb.co.uk.

GB Group - because identity matters™  

Chairman's Statement

In my statement in the 2010 Annual Report, I referred to GB Group's clear vision and that it would approach opportunities for growth boldly despite difficult market conditions.  Excellent progress has been made in this regard and I'm pleased to be able to report a period of increased revenue and substantially increased profitability.

GB Group's Results

As highlighted in our trading update released in October 2010, GB Group's profitability for the six months ending 30 September 2010 was substantially higher than previous expectations.  The financial highlights were as follows:

·     Group revenue increased by 10% to £11.6 million (2009: £10.5 million).

·     The Group generated profit before interest, taxation, exceptional costs and share-based payments of £746,000 (2009: £297,000).

·     The Group balance sheet remains strong.  Cash balances at 30 September 2010 were £4.64 million (2009: £4.28 million) after the payment of the increased final dividend of 1.2p per share in August 2010 amounting to £1.03 million (2009: £0.98 million).

The positive trend in the first half of the year has continued during our third quarter to date.

DataSolutions

In the six months to 30 September 2010, DataSolutions, the provider of identity-based marketing services, showed good revenue and profit growth.  Revenue increased by 20% to £6.5 million (2009: £5.4 million) and profitability improved.

This improved performance reflects DataSolutions' continuing move to develop new and innovative online services which deliver distinctive value to clients such as Homeserve, National Fraud Intelligence Bureau and the Department of Energy and Climate Change, all of whom have become new clients of DataSolutions in the current year.

DataSolutions is continuing to experience good demand for its products and services and we expect this to continue during the second half of the year.

DataAuthentication

In the six months to 30 September 2010, revenue in DataAuthentication, the provider of identity verification services, was £5.1 million (2009: £5.2 million).

Our strategy for the DataAuthentication business continues to be to grow the number of clients using our URU and ID3 Check services, and we are continuing to win new business as clients move from manual to electronic methods of identity verification.  New business growth has seen recovery in the last six months which has made up for the recession-linked loss of clients last year.  The new clients that have been added are greater in number than those lost and, accordingly, DataAuthentication is less reliant than it was previously on large accounts.

The effect of these new contracts, when combined with the steps taken to control costs, has resulted in improved profitability, and the momentum of new customer contracts such as Creation Finance and FLM Loans should see this continue in the balance of the year. 

Move to Alternative Investment Market (AIM)

The Company successfully moved from the Full List to AIM on 27 August 2010.  As expected a number of shareholders who are unable to hold AIM stocks, for instance those whose shares were held in ISA accounts, moved out and the management team has worked with its advisers to introduce new shareholders to the Company. The net impact was to consolidate the number of shareholders overall and the Board's view is that the shareholder base remains of high quality and is less widely dispersed.

Board

For some months I have been discussing with my fellow directors my desire to stand down as Chairman.  Accordingly, I am leaving the Board today after 10 very constructive years with GB Group and I am delighted that David Rasche, who joined the Board in September 2010, has accepted the invitation to succeed me as Chairman. David has already brought significant benefit to GB Group and the Board considers that his relevant experience, drive and enthusiasm would be most valuable in the next phase of GB Group's development. 

I believe that over recent years the underlying quality of the business and its prospects have been transformed by the efforts of Richard Law and his management team.  A relatively small highly motivated company like ours can make a real and successful impact on the markets in which it operates.

Outlook

We continue to invest in product development, new data sources and high calibre people to maintain our position as the UK's leading identity management business.

GB Group has traded well in the first half of this year and we expect this to continue as we move through the second half of the year.

JL Walker-Haworth

Chairman

30 November 2010

Interim Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2010

	Note		Unaudited 6 months to 30 September		Unaudited 6 months to 30 September			Audited Year to 31 March
			2010		2009			2010
			£'000		£'000			£'000
Revenue			11,556		10,509			22,208
Cost of sales			(5,461)		(4,939)			(10,330)
Gross profit			6,095		5,570			11,878
Other operating expenses			(5,379)		(5,325)			(10,627)
Exceptional items	3		(151)		-			(94)
Operating profit			565		245			1,157
Finance revenue - excluding exceptional item			12		22			32
Finance revenue - exceptional item	3		-		74			74
Profit before tax			577		341			1,263
Income tax (expense)/credit	6		(18)		(27)			243
Profit for the period attributable to equity holders of the parent and total comprehensive income for the year			559		314			1,506
Earnings per share	8
- basic earnings per share for the period			0.7p		0.4p			1.8p
- diluted earnings per share for the period			0.6p		0.4p			1.8p

 

Interim Consolidated Statement of Changes in Equity                                                                                                                                                    For the six months ended 30 September 2010

	Note		Equity share capital		Merger reserve		Capital redemption reserve		Retained earnings			Total equity
			£'000		£'000		£'000		£'000			£'000
Balance at 1 April 2009			5,867		6,575		3		(99)			12,346
Profit for the period			-		-		-		314			314
Total comprehensive income for the period			-		-		-		314			314
Exercise of options			40		-		-		-			40
Recovery of VAT on share issue fees	3		114		-		-		-			114
Cost of share-based payments			-		-		-		52			52
Equity dividend	9		-		-		-		(984)			(984)
Balance at 30 September 2009			6,021		6,575		3		(717)			11,882
Profit for the period			-		-		-		1,192			1,192
Total comprehensive income for the period			-		-		-		1,192			1,192
Exercise of options			-		-		-		-			-
Cost of share-based payments			-		-		-		(9)			(9)
Balance at 1 April 2010			6,021		6,575		3		466			13,065
Profit for the period			-		-		-		559			559
Total comprehensive income for the period			-		-		-		559			559
Exercise of options			14		-		-		-			14
Cost of share-based payments			-		-		-		30			30
Equity dividend	9		-		-		-		(1,026)			(1,026)
Balance at 30 September 2010			6,035		6,575		3		29			12,642

Interim Consolidated Balance Sheet

As at 30 September 2010

	Note		Unaudited As At 30 September		Unaudited As At 30 September		Audited As At 31 March
			2010		2009		2010
			£'000		£'000		£'000
ASSETS
Non-current assets
Property, plant and equipment	10		898		1,047		1,023
Intangible assets			6,576		6,579		6,604
Deferred tax asset			800		563		815
			8,274		8,189		8,442
Current assets
Trade and other receivables			5,554		4,851		6,165
Cash and short-term deposits			4,636		4,275		5,747
			10,190		9,126		11,912
TOTAL ASSETS			18,464		17,315		20,354
EQUITY AND LIABILITIES
Capital and reserves
Equity share capital			6,035		6,021		6,021
Merger reserve			6,575		6,575		6,575
Capital redemption reserve			3		3		3
Retained earnings			29		(717)		466
Total equity attributable to equity holders of the parent			12,642		11,882		13,065
Current liabilities
Trade and other payables			5,797		5,302		7,215
Current tax			25		79		22
Provision			-		52		52
TOTAL LIABILITIES			5,822		5,433		7,289
TOTAL EQUITY AND LIABILITIES			18,464		17,315		20,354

Interim Consolidated Cash Flow Statement                                                                                                                             For the six months ended 30 September 2010

			Unaudited 6 months to 30 September 2010		Unaudited 6 months to 30 September 2009		Audited Year to 31 March 2010
			£'000		£'000		£'000
Group profit before tax			577		341		1,263
Adjustments to reconcile Group profit before tax to net cash flows
Interest income			(12)		(96)		(106)
Depreciation of property, plant and equipment			230		199		422
Amortisation of intangible assets			28		21		47
Share-based payments			30		52		43
Decrease/(increase) in receivables			611		1,294		(20)
(Decrease)/increase in payables			(1,418)		(1,043)		870
Decrease in provisions			(52)		-		-
Cash (consumed)/generated from operations			(6)		768		2,519
Income tax paid			-		-		(39)
Net cash (consumed)/generated from operating activities			(6)		768		2,480
Cash flows from investing activities
Purchase of property, plant and equipment			(105)		(263)		(462)
Expenditure on product development			-		-		(51)
Interest received			12		96		106
Net cash flows from investing activities			(93)		(167)		(407)
Cash flows from financing activities
Proceeds from issue of shares			14		40		40
VAT reclaim on share issue costs			-		114		114
Dividends paid to equity shareholders			(1,026)		(984)		(984)
Net cash flows from financing activities			(1,012)		(830)		(830)
Net (decrease)/increase in cash and cash equivalents			(1,111)		(229)		1,243
Cash and cash equivalents at the beginning of period			5,747		4,504		4,504
Cash and cash equivalents at the end of period			4,636		4,275		5,747

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 2010 were authorised for issue in accordance with a resolution of the directors on 30 November 2010.  GB Group plc is a public limited company incorporated in the United Kingdom whose shares are publicly traded on 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 2010 have been prepared in accordance with IAS 34 Interim Financial Reporting.

The interim condensed consolidated financial statements are presented in sterling and all values are rounded to the nearest thousand (£'000) except when otherwise indicated.

The interim condensed consolidated financial statements do not constitute statutory accounts 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 2010.  The financial information for the preceding year is based on the statutory accounts for the year ended 31 March 2010.  These accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies.  These accounts 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 2010, except for the adoption of new Standards and Interpretations noted below.  Adoption of these Standards and Interpretations did not have any effect on the financial position or performance of the Group.

International Financial Reporting Interpretations Committee (IFRIC)

Adoption date

IFRIC 17	Distribution of Non-Cash Assets to Owners	1 July 2009
IFRIC 18	Transfers of Assets from Customers	1 July 2009

International Accounting Standards (IAS / IFRS)		Adoption date
IFRS 1	Amendment to IFRS 1 - Additional Exemptions for First-time Adopters	1 January 2010
IFRS 2	Amendment to IFRS 2 - Group Cash-Settled Share-based Payment Transactions	1 January 2010
IFRS 3	Business Combinations (revised January 2008)	1 July 2009
IAS 27	Consolidated and Separate Financial Statements (revised January 2008)	1 July 2009
IAS 32	Amendment to IAS 32 - Classification of Rights Issues	1 February 2010
IAS 39	Amendment to IAS 39 - Eligible Hedged Items	1 July 2009
	Improvements to IFRS (issued April 2009)	Various dates
IFRS 1	Amendment to IFRS 1 - Additional Exemptions for First-time Adopters	1 January 2010

New Accounting Standards and Interpretations not Applied

During the year, the IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of these financial statements:

International Accounting Standards (IAS / IFRS)		Effective date
IFRS 1	Amendment to IFRS 1 - Limited Exemption from Comparative IFRS 7 disclosures	1 July 2010
IFRS 9	Financial Instruments: Classification & Measurement	1 January 2013
IAS 24	Related Party Disclosures (revised)	1 January 2011

International Financial Reporting Interpretations Committee (IFRIC)		Effective date
IFRIC 14	Amendment: Prepayments of a Minimum Funding Requirement	1 January 2011
IFRIC 19	Extinguishing Financial Liabilities with Equity Instruments	1 July 2010

The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group's or the Company's financial statements in the period of initial application.

3.  EXCEPTIONAL ITEMS

Exceptional costs of £151,000 in the six months ended 30 September 2010 were costs principally associated with the Company's move to AIM on 27 August 2010.  Exceptional costs for the year ended 31 March 2010 were reorganisation costs relating to redundancy payments following a staff reorganisation.

The £74,000 finance revenue item in the six months ended 30 September 2009 and year ended 31 March 2010 relates to interest received from HM Revenue and Customs following a reclaim of VAT associated with fees for share issues in 1993, 1995 and 1996.  The total amount of VAT recovered was £114,000 which has been credited to the share premium account.

4.  RISKS & 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: regulatory risk resulting from regulatory developments; changes in the Group's competitive position; non-supply by a major supplier; and disaster recovery and business continuity.  These risks and uncertainties facing our business were reported in detail in the 2010 Annual Report and Accounts and all of them are monitored closely by the Group.  There have been no significant changes in the Group's risk and uncertainty factors during the review period, nor are any expected to for the remainder of the year.

5.  SEGMENTAL INFORMATION

The Group's operating segments are internally reported to the Group's Chief Executive Officer based on two separable areas grouped into two operating segments: DataAuthentication - which provides electronic identity verification services and DataSolutions - which provides identity capture, maintenance and analysis services.  The Directors believe that the best measure of performance of those segments is operating profit before finance revenue and income tax as shown below. 

All revenues and all non-current assets are derived from UK operations.  Segment results include items directly attributable to either DataAuthentication or DataSolutions.  Unallocated items for the six months to 30 September 2010 represent Group head office costs (£155,000), exceptional costs (£151,000), Group finance income (£14,000), Group income tax (£3,000) and share-based payments (£30,000).  Unallocated items for the six months to 30 September 2009 represent Group head office costs (£204,000), Group finance income (£96,000), Group income tax credit (£27,000) and share-based payments (£52,000).  Unallocated items for the year ended 31 March 2010 represent Group head office costs (£333,000), exceptional costs (£94,000), Group finance income (£106,000), Group income tax credit (£243,000) and share-based payments (£43,000)

Information on segment assets and liabilities is not regularly provided to the Group's Chief Executive Officer and is therefore not disclosed below.

	Data Authentication		Data Solutions		Unallocated		Total Unaudited 6 months to 30 September 2010
Six months ended 30 September 2010	£'000		£'000		£'000		£'000
Revenue	5,056		6,500		-		11,556
Operating profit before depreciation	353		806		(306)		853
Depreciation and amortisation	(53)		(205)		-		(258)
Operating profit before finance revenue and income tax	300		601		(306)		595
Finance revenue					12		12
Share-based payments					(30)		(30)
Income tax					(18)		(18)
Profit for the period							559

	Data Authentication		Data Solutions		Unallocated		Total Unaudited 6 months to 30 September 2009
Six months ended 30 September 2009	£'000		£'000		£'000		£'000
Total revenue	5,152		5,356		-		10,509
Operating profit before depreciation	290		431		(204)		518
Depreciation and amortisation	(46)		(175)		-		(221)
Operating profit before finance revenue and income tax	244		256		(204)		297
Finance revenue					96		96
Share-based payments					(52)		(52)
Income tax					(27)		(27)
Profit for the period							314

	Data Authentication		Data Solutions		Unallocated		Total Audited Year  to 31 March 2010
Year ended 31 March 2010	£'000		£'000		£'000		£'000
Total revenue	9,694		12,514		-		22,208
Operating profit before depreciation	221		1,875		-		1,669
Depreciation and amortisation	(97)		(372)		-		(469)
Operating profit before finance revenue and income tax	124		1,503		(427)		1,200
Finance revenue							106
Share-based payments							(43)
Income tax							243
Profit for the period							1,506

6.  TAXATION

Taxation on profit on ordinary activities

		Unaudited 6 months to 30 Sept 2010		Unaudited 6 months to 30 Sept 2009		Audited Year to 31 March 2010
		£'000		£'000		£'000
Current income tax:
UK corporation tax on profit		3		27		22
Amounts underprovided in previous years		-		-		(13)
		3		27		9
Deferred tax:
Origination and reversal of temporary differences		-		-		(252)
Impact of change in corporation tax rate		15		-		-
		15		-		(252)
Tax charge/(credit) in the Statement of Comprehensive Income		18		27		(243)

In his budget of 22 June 2010, the Chancellor of the Exchequer announced Budget tax changes which will have an effect on the company's future tax position.  The budget proposed a decrease in the rate of UK corporation tax from 28% to 24% by 1% each year from April 2011, which will be enacted annually.

The reduction of the main rate of corporation tax from 28% to 27% from April 2011 has now been substantively enacted, on 27 July 2010.  In accordance with Accounting Standards, this change has been reflected in the interim Financial Statements as at 30 September 2010.

Further effect of the reduction of the corporation tax rate to 24% on the company's deferred tax asset (recognised and not recognised) would be to reduce the deferred tax asset by approximately £677,000.  The rate change would also impact the amount of future cash tax payments to be made by the company.  The effect on the company of the proposed changes to the UK tax system will be reflected in the company's Financial Statements in future years, as appropriate, once the proposals have been substantively enacted.

7.  CYCLICALITY

Due to the cyclicality of our software renewal business, higher renewals in the second half traditionally result in the Group's performance being biased towards the second half of the year.

8.  EARNINGS PER ORDINARY SHARE

Basic

Basic earning 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.

Unaudited 6 months to 30 September 2010

Unaudited 6 months to 30 September 2009

Audited Year to 31 March 2010

pence per share

£'000

pence per share

£'000

pence per share

£'000

Profit attributable to equity holders of the parent

0.7

559

0.4

314

1.8

1,506

Diluted

Diluted earnings per share amounts are calculated by dividing the profit for the period attributable to ordinary equity holders 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.

Unaudited 6 months to 30 September 2010

Unaudited 6 months to 30 September 2009

Audited Year to 31 March 2010

pence per share

£'000

pence per share

£'000

pence per share

£'000

Profit attributable to equity holders of the parent

0.6

559

0.4

314

1.8

1,506

		30 Sept 2010		30 Sept 2009		31 March 2010
		No.		No.		No.
Basic weighted average number of shares in issue		85,543,014		85,439,080		85,487,254
Dilutive effect of share options		923,484		220,525		280,177
Diluted weighted average number of shares in issue		86,466,498		85,659,605		85,767,431

9.  DIVIDENDS PAID AND PROPOSED

		Unaudited 6 months to 30 Sept 2010		Unaudited 6 months to 30 Sept 2009		Audited Year to 31 March 2010
		£'000		£'000		£'000
Declared and paid during the period
Final dividend for 2010: 1.20p per share (2009: 1.15p per share)		1,026		984		984
Proposed for approval at AGM (not recognised as a liability at 31 March 2010)
Final dividend for 2010: 1.20p per share		-		-		1,026

 

10.  PROPERTY, PLANT AND EQUIPMENT & INTANGIBLE ASSETS

During the six months ended 30 September 2010, the Group acquired property, plant and equipment with a cost of £105,000 (2009: £263,000).  There was no expenditure on product development for the six months ended 30 September 2010 (2009: £Nil).

£13,000 of disposals were made in the six months ended 30 September 2010 for assets fully written down (2009: £Nil).

11.  SHARE-BASED PAYMENT

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

During the six month period to 30 September 2010 a new executive share option scheme, Section D, was established.

Executive Share Option Scheme

Options are granted to executive directors and employees on the basis of their performance.  Options are granted at the full market value of the Company's shares at the time of grant and are exercisable between three and ten years from the date of grant.  The options vest when the Company's earnings per share growth is greater than the growth of the Retail Prices Index (RPI) over a 3 year period prior to the exercise date.  There are no cash settlement alternatives.

Executive Share Option Scheme (Section C Scheme)

Options are granted to executive directors and employees on the basis of their performance.  Options are granted at the full market value of the Company's shares at the time of grant and are exercisable between three and ten years from the date of grant.  The percentage of an option that will vest and be capable of exercise will depend on the performance of the Company.  A minimum of 50 per cent. of the options will vest when the Total Shareholder Return (TSR) performance of the Company, as compared to the TSR of the FTSE Computer and CPU Services Sub-Sector over a three-year period, matches or exceeds the median company.  The percentage of shares subject to an option in respect of which that option becomes capable of exercise will then increase on a sliding scale so that the option will become exercisable in full if top quartile performance is achieved.

Executive Share Option Scheme (Section D Scheme)

Options are granted to executive directors and employees on the basis of their performance.  Options are granted at the full market value of the Company's shares at the time of grant and are exercisable between three and ten years from the date of grant.  The vesting of options under the Section D Scheme will be subject to the achievement of normalised EPS growth at an annual compound rate of 20 per cent. over the performance period. The base year for the purposes of the EPS target will be the financial year of the Company ended immediately prior to the grant of the award.  The performance period will be the three financial years following the base year.  Section D Scheme options will only become exercisable to the extent they have vested in accordance with the EPS target.  There are no cash settlement alternatives.

GB Sharesave Scheme

The Group has a savings-related share option plan, under which employees save on a monthly basis, over a three or five year period, towards the purchase of shares at a fixed price determined when the option is granted.  This price is usually set at a 20% discount to the market price at the time of grant.  The option must be exercised within six months of maturity of the savings contract, otherwise it lapses.

During the six months ended 30 September 2010, the following share options were granted to executive directors, managers and staff of the Company.

Scheme		Date		No. of options		Exercise price
Executive Share Option Scheme - Section D		30 July 2010		1,500,000		25.75p

The fair value of equity-settled share options granted is estimated as at the date of grant using a binomial model, taking into account the terms and conditions upon which the options were granted.  The following table lists the inputs to the model for the options granted during the six months ended 30 September 2010.

Dividend yield (%)				4.70
Expected share price volatility (%)				45.00
Risk-free interest rate (%)				1.80
Lapse rate (%)				5.00
Expected exercise behaviour				See below
Expected life of option (years)				3.90

It is assumed that 50% of options will be exercised by participants as soon as they are 20% or more "in-the-money" (i.e. 120% of the exercise price) and the remaining 50% of options will be exercised gradually at the rate of 20% per annum for each year they remain at or above 20% "in-the-money".

12.  RELATED PARTY TRANSACTIONS

Compensation of key management personnel (including directors)

		Unaudited 6 months to 30 Sept 2010		Unaudited 6 months to 30 Sept 2009		Audited Year to 31 March 2010
		£'000		£'000		£'000
Short-term employee benefits		186		115		470
Post-employment benefits		28		18		47
Share-based payments		63		-		1
		277		133		518

13.  SHARE CAPITAL

During the period 55,513 (2009:210,000) ordinary shares of 2.5p were allotted on the exercise of share options for an aggregate cash consideration of £14,000 (2009: £40,000).

                                                                                                                                           Independent Review Report to GB Group plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2010 which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement, and the related explanatory notes 1 to 13.  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 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 Standard 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 financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 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 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 financial statements in the half-yearly financial report for the six months ended 30 September 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union.

Ernst & Young LLP

Manchester

30 November 2010

 

END

 

 

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