Half Yearly Report

RNS Number : 9443R

GB Group PLC

26 November 2012

 

Embargoed until 7.00 a.m.

26 November 2012

GB GROUP PLC

(the "Group" or the "Company")

Half Yearly Report

GB Group plc, the identity management specialist, is pleased to announce its half year results for the period ended 30 September 2012.

Highlights

·      First complete 6 months of trading for the three acquired businesses demonstrates the increased scale and profitability of GB Group.

·      Group revenues increased by 44% to £17.7m (2011:  £12.3m¹)

o  DataAuthentication, which provides identity verification services, revenues grew by 26% to £7.3m (2011: £5.8m¹)

o  DataSolutions, which provides identity-based marketing solutions, revenues grew by 60% to £10.5m  (2011: £6.6m¹)

·      Adjusted operating profit² increased by 58% to £1.5m (2011: £0.95m¹), £0.1m ahead of the trading update issued in October 2012.

·      The Group remains highly cash generative, with operating cash flow before working capital movements increasing by 52% to £1.5m (2011: £0.95m).Cash balances at the period end were £5.8m (2011: £4.2m), after £1.5m of dividend payments.

·      Two new territories, China and Argentina, added to the Group's international hub, ID3Global, bringing total number of geographies in which GB can offer identity verification services to 16 (2011: 7).

·      Acquisition activity continued post period end, with acquisition of TMG.tv Limited, the UK's second largest criminal Records Bureau ("CRB") umbrella organisation for up to £3m in November 2012.

·      Positive outlook for the year and beyond.

Note 1: the 2011 comparison figures for revenue and adjusted operating profit are restated in accordance with the prior period restatement as disclosed in both the 2012 Interim Report and the 2012 Annual Report and Accounts.

Note 2: adjusted operating profit means operating profits before share of associate investment result, share based payment charges, amortisation of acquired intangibles, acquisition related costs and reorganisation costs.

Richard Law, CEO, commented,"As online and cross-border trading continues to increase, we remain confident that there is a corresponding demand for our identity management services which are designed to "enable" online business and make it safe and easy for consumers and businesses. GB Group is meeting this demand through its existing range of excellent services and through the additional capability we have acquired as a result of four acquisitions successfully completed over the last 18 months. These are exciting times for GB Group and I believe that our prospects are positive."

For further information, please contact:

GB Group plc	01244 657333
Richard Law, Chief Executive
Dave Wilson, Finance Director
Peel Hunt LLP (Nominated Adviser and Broker)	020 7418 8900
Richard Kauffer
Daniel Harris
Newgate Threadneedle	020 7653 9850
Caroline Evans-Jones
Heather Armstrong

Website

www.gb.co.uk

Editors' Notes

Who is GB Group?

The most successful organisations recognise the value of understanding your individual identity - who you are, what you need and what you like. GB Group 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 four complementary Identity Management offerings:

·      ID Verification, which provides the ability to verify consumers' identities remotely, without the physical presentation of documentation, in order to combat ID fraud, money laundering and restrict access to under age content, purchases and gambling

·      ID Customer Registration, which includes software and services for quick and accurate customer registration and validation of records

·      ID Engagement Services, which provides database services so our clients can better understand, target and retain their customers and offers accurate and up-to-date identity information for their contact strategies 

·      ID Tracing Services, which provides the largest and most accurate picture of the UK's population and properties in order to locate and contact the right individual, first time

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® 

Financial Highlights

·     Solid trading performance for the six months to 30 September, in line with market expectations:

o  Revenue up 44% to £17.7 million (2011: £12.3 million);

o  Organic Revenue up 14% to £13.4 million (2011: £11.7 million);

o  Adjusted Operating Profit* up 57% to £1.50 million (2011: £0.95 million);

o  Adjusted Basic EPS† of 1.4p (2011: 1.1p);

·     Group cash balances up 22% to £5.8 million (2011: £4.8 million).

·     Deferred revenue balances of £4.9 million (2011: £2.4 million).  These balances represent revenue to be released to the Income Statement over contract terms in accordance with the Group's accounting policies.

·     Dividend increased 7.8% to 1.375p per share (2011: 1.275p per share).

Note^*: adjusted operating profit means profits before share of associate investment result, share based payment charges, amortisation of acquired intangibles, acquisition related costs and reorganisation costs.

Note^†: adjusted earnings per share is calculated before share of associate investment result, share based payment charges, amortisation of acquired intangibles, acquisition related costs and reorganisation costs.

Chairman's Statement

The Board reports that the Group has performed in line with market expectations with growth coming from both our organic activities and our acquired businesses.

These results include a full six months of trading for the acquired Data Discoveries, Advanced Checking Services (ACS) and Capscan businesses and whilst growth compared to the same period in 2011 has been mainly through acquisition, it is encouraging to note that year-on-year, organic revenue growth was 14%.

Results

The Group's DataAuthentication and the DataSolutions businesses generated revenue well ahead of last year by 26% and 60% respectively.

Group revenues for the period grew 44 per cent. to £17.7 million (2011: £12.3 million¹) with a 57 per cent. increase in adjusted operating profit² to £1.5 million (2011: £0.95 million¹).  This profit result is £0.1 million ahead of the trading update statement that the Company issued on 29 October 2012.

The Group continues to be highly cash generative with operating cash flow before working capital movements increasing by 52% to £1.5 million (2011: £1.0 million).  At 30 September 2012, the Group had cash balances of £5.8 million (2011: £4.2 million) after payment of £1.5 million in respect of the final dividend in August 2012.

Overall profit after the deduction of non-cash items and exceptional costs³ was £0.6 million (2011: £0.7 million).

Acquisition Activity

On 5 November 2012, GB Group announced the acquisition of TMG.tv Limited ("TMG CRB"), the UK's second largest Criminal Records Bureau ("CRB") umbrella organisation.  As previously announced, this acquisition will enable the Group to access the growing market for online CRB disclosure checks which is consistent with our core proposition of enabling organisations to connect, communicate and transact with individuals safely, responsibly and profitably. 

DataAuthentication

DataAuthentication provides the electronic ID verification component of GB Group's identity management offerings.  With the acquisition of TMG CRB, this division will also have the capability to serve the employee screening market, a growing business area in the UK. 

In a strong first half performance, DataAuthentication saw revenues grow by 26% to £7.3 million (2011: £5.8 million).

Good strategic progress has also been made in the half year with the addition of new country services for the identity verification of individuals from Argentina and China.  Further services for other countries are expected to be added before the end of the current financial year and we are investing in the development of our new international identity verification service, ID3 Global. 

DataSolutions

DataSolutions which provides identity-based marketing solutions (ID Customer Registration, ID Marketing Services and ID Tracing software and services), made good progress demonstrated by overall revenue growth of 60% to £10.5 million (2011: £6.5 million).

Outlook

Our products and services are successfully meeting the needs of our clients, helping them to develop profitable and robust relationships with their customers.

The further development of our identity management product and service portfolio, through the strategic addition of TMG CRB, now provides the Group with the capacity to address new markets and will provide our clients with the additional ability to make safer recruitment decisions more quickly and more efficiently.

We expect the strong performance to continue for the remainder of the year.  Looking further ahead, we are encouraged by the growth expected in our markets and believe we are well positioned to exploit this market expansion over the coming years.

Note 1: the 2011 comparison figures for revenue and adjusted operating profit are restated in accordance with the prior period restatement as disclosed in both the 2012 Interim Report and the 2012 Annual Report and Accounts.

Note 2: adjusted operating profit means operating profits before share of associate investment result, share based payment charges, amortisation of acquired intangibles, acquisition related costs and reorganisation costs.

Note 3: non-cash items are the amortisation of acquired intangible assets, share-based payment charges and the share of associate investment result.  Exceptional items are those costs associated with the rationalisation of acquired businesses together with fees related to acquisition activities.

Interim Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2012

	Note		Unaudited 6 months to 30 September		Restated unaudited 6 months to 30 September			Audited Year to 31 March
			2012		2011			2012
			£'000		£'000			£'000
Revenue			17,724		12,318			31,827
Cost of sales			(7,843)		(5,876)			(14,521)
Gross profit			9,881		6,442			17,306
Operating expenses before amortisation of acquired intangibles, share-based payments and exceptional items			(8,382)		(5,490)			(13,637)
Operating profit before amortisation of acquired intangibles, share-based payments and exceptional items			1,499		952			3,669
Amortisation of acquired intangibles			(393)		(22)			(358)
Share-based payments charge			(201)		(41)			(137)
Exceptional items	5		(266)		(170)			(676)
Share of associate investment result	12		(97)		-			24
Group operating profit			542		719			2,522
Finance revenue			1		17			18
Finance costs			(42)		-			(34)
Profit before tax			501		736			2,506
Income tax credit/(expense)	7		95		(16)			1,094
Profit for the period attributable to equity holders of the parent and total comprehensive income for the period			596		720			3,600
Earnings per share
- adjusted† basic earnings per share for the period			1.4p		1.1p			5.0p
- adjusted† diluted earnings per share for the period			1.4p		1.1p			4.9p
- basic earnings per share for the period	8		0.6p		0.8p			3.8p
- diluted earnings per share for the period	8		0.5p		0.8p			3.7p

 

Interim Consolidated Statement of Changes in Equity For the six months ended 30 September 2012

	Note		Equity share capital		Merger reserve		Capital redemption reserve		Retained earnings			Total equity
			£'000		£'000		£'000		£'000			£'000
Balance at 1 April 2011 (restated)			6,171		6,575		3		313			13,062
Profit for the period (restated)			-		-		-		720			720
Total comprehensive income for the period			-		-		-		720			720
Issue of share capital	15		154		-		-		-			154
Share-based payments charge			-		-		-		41			41
Equity dividend	9		-		-		-		(1,100)			(1,100)
Balance at 30 September 2011 (restated)			6,325		6,575		3		(26)			12,877
Profit for the period			-		-		-		2,880			2,880
Total comprehensive income for the period			-		-		-		2,880			2,880
Issue of share capital			8,270		-		-		-			8,270
Share issue costs			(250)		-		-		-			(250)
Share-based payments charge			-		-		-		96			96
Balance at 1 April 2012			14,345		6,575		3		2,950			23,873
Profit for the period			-		-		-		596			596
Total comprehensive income for the period			-		-		-		596			596
Issue of share capital	15		144		-		-		-			144
Share-based payments charge			-		-		-		201			201
Equity dividend	9		-		-		-		(1,487)			(1,487)
Balance at 30 September 2012			14,489		6,575		3		2,260			23,327

Interim Consolidated Balance Sheet

As at 30 September 2012

	Note		Unaudited As at 30 September		Restated unaudited As at 30 September		Audited As at 31 March
			2012		2011		2012
			£'000		£'000		£'000
ASSETS
Non-current assets
Property, plant and equipment	10		1,028		791		933
Intangible assets	11		19,891		7,915		20,045
Investments accounted for using the equity method	12		51		-		58
Deferred tax asset			2,206		1,200		2,206
			23,176		9,906		23,242
Current assets
Trade and other receivables			7,950		6,078		10,630
Cash and short-term deposits			5,824		4,238		4,757
			13,774		10,316		15,387
TOTAL ASSETS			36,950		20,222		38,629
EQUITY AND LIABILITIES
Capital and reserves
Equity share capital			14,489		6,325		14,345
Merger reserve			6,575		6,575		6,575
Capital redemption reserve			3		3		3
Retained earnings			2,260		(26)		2,950
Total equity attributable to equity holders of the parent			23,327		12,877		23,873
Non-current liabilities
Deferred consideration			571		124		571
Deferred tax liability			1,265		166		1,360
			1,836		290		1,931
Current liabilities
Trade and other payables			11,706		7,020		12,744
Current tax			81		35		81
			11,787		7,055		12,825
TOTAL LIABILITIES			13,623		7,345		14,756
TOTAL EQUITY AND LIABILITIES			36,950		20,222		38,629

Interim Consolidated Cash Flow Statement                                                                                                                                 For the six months ended 30 September 2012

	Note		Unaudited 6 months to 30 September 2012		Restated unaudited 6 months to 30 September 2011		Audited Year to 31 March 2012
			£'000		£'000		£'000
Group profit before tax			501		736		2,506
Adjustments to reconcile Group profit before tax to net cash flows
Share of associate investment result	12		97		-		(24)
Finance revenue			(1)		(17)		(18)
Finance costs			42		-		34
Depreciation of plant and equipment			230		179		376
Amortisation of intangible assets	11		404		32		377
Share-based payments			201		41		137
Decrease/(increase) in receivables			2,680		894		(2,299)
(Decrease)/increase in payables			(1,038)		(1,778)		2,527
Cash generated from operations			3,116		87		3,616
Income tax paid			-		-		(21)
Net cash generated from operating activities			3,116		87		3,595
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired	11		(119)		(920)		(11,581)
Investment in associates	12		(90)		-		-
Purchase of property, plant and equipment	10		(325)		(100)		(404)
Expenditure on product development	11		(131)		(8)		(19)
Interest received			1		17		18
Net cash flows from investing activities			(664)		(1,011)		(11,986)
Cash flows from financing activities
Finance costs			(42)		-		(34)
Proceeds from issue of shares	15		144		94		8,364
Share issue costs			-		-		(250)
Dividends paid to equity shareholders	9		(1,487)		(1,100)		(1,100)
Net cash flows from financing activities			(1,385)		(1,006)		6,980
Net increase/(decrease) in cash and cash equivalents			1,067		(1,930)		(1,411)
Cash and cash equivalents at the beginning of period			4,757		6,168		6,168
Cash and cash equivalents at the end of period			5,824		4,238		4,757

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 2012 were authorised for issue in accordance with a resolution of the directors on 26 November 2012.  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 2012 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 2012.  The financial information for the preceding year is based on the statutory accounts for the year ended 31 March 2012.  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 2012, 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 Accounting Standards (IAS / IFRS)		Adoption date
IAS 12	Amendment: Deferred Taxes: Recovery of Underlying Assets	1 January 2012
IFRS 1	Amendment: Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters	1 July 2011
IFRS 7	Amendment: Financial Instrument Disclosures - Enhanced Derecognition Disclosure Requirements	1 July 2011

Prior period restatements

As reported in the Group's annual financial statements for the year ended 31 March 2012, as a consequence of the acquisition of similar businesses during the 2012 year and cognisant of the evolving nature of accounting standards concerning revenue recognition, the Group took the opportunity to re-examine all revenue recognition policies throughout the Group and assess whether the applications of its policies were the most appropriate to take the enlarged business forward and to better align with the approach that future accounting standards are likely to take.  Consequently, the 30 September 2011 balance sheet along with the 2011 Interim Consolidated Statement of Comprehensive Income have been restated as a result of a reassessment of the most appropriate proportions of revenue that are spread over the contract duration for certain software licences where there is an online delivery component.  This following table shows the impact of this adjustment to the Consolidated Statement of Comprehensive Income and the Consolidated Balance Sheet:

	Consolidated Statement of Comprehensive Income				Consolidated Balance Sheet
	Revenue		Group operating profit		Trade and other payables		Net assets
	£'000		£'000		£'000		£'000
At 30 September 2011 - as reported	12,417		818		5,696		14,201
Revenue recognition adjustment	(99)		(9)		1,324		(1,324)
At 30 September 2011 - as restated	12,318		719		7,020		12,877

The impact on profit for the six months ended 30 September 2011 was a reduction of £99,000.  The impact on net assets at 30 September 2011 was a reduction of £1,324,000.

The impact on the 2011 basic and diluted earnings per share was a decrease of 0.1p and 0.1p per share respectively.

3.  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.

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; disaster recovery and business continuity; new product development; and intellectual property risk.  These risks and uncertainties facing our business were reported in detail in the 2012 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.  EXCEPTIONAL ITEMS

Exceptional costs of £266,000 in the six months ended 30 September 2012 included £154,000 of costs associated with staff reorganisations along with £112,000 of professional fees related to Company's acquisition related activities.

6.  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, tracing, 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 2012 represent Group head office costs (£364,000), exceptional costs (£266,000), Group finance income (£1,000), Group income tax (£95,000) and share-based payments charge (£201,000).  Unallocated items for the six months to 30 September 2011 represent Group head office costs (£260,000), exceptional costs (£170,000), amortisation of acquisition intangibles (£22,000), Group finance income (£17,000), Group income tax (£16,000) and share-based payments charge (£41,000).  Unallocated items for the year ended 31 March  2012 represent Group head office costs (£435,000), share of associate investment (£24,000), exceptional costs (£676,000), Group finance income (£18,000), Group finance costs (£34,000), Group income tax credit (£1,094,000) and share-based payments charge (£137,000).

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 2012
Six months ended 30 September 2012	£'000		£'000		£'000		£'000
Revenue	7,253		10,471		-		17,724
Operating profit before depreciation and amortisation	785		1,319		(630)		1,474
Depreciation of plant and equipment	(51)		(179)		-		(230)
Amortisation of intangible assets	(19)		(385)		-		(404)
Operating profit before finance revenue and income tax	715		755		(630)		840
Share of associate investment					(97)		(97)
Finance revenue					1		1
Finance costs					(42)		(42)
Share-based payments charge					(201)		(201)
Income tax credit					95		95
Profit for the period							596

	Data Authentication		Data Solutions		Unallocated		Total Unaudited 6 months to 30 September 2010
Six months ended 30 September 2011 (restated)	£'000		£'000		£'000		£'000
Revenue	5,779		6,539		-		12,318
Operating profit before depreciation and amortisation	529		872		(430)		971
Depreciation of plant and equipment	(34)		(123)		(22)		(179)
Amortisation of intangible assets	(7)		(25)		-		(32)
Operating profit before finance revenue and income tax	488		724		(452)		760
Finance revenue					17		17
Share-based payments charge					(41)		(41)
Income tax expense					(16)		(16)
Profit for the period							720

	Data Authentication		Data Solutions		Unallocated		Total Audited Year  to 31 March 2012
Year ended 31 March 2012	£'000		£'000		£'000		£'000
Total revenue	12,869		18,958		-		31,827
Operating profit before depreciation and amortisation	1,039		3,460		(1,111)		3,388
Depreciation of plant and equipment	(84)		(292)		-		(376)
Amortisation of intangible assets	(26		(351)				(377)
Operating profit before finance revenue and income tax	929		2,817		(1,111)		2,635
Share of associate investment					24		24
Finance revenue					18		18
Finance costs					(34)		(34)
Share-based payments credit					(137)		(137)
Income tax credit					1,094		1,094
Profit for the year							3,600

7.  TAXATION

Taxation on profit on ordinary activities

		Unaudited 6 months to 30 Sept 2012		Restated unaudited 6 months to 30 Sept 2011		Audited Year to 31 March 2012
		£'000		£'000		£'000
Current income tax:
UK corporation tax on profit		-		22		5
				22		5
Deferred tax:
Origination and reversal of temporary differences		(95)		(6)		(1,191)
Impact of change in tax rates		-		-		92
		(95)		(6)		(1,099)
Tax (credit)/charge in the Statement of Comprehensive Income		(95)		16		(1,094)

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.

Unaudited 6 months to 30 September 2012

Restated unaudited 6 months to 30 September 2011

Audited Year to 31 March 2012

pence per share

£'000

pence per share

£'000

pence per share

£'000

Profit attributable to equity holders of the parent

0.6

596

0.8

720

3.8

3,600

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 2012

Restated unaudited 6 months to 30 September 2011

Audited Year to 31 March 2012

pence per share

£'000

pence per share

£'000

pence per share

£'000

Profit attributable to equity holders of the parent

0.5

596

0.8

720

3.7

3,600

		30 Sept 2012		30 Sept 2011		31 March 2012
		No.		No.		No.
Basic weighted average number of shares in issue		108,137,511		86,372,174		94,741,029
Dilutive effect of share options		5,366,956		3,601,640		2,767,829
Diluted weighted average number of shares in issue		113,504,467		89,973,814		97,508,858

9.  DIVIDENDS PAID AND PROPOSED

		Unaudited 6 months to 30 Sept 2012		Unaudited 6 months to 30 Sept 2011		Audited Year to 31 March 2012
		£'000		£'000		£'000
Declared and paid during the period
Final dividend for 2012: 1.375p per share (2011: 1.275p per share)		1,487		1,100		1,100
Proposed for approval at AGM (not recognised as a liability at 31 March 2012)
Final dividend for 2012: 1.375p per share		-		-		1,484

 

10.  PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 September 2012, the Group acquired property, plant and equipment with a cost of £325,000 (2011: £100,000).

Depreciation provided during the six months ended 30 September 2012 was £230,000 (2011: £179,000).

No disposals were made in the six months ended 30 September 2012 (2011: £nil).

11.  INTANGIBLE ASSETS

Group	Customer relationships £'000		Other acquisition intangibles £'000		Total acquisition intangibles £'000		Goodwill £'000		Internally developed software £'000		Total £'000
Cost
At 1 April 2011	-		-		-		6,506		445		6,951
Additions - business combinations	505		155		660		572		-		1,232
Additions - product development	-		-		-		-		8		8
At 30 September 2011	505		155		660		7,078		453		8,191
Additions - business combinations	4,785		579		5,364		7,100		-		12,464
Additions - product development	-		-		-		-		11		11
At 31 March 2012	5,290		734		6,024		14,178		464		20,666
Additions - business combinations	-		-		-		119		-		119
Additions - product development	-		-		-		-		131		131
At 30 September 2012	5,290		734		6,024		14,297		595		20,916
Amortisation and impairment
At 1 April 2011	-		-		-		-		244		244
Amortisation during the period	13		9		22		-		10		32
At 30 September 2011	13		9		22		-		254		276
Amortisation during the period	225		111		336		-		9		345
At 31 March 2012	238		120		358		-		263		621
Amortisation during the period	264		129		393		-		11		404
At 30 September 2012	502		249		751		-		274		1,025
Net book value
At 30 September 2012	4,788		485		5,273		14,297		321		19,891
At 31 March 2012	5,052		614		5,666		14,178		201		20,045
At 30 September 2011	492		146		638		7,078		199		7,915

Goodwill arose on the acquisition of GB Mailing Systems Limited, e-Ware Interactive Limited, Data Discoveries Holdings Limited, Advanced Checking Services Limited and Capscan Parent Limited.  During the six months ended 30 September 2012, additional consideration of £119,000 was made relating to the acquisition of Capscan Parent Limited, resulting in an increase in goodwill.  Under IFRS, goodwill is no longer amortised and is annually tested for impairment.

12.  INVESTMENTS IN ASSOCIATES

Following an additional investment made on 3 April 2012, the Group has a 25.53% interest in Loqate Inc., a private company which develops international addressing solutions, based in the USA.  The associated undertaking is accounted for using the equity method.

The following table illustrates summarised financial information of the Group's investment in Loqate Inc:

		30 Sept 2012		30 Sept 2011		31 March 2012
		£'000		£'000		£'000
Opening investment value		58		-		-
Acquired on the acquisition of subsidiaries		-		-		34
Additional investment in the associate		90
Gain on dilution of investment		-		-		88
Share of loss for the period		(97)		-		(64)
Closing investment value		51		-		58

13.  SHARE-BASED PAYMENTS

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 months ended 30 September 2012, 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 A		27 June 2012		141,090		68.75p
Executive Share Option Scheme - Section B		27 June 2012		378,910		68.75p
Executive Share Matching Plan		12 July 2012		1,162,343		2.50p

The charge recognised from equity-settled share-based payments in respect of employee services received during the period was £201,000 (2011: £41,000).

14.  RELATED PARTY TRANSACTIONS

During the period, the Group entered into transactions, in the ordinary course of business, with related parties.  Transactions entered into and trading balances outstanding at 30 September are as follows:

Group		Sales to related parties		Purchases from related parties		Net amounts owed to related parties
		£'000		£'000		£'000
Associates:
2012		-		12		-
2011		-		-		-
Directors (see below):
2012		-		15		-
2011		-		12		-

The Chairman of the Company undertakes some general and operational consultancy for the business outside of his directorship remit through his consultancy business Rasche Consulting Limited. 

Terms and conditions of transactions with related parties

Sales and balances between related parties are made at normal market prices.  Outstanding balances with entities other than subsidiaries are unsecured, interest free and cash settlement is expected within 30 days of invoice.  Terms and conditions for transactions with subsidiaries are the same, with the exception that balances are placed on intercompany accounts with no specified credit period.  During the year ended 30 September 2012, the Group has not made any provision for doubtful debts relating to amounts owed by related parties (2011: nil).

Compensation of key management personnel (including directors)

		Unaudited 6 months to 30 Sept 2012		Unaudited 6 months to 30 Sept 2011		Audited Year to 31 March 2012
		£'000		£'000		£'000
Short-term employee benefits		276		247		904
Post-employment benefits		30		28		56
Share-based payments		530		-		387
		836		275		1,347

15.  SHARE CAPITAL

During the period 499,038 (2011: 318,920) ordinary shares of 2.5p were allotted on the exercise of share options for an aggregate cash consideration of £144,000 (2011: £154,000).

16.  POST BALANCE SHEET EVENTS

On 5 November 2012, the Group announced that it had conditionally agreed to acquire the entire share capital of TMG.tv Limited.  This acquisition is for a gross consideration of approximately £3.0 million, which net of estimated completion cash acquired equates to £2.3 million with the initial consideration being subject to adjustment by reference to completion accounts.

As part of the share sale and purchase agreement, a further amount of up to a maximum of £0.75 million has been agreed.  There will be an additional contingent cash payment due to the previous owners of TMG at 30 June 2015.  This payment is subject to certain future revenue targets being met.

As the completion accounts are yet to be finalised, no information has been disclosed at this time on the fair value of assets and liabilities acquired and goodwill arising.

Further details of the acquisition are set out in a separate regulatory announcement released on 5 November 2012.

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 2012 which comprises the 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 16. 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 the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group 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 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Ernst & Young LLP

Manchester

26 November 2012

 

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