Half Yearly Report

RNS Number : 4626H

GB Group PLC

01 December 2015

 



Embargoed until 7.00 a.m.

1st December 2015

GB GROUP PLC

("GBG" or the "Group")

Half Yearly Report

GB Group plc (AIM: GBG), the global identity data intelligence specialist, announces its unaudited results for the six months ended 30 September 2015.

Financial Highlights

·      Strong trading performance for the six months to 30 September:

o  Revenue up 39% to £32.4 million (2014: £23.2 million)

o  Adjusted operating profits^† increased by 21% to £4.5 million (2014: £3.7 million)

o  Adjusted basic earnings per share^‡ of 3.4p (2014: 3.3p)

o  18% increase in overall organic revenue growth (2014: 13%)

o  Both segments of the Group, Identity Proofing and Identity Solutions, contributing to revenue growth

o  32% increase in profit after tax to £2.3 million (2014: £1.7 million)

·      The Group has had a good start to the year and anticipates delivering full year results in line with market expectations.

·      Highly cash generative with net cash from operating activities increasing by 61% to £5.7 million (2014: £3.5 million).

·      Net cash balances^†† of £1.2 million (2014: £8.6 million) after payments for dividends, the acquisition of Loqate and an earn-out relating to DecTech.

Operational Highlights

·      Our acquisition strategy, to create truly international services and to support GBG's customers globally, continued with the successful acquisition of Loqate Inc. completed in April 2015. DecTech, based in Melbourne and acquired in April 2014, continues to perform strongly.

·      Excellent progress in growing revenues from international clients who now account for 26% of GBG's business with a number of major financial services sector contract wins in the Asia Pacific region secured in the first half.

·      GBG products and services have the ability to conduct KYC (Know Your Customer) checks for 40 countries (2014: 31).

·      New banking facility arrangements agreed with Barclays and Lloyds to support future acquisition and growth activities.

Richard Law, CEO, commented,

"The Group continues to perform well and this reflects our focus on delivering the Group's Vision, Objectives and Strategies (VOS).  As we build upon our market-leading position and the strong differentiation we have against our competitors, I expect this progressive trend of profitable growth to continue."

Notes:

^†Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payments, exceptional items, share of associate investment result, interest and tax.

^†† Net cash means cash and short-term deposits less borrowings.

^‡ 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.  In prior periods the Group reported adjusted earnings per share on a pre-tax basis and the comparative numbers have been restated to take in account the change to a post-tax basis.

For further information, please contact:

GBG Richard Law, Chief Executive Dave Wilson, Group Finance Director & Operations Director	01244 657333
Peel Hunt LLP (Nominated Adviser and Broker) Richard Kauffer	020 7418 8900
Newgate Andrew Jones Bob Huxford	020 7653 9850
Website	www.gbgplc.com

About GBG

GBG is a global specialist in Identity Data Intelligence. We help organisations make decisions about the customers they serve and the people they employ.

Through our fundamental belief that the digital economy relies on everyone having access to data they can trust, GBG enables companies and governments to fight fraud and •crime, to improve the customer experience and help to protect the more vulnerable people in our society.

Headquartered in Chester (UK) and with 18 offices across the world, GBG provides solutions to many of the world's biggest organisations, from established brands like Nike and Harrods to disruptive newcomers such as Taskrabbit and Stripe.

Find out more about how we use identity data intelligently by visiting www.gbgplc.com and following us on Twitter: @gbgplc

About GBG's solutions

We provide a number of business solutions aimed at informing decisions about customers or employees in key areas:

Employing people - we provide thorough background checks through the online verification of individuals and key documents such as a driver's licence, enabling organisations to safeguard, recruit and engage with confidence. 

Registering identities - GBG solutions facilitate the registration of identity data, such as name and address, contact information and social network IDs, quickly and with minimum impact on the customer experience.

Verifying identities - we provide more innovative ways of confirming identity than simply relying on credit data. Our solutions check the identities of more than 4 billion people worldwide and also verify citizens of the world's largest economies to the rigorous standards set by the world's financial regulators.

Building relationships - we work collaboratively with clients to make sure they use the data their customers share with them to create personalised customer journeys for each individual, responding to every interaction in real time.

Fighting fraud - our fraud prevention solutions not only check new customer details in real time as they register but monitor and detect application and transaction fraud on an ongoing basis.

Locating people - voted 'Most Innovative Online Product' at the 2015 UK Retail Fraud Awards, GBG technology confirms and locates the people our clients need to connect with. It saves valuable time and resource and ensures that good customers don't incur the cost of inefficient processes.

GBG is listed on the London Stock Exchange (GBG). For more information visit www.gbgplc.com

CHAIRMAN'S STATEMENT

I am pleased to report that GBG has delivered another strong performance in the first half of the year.  Revenue has grown year-on-year by 39% and pleasingly almost half of this increase (18%) came from organic growth.  We also saw improved adjusted operating profit, up by 21% on last year after investing circa £1.3 million in our product and business development capabilities.

I recently joined the Chief Executive when we visited some of GBG's offices in the Asia Pacific region as well as the West Coast of the USA.  During these visits I met with our team members at leadership and operational levels and it is clear from these meetings that the Group is extremely well-positioned to take advantage of growth opportunities in our markets. 

Our continuing commitment to the development of our product portfolio has clear attractions to our clients.  This provides us with a competitive advantage enabling us to grow sales and secure market share.  One of GBG's strongest differentiators is the international nature of our services which access data from some of the largest and most reputable data owners across 40 countries (2014: 31).

The global impact of cybercrime and financial fraud means that businesses and governments need to make increasing investment in technology, software and compliance solutions to match these major threats. This environment offers exciting international opportunities for our data intelligence and fraud prevention solutions and should provide rewarding growth for the Group. 

Results

The Group's performance in the first half year is in line with the guidance given in the pre-close trading update statement issued in October 2015.  Group revenues increased to £32.4 million (2014: £23.2 million) and our adjusted operating profits^† increased to £4.5 million (2014: £3.7 million).

GBG continues to be highly cash generative with net cash from operating activities increasing by 61% to £5.7 million (2014: £3.5 million).  At 30 September 2015, the Group had net cash balances of £1.2 million (2014: £8.6 million) after payments for dividends, the acquisition of Loqate and an earn-out relating to DecTech.

We have made excellent progress in growing our revenues from international clients who now account for 26% of GBG's business.  It is also encouraging that we have secured a number of important contract wins in the Asia Pacific region including: Bank of New Zealand; Maybank (Malaysia's largest bank); and Ping An Puhui, China's largest consumer lender.

Identity Proofing (IDP)

The Identity Proofing business, which provides the Group's global fraud, risk, compliance, ID verification solutions and employee background checking solutions, continued to make good strategic progress and grew revenues by 36% to £15.4 million (2014: £11.3 million).

GBG's identity verification service for the UK Government's identity assurance scheme, GOV.UK Verify, is expected to be launched early in the fourth quarter of our financial year through our own brand CitizenSafe® and also through our collaboration with Royal Mail on its solution for the same project.

Identity Solutions (IDS)

The Identity Solutions business, which provides domestic and international registration, tracing and engagement solutions also performed well in the first half, seeing revenues grow by 43% to £17.0 million (2014: £11.9 million).

Value Enhancing Acquisition Strategy

Our acquisition strategy is an important factor for the Group's future growth.  The Loqate and DecTech transactions have enabled us to acquire the product capability and geographical presence needed to create truly international services and to support our customers globally. Our latest acquisition of San Francisco based Loqate, completed in April 2015, provides specialist location intelligence services. A good strategic fit, it offers exciting opportunities in the US market and internationally through its high quality distribution partners such as IBM and Oracle. DecTech, acquired in April 2014, our Melbourne-based provider of anti-fraud solutions, continues to perform strongly and has now become GBG's platform for expansion in Asia.  

We continue to seek further strategic acquisitions that can help develop our markets and enhance our product portfolio. To this end, in November we agreed new banking facility arrangements with Barclays Bank PLC and Lloyds Bank PLC.  This comprises a £50 million revolving credit facility (incorporating a £20 million accordion option) and an AUS$7.4 million term loan facility which replaces the existing loan.

Outlook

Our progress to date supports the strategic platform of our international expansion and  demonstrates our credentials of investing in attractive growth areas organically and through acquisition.  This will strengthen our market-leading position and build shareholder value.

We have had a good start to the year and we anticipate delivering full year results in line with market expectations.

On behalf of the Board I would like to thank the Group's leadership team and employees for their accomplishments.

David Rasche

Chairman

^† Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payments, exceptional items, share of associate investment result, interest and tax.

^†† Net cash means cash and short-term deposits less borrowings.

Interim Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2015

		Note		Unaudited 6 months to 30 September		Unaudited 6 months to 30 September			Audited Year to 31 March
				2015		2014			2015
				£'000		£'000			£'000
	Revenue			32,368		23,232			57,283
	Cost of sales			(7,813)		(6,809)			(16,448)
	Gross profit			24,555		16,423			40,835
	Operating expenses before amortisation of acquired intangibles, share-based payments and exceptional items			(20,065)		(12,695)			(30,079)
	Other operating income			46		22			34
	Operating profit before amortisation of acquired intangibles, share-based payments, exceptional items and share of associate investment result (adjusted operating profit)			4,536		3,750			10,790
	Amortisation of acquired intangibles	11		(1,254)		(968)			(1,986)
	Share-based payments charge	13		(582)		(443)			(971)
	Exceptional items	5		(21)		(809)			(1,629)
	Share of associate investment result	12		-		(10)			(10)
	Group operating profit			2,679		1,520			6,194
	Finance revenue			8		13			25
	Finance costs			(117)		(145)			(291)
	Profit before tax			2,570		1,388			5,928
	Income tax (expense)/credit	7		(311)		323			(1,127)
	Profit for the period attributable to equity holders of the parent			2,259		1,711			4,801
	Other comprehensive income:
	Exchange differences on retranslation of foreign operations (net of tax)*			(1,257)		(203)			(684)
	Total comprehensive income for the period attributable to equity holders of the parent			1,002		1,508			4,117
	Earnings per share
	- adjusted basic earnings per share for the period	8		3.4p		3.3p			7.9p
	- basic earnings per share for the period	8		1.8p		1.5p			4.0p
	- diluted earnings per share for the period	8		1.8p		1.4p			3.9p
	* Upon a disposal of a foreign operation, this would be recycled to the Income Statement
Interim Consolidated Statement of Changes in Equity           For the six months ended 30 September 2015

	Note		Equity share capital		Merger reserve		Capital redemption reserve		Foreign currency translation reserve		Retained earnings			Total shareholders equity
			£'000		£'000		£'000		£'000		£'000			£'000
Balance at 1 April 2014 (audited)			14,964		6,575		3		-		9,291			30,833
Profit for the period			-		-		-		-		1,711			1,711
Other comprehensive income									(203)		-			(203)
Total comprehensive income for the period			-		-		-		(203)		1,711			1,508
Issue of share capital	16		11,224		-		-		-		-			11,224
Share issue costs	16		(330)		-		-		-		-			(330)
Share-based payments charge	13		-		-		-		-		443			443
Deferred tax on share options			-		-		-		-		491			491
Equity dividend	9		-		-		-		-		(1,955)			(1,955)
Balance at 30 September 2014 (unaudited)			25,858		6,575		3		(203)		9,981			42,214
Profit for the period			-		-		-		-		3,090			3,090
Other comprehensive income			-		-		-		(481)		-			(481)
Total comprehensive income for the period			-		-		-		(481)		3,090			2,609
Issue of share capital			560		-		-		-		-			560
Share-based payments charge			-		-		-		-		528			528
Deferred tax on share options			-		-		-		-		223			223
Balance at 1 April 2015 (audited)			26,418		6,575		3		(684)		13,822			46,134
Profit for the period			-		-		-		-		2,259			2,259
Other comprehensive income			-		-		-		(1,257)		-			(1,257)
Total comprehensive income for the period			-		-		-		(1,257)		2,259			1,002
Issue of share capital	16		412		-		-		-		-			412
Share-based payments charge	13		-		-		-		-		582			582
Deferred tax on share options			-		-		-		-		371			371
Equity dividend	9		-		-		-		-		(2,277)			(2,277)
Balance at 30 September 2015 (unaudited)			26,830		6,575		3		(1,941)		14,757			46,224

Interim Consolidated Balance Sheet

As at 30 September 2015

	Note		Unaudited As at 30 September		Unaudited As at 30 September		Audited As at 31 March
			2015		2014		2015
			£'000		£'000		£'000
ASSETS
Non-current assets
Property, plant and equipment	10		2,900		2,630		2,829
Intangible assets	11		51,885		43,380		45,296
Investments accounted for using the equity method	12		-		-		-
Deferred tax asset			2,891		2,952		3,113
			57,676		48,962		51,238
Current assets
Trade and other receivables			17,109		12,092		17,408
Cash and short-term deposits			4,806		13,604		15,778
			21,915		25,696		33,186
TOTAL ASSETS			79,591		74,658		84,424
EQUITY AND LIABILITIES
Capital and reserves
Equity share capital			26,830		25,858		26,418
Merger reserve			6,575		6,575		6,575
Capital redemption reserve			3		3		3
Foreign currency translation reserve			(1,941)		(203)		(684)
Retained earnings			14,757		9,981		13,822
Total equity attributable to equity holders of the parent			46,224		42,214		46,134
Non-current liabilities
Loans	14		2,958		4,221		3,643
Provisions			-		33		-
Contingent consideration	18		-		886		895
Deferred tax liability			3,522		3,146		2,968
			6,480		8,286		7,506
Current liabilities
Loans	14		675		785		746
Trade and other payables			24,045		17,875		23,984
Contingent consideration	18		1,850		4,749		5,733
Provisions			39		388		48
Current tax			278		361		273
			26,887		24,158		30,784
TOTAL LIABILITIES			33,367		32,444		38,290
TOTAL EQUITY AND LIABILITIES			79,591		74,658		84,424
Interim Consolidated Cash Flow Statement                                                                      For the six months ended 30 September 2015

		Note		Unaudited 6 months to 30 September 2015		Unaudited 6 months to 30 September 2014		Audited Year to 31 March 2015
				£'000		£'000		£'000
Group profit before tax				2,570		1,388		5,928
Adjustments to reconcile Group profit before tax to net cash flows
Share of associate investment result		12		-		10		10
Finance revenue				(8)		(13)		(25)
Finance costs				115		145		291
Depreciation of plant and equipment		10		543		339		873
Amortisation/impairment of intangible assets		11		1,348		1,057		2,167
Loss on disposal of fixed assets				-		57		55
Fair value adjustment on contingent consideration		5		148		268		403
Fair value gain on revaluation of associate investment		5		(247)		-		-
Share-based payments		13		582		443		971
(Decrease)/increase in provisions				(9)		106		(267)
Decrease/(increase) in receivables				3,864		804		(2,852)
(Decrease)/increase in payables				(3,255)		(1,093)		4,130
Cash generated from operations				5,651		3,511		11,684
Income tax received/(paid)				9		-		(337)
Net cash generated from operating activities				5,660		3,511		11,347
Cash flows used in investing activities
Acquisition of subsidiaries, net of cash acquired		17		(13,058)		(14,084)		(18,672)
Investment in associates		12		-		-		-
Purchase of property, plant and equipment		10		(548)		(1,451)		(1,961)
Proceeds from disposal of plant and equipment				-		11		13
Expenditure on product development		11		(421)		(42)		(63)
Interest received				8		13		25
Net cash flows used in investing activities				(14,019)		(15,553)		(20,658)
Cash flows from/(used in) financing activities
Finance costs				(115)		(145)		(291)
Proceeds from issue of shares		16		412		11,224		11,284
Share issue costs		16		-		(330)		(330)
Proceeds from new borrowings		14		-		5,487		5,487
Repayment of borrowings		14		(351)		(401)		(781)
Dividends paid to equity shareholders		9		(2,277)		(1,955)		(1,955)
Net cash flows from/(used in) financing activities				(2,331)		13,880		13,414
Net increase/(decrease) in cash and cash equivalents				(10,690)		1,838		4,103
Effect of exchange rates on cash and cash equivalents				(282)		(80)		(171)
Cash and cash equivalents at the beginning of period				15,778		11,846		11,846
Cash and cash equivalents at the end of period				4,806		13,604		15,778
	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 2015 were authorised for issue in accordance with a resolution of the directors on 1 December 2015.  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 2015 have been prepared in accordance with IAS 34 Interim Financial Reporting.  The annual financial statements of the company are prepared in accordance with IFRSs as adopted by the European Union.

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

After making appropriate enquiries, 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 report.

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 2015.  The financial information for the preceding year is based on the statutory financial statements for the year ended 31 March 2015.  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 Group applies IFRS 3: Business Combinations and as a consequence of the acquisition of the remaining 73.3% of shares in Loqate, the area of the standard applicable to business combinations achieved in stages became relevant to the Group.  If the business combination is achieved in stages, the acquisition date fair value of the Group's previously held investment in the acquiree is remeasured to fair value at the acquisition date with any resultant gain or loss recognised through profit or loss.

The other 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 2015, 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)		EU Adoption date
IAS 19	Defined Benefit Plans: Employee Contributions - Amendments to IAS 19	1 February 2015
Various	Annual Improvements to IFRS - 2010-2012 Cycle	1 February 2015
Various	Annual Improvements to IFRS - 2011-2013 Cycle	1 January 2015

Notes to the Interim Report

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 2015 Annual Report and Accounts and all of them are monitored closely by the Group.  Following the acquisition of Loqate Inc., based in the USA, the Group has an increased exposure to currency translation and transaction risks and these risks are monitored closely by the Group.

The Group's accounting policy on the acquisition of subsidiaries is to allocate purchase consideration to the fair value of identifiable assets and liabilities with any excess consideration representing goodwill.  Determining the fair value of assets and liabilities acquired requires significant estimates and assumptions.  The determination of these fair values is based upon management's judgement and includes assumptions on the economic lives of intangible assets, the timing and amount of future cash flows generated by the assets and the selection of appropriate discount rates.

5.  EXCEPTIONAL ITEMS

		Unaudited 6 months to 30 Sept 2015		Unaudited 6  months to 30 Sept 2014		Audited Year to 31 March 2015
		£'000		£'000		£'000
Fair value adjustments to contingent consideration		148		18		403
Fair value gain on revaluation of investment in associate (note 12)		(247)		-		-
Acquisition related costs		120		248		452
Costs associated with staff reorganisations		-		119		331
Provision for dilapidation obligations on the relocation of the Group head office		-		138		138
Costs associated with the relocation of Group head office		-		286		305
		21		809		1,629

Fair value adjustments to contingent consideration in the six months to 30 September 2015 include a £42,000 downwards adjustment relating to contingent purchase price adjustment relating to Loqate (note 18) along with a £190,000 charge relating to the partial unwinding of discounting relating to the contingent consideration on the acquisition of DecTech Solutions Pty Ltd and CDMS Limited (Note 18).  This charge arises because contingent consideration due to be paid at a future date is discounted for the time value of money at the point of initial recognition and over the passage of time, this discount unwinds within the Consolidated Statement of Comprehensive Income.  These are non-cash items.

An exceptional fair value gain of £247,000 has been recognised as a consequence of the Group revaluing its previously held equity stake in Loqate at the date of its acquisition of the remaining 73.3% of shares in accordance with IFRS 3.  This is a non-cash item.

Notes to the Interim Report

6.  SEGMENTAL INFORMATION

The Group's operating segments are internally reported to the Group's Chief Executive Officer as two operating segments: Identity Proofing Division- which provides ID Verification and ID Employ & Comply services and Identity Solutions Division - which provides ID Registration, ID Engagement and ID Trace & Investigate services.  The measure of performance of those segments that is reported to the Group's Chief Executive Officer is adjusted operating profit before amortisation of acquired intangibles as shown below.

Segment results include items directly attributable to either Identity Proofing or Identity Solutions.

Unallocated items for the six months to 30 September 2015 represent Group head office costs £492,000 (2014: £357,000), share of associate investment result £nil (2014: £10,000), exceptional items £21,000 (2014: £809,000), Group finance income £8,000 (2014: £13,000), Group finance costs £117,000 (2014: £145,000), Group income tax expense £311,000 (2014: £323,000 credit) and share-based payments charge £582,000 (2014: £443,000).  Unallocated items for the year ended 31 March 2015 represent Group head office costs £591,000, share of associate investment result £10,000, exceptional costs £1,629,000, Group finance income £25,000, Group finance costs £291,000, Group income tax charge £1,127,000 and share-based payments charge £971,000.

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

Loqate, which was acquired during the period, is reported within the Identity Solutions Division.

	Identity Proofing		Identity Solutions		Unallocated		Total Unaudited 6 months to 30 September 2015
Six months ended 30 September 2015	£'000		£'000		£'000		£'000
Total revenue	15,423		16,945		-		32,368
Adjusted operating profit	3,219		1,809		(492)		4,536
Amortisation of acquired intangibles	(545)		(709)		-		(1,254)
Share-based payments charge	-		-		(582)		(582)
Exceptional items	-		-		(21)		(21)
Operating profit	2,674		1,100		(1,095)		2,679
Finance revenue							8
Finance costs							(117)
Income tax charge							(311)
Profit for the period							2,259

	Identity Proofing		Identity Solutions		Unallocated		Total Unaudited 6 months to 30 September 2014
Six months ended 30 September 2014	£'000		£'000		£'000		£'000
Total revenue	11,346		11,886		-		23,232
Adjusted operating profit	2,049		2,058		(357)		3,750
Amortisation of acquired intangibles	(605)		(363)		-		(968)
Share-based payments charge	-		-		(443)		(443)
Exceptional items	-		-		(809)		(809)
Share of associate investment result	-		-		(10)		(10)
Operating profit	1,444		1,695		(1,619)		1,520
Finance revenue							13
Finance costs							(145)
Income tax credit							323
Profit for the period							1,711

Notes to the Interim Report

6.  SEGMENTAL INFORMATION (continued)

	Identity Proofing		Identity Solutions		Unallocated		Total Audited Year to 31 March 2015
Year ended 31 March 2015	£'000		£'000		£'000		£'000
Total revenue	25,167		32,116		-		57,283
Adjusted operating profit	4,304		7,077		(591)		10,790
Amortisation of acquired intangibles	(1,097)		(889)		-		(1,986)
Share-based payments charge	-		-		(971)		(971)
Exceptional items	-		-		(1,629)		(1,629)
Share of associate investment result	-		-		(10)		(10)
Operating profit	3,207		6,188		(3,201)		6,194
Finance revenue							25
Finance costs							(291)
Income tax charge							(1,127)
Profit for the year							4,801

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 2016.

Notes to the Interim Report

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 2015

Unaudited 6 months to 30 September 2014

Audited Year to 31 March 2015

pence per share

£'000

pence per share

£'000

pence per share

£'000

Profit attributable to equity holders of the parent

1.8

2,259

1.5

1,711

4.0

4,801

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 2015

Unaudited 6 months to 30 September 2014

Audited Year to 31 March 2015

pence per share

£'000

pence per share

£'000

pence per share

£'000

Profit attributable to equity holders of the parent

1.8

2,259

1.4

1,711

3.9

4,801

		30 Sept 2015		30 Sept 2014			31 March 2015
		No.		No.			No.
Basic weighted average number of shares in issue		122,121,920		117,676,223				119,144,442
Dilutive effect of share options		4,127,693		5,491,132				5,395,880
Diluted weighted average number of shares in issue		126,249,613		123,167,355				124,540,322

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.  In prior periods the Group reported adjusted earnings per share on a pre-tax basis and the comparative numbers below have been restated to take in account the change to a post-tax basis.

		Unaudited 6 months to 30 September 2015				Unaudited 6 months to 30 September 2014				Audited Year to 31 March 2015
		pence per share		£'000		pence per share		£'000		pence per share		£'000
Adjusted operating profit		3.7		4,536		3.2		3,750		9.1		10,790
Less net finance costs		(0.1)		(109)		(0.1)		(132)		(0.3)		(266)
Less tax		(0.2)		(311)		0.2		323		(0.9)		(1,127)
Adjusted earnings		3.4		4,116		3.3		3,941		7.9		9,397

Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payments, exceptional items, share of associate investment result, interest and tax.

Notes to the Interim Report

9.  DIVIDENDS PAID AND PROPOSED

		Unaudited 6 months to 30 Sept 2015		Unaudited 6  months to 30 Sept 2014		Audited Year to 31 March 2015
		£'000		£'000		£'000
Declared and paid during the period
Final dividend for 2015: 1.85p per share (2014: 1.65p per share)		2,277		1,955		1,955
Proposed for approval at AGM (not recognised as a liability at 31 March 2015)
Final dividend for 2015: 1.85p per share		-		-		2,234

10.  PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 September 2015, the Group acquired property, plant and equipment with a cost of £548,000 (2014: £1,451,000).

Property, plant and equipment with a fair value of £73,000 was acquired with the acquisition of Loqate Inc. (see note 17).

Depreciation provided during the six months ended 30 September 2015 was £543,000 (2014: £339,000).

No disposals were made in the six months ended 30 September 2015 (2014: £69,000).

Notes to the Interim Report

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 2014	7,237		1,311		8,548		16,542		1,041		26,131
Additions - business combinations	5,059		2,162		7,221		14,184		-		21,405
Additions - product development	-		-		-		-		42		42
Foreign exchange adjustments	(82)		(35)		(117)		(231)		-		(348)
At 30 September 2014	12,214		3,438		15,652		30,495		1,083		47,230
Additions - business combinations	2,816		420		3,236		700		-		3,936
Additions - product development	-		-		-		-		21		21
Foreign exchange adjustments	(191)		(72)		(263)		(690)		-		(953)
At 31 March 2015	14,839		3,786		18,625		30,505		1,104		50,234
Additions - business combinations	1,912		819		2,731		6,623		20		9,374
Additions - product development	-		-		-		-		421		421
Foreign exchange adjustments	(404)		(162)		(566)		(1,364)		(2)		(1,932)
At 30 September 2015	16,347		4,443		20,790		35,764		1,543		58,097
Amortisation and impairment
At 1 April 2014	1,514		843		2,357		-		445		2,802
Foreign exchange adjustments	(5)		(4)		(9)		-		-		(9)
Amortisation during the period	574		394		968		-		89		1,057
At 30 September 2014	2,083		1,233		3,316		-		534		3,850
Foreign exchange adjustments	(12)		(10)		(22)		-		-		(22)
Amortisation during the period	683		335		1,018		-		92		1,110
At 31 March 2015	2,754		1,558		4,312		-		626		4,938
Foreign exchange adjustments	(41)		(33)		(74)		-		-		(74)
Amortisation during the period	808		446		1,254		-		94		1,348
At 30 September 2015	3,521		1,971		5,492		-		720		6,212
Net book value
At 30 September 2015	12,826		2,472		15,298		35,764		823		51,885
At 31 March 2015	12,085		2,228		14,313		30,505		478		45,296
At 30 September 2014	10,131		2,205		12,336		30,495		549		43,380

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 and Loqate Inc..  Under IFRS, goodwill is annually tested for impairment.

Notes to the Interim Report

12.  INVESTMENTS IN ASSOCIATES

The Group had a 26.7% interest in Loqate Inc., a private company based in the USA which develops international addressing solutions, geocoding solutions and location based services which are used in the Group's portfolio of products and services.  The associated undertaking was accounted for using the equity method.  On 27 April 2015, the Group acquired the remaining 73.3% of the shares in Loqate Inc. and its performance is included in the consolidated financial statements since that date.

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

		Unaudited 30 Sept 2015		Unaudited 30 Sept 2014		Audited 31 March 2015
		£'000		£'000		£'000
Opening investment value		-		10		10
Additional investment in the associate		-		-		-
Share of loss for the period		-		(10)		(10)
Closing investment value		-		-		-

At the acquisition date of the remaining 73.3% of shares in Loqate, the Group revalued its previously held equity stake in Loqate at its acquisition-date fair value in accordance with IFRS 3.  The resulting gain of £247,000 has been recognised in the Consolidated Statement of Comprehensive Income.

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 2015, the following share options were granted to executive directors, managers and staff of the Company.

Scheme	Date	No. of options		Exercise price		Fair value
Executive Share Matching Plan	5 July 2015	782,611		2.5p		204.87p
Executive Share Options	3 July 2015	50,000		209.0p		52.52p
Save As You Earn Options - 3 Year	20 July 2015	364,354		163.0p		58.19p
Save As You Earn Options - 5 Year	20 July 2015	235,199		163.0p		65.90p

The charge recognised from equity-settled share-based payments in respect of employee services received during the period was £582,000 (2014: £443,000).

Notes to the Interim Report

14.  LOANS

In April 2014, the Group secured an Australian dollar three year term loan of AUS$10 million.  The debt bears an interest rate of +1.90% above the Australian Dollar bank bill interest swap rate ('BBSW').  Security on the debt is provided by way of an all asset debenture.

		30 Sept 2015		30 Sept 2014		31 March 2015
		£'000		£'000		£'000
Opening bank loan		4,389		-		-
New borrowings		-		5,487		5,487
Repayment of borrowings		(351)		(401)		(781)
Foreign currency translation adjustment		(405)		(80)		(317)
Closing bank loan		3,633		5,006		4,389
Analysed as:
Amounts falling due within 12 months		675		785		746
Amounts falling after one year		2,958		4,221		3,643
		3,633		5,006		4,389

15.  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/(due from) related parties
		£'000		£'000		£'000
Associates:
30 September 2015		1		-		-
30 September 2014		-		41		7
31 March 2015		-		150		-
Directors (see below):
30 September 2015		-		1		-
30 September 2014		-		-		-
31 March 2015		-		33		8
Other related parties (see below):
30 September 2015		19		-		-
30 September 2014		23		-		(5)
31 March 2015		55		-		(5)

Associate related party disclosures for the six months ended 30 September 2015 are prior to the acquisition of the remaining shares in Loqate.

The Chairman of the Company previously undertook some general and operational consultancy for the business outside of his directorship remit through his consultancy business Rasche Consulting Limited.  Purchases in the six months ended 30 September 2015 were only in extent of expenses incurred in relation to those activities.

The Chief Executive of the Company is a director of Car Loan 4U Limited which is a client of the Group.  Transactions with them have been reported under the heading of 'other related parties' in the table above.

A Non-Executive Director of the Company is a director of Avanti Communications Group PLC which is a client of the Group.  Transactions with them have been reported under the heading of 'other related parties'.

Notes to the Interim Report

15.  RELATED PARTY TRANSACTIONS (continued)

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 2015, the Group has not made any provision for doubtful debts relating to amounts owed by related parties (2014: nil).

Compensation of key management personnel (including directors)

		Unaudited 6 months to 30 Sept 2015		Unaudited 6  months to 30 Sept 2014		Audited Year to 31 March 2015
		£'000		£'000		£'000
Short-term employee benefits		440		420		1,412
Post-employment benefits		12		43		23
Share-based payments		929		634		769
		1,381		1,097		2,204

16.  SHARE CAPITAL

During the period 2,332,024 (2014: 10,041,614) ordinary shares with a nominal value of 2.5p were issued for an aggregate cash consideration of £412,000 (2014: £11,224,000).  The cost associated with the issue of shares was £nil (2014: £330,000).

Notes to the Interim Report

17.  BUSINESS COMBINATIONS

Acquisition of Loqate Inc

On 27 April 2015, the Company acquired additional shares in Loqate Inc. ('Loqate') taking its shareholding to 100% of the voting shares. Loqate is an unlisted company based in the United States of America and is a leading provider of global location intelligence data and technology.  The Company acquired to bring together all the data that sits behind its address and identity verification solutions into one common global platform - making for a seamless integration of registration, on-boarding and identity checking processes. It will also further support GBG's expansion by allowing access to the North American market through Loqate's significant partnerships with some of the world's largest software companies.  The Consolidated Statement of Comprehensive Income includes the results of Loqate for the five month period from the acquisition date.

The fair value of the identifiable assets and liabilities of Loqate as at the date of acquisition was:

		Fair value recognised on acquisition £'000
Assets
Technology intellectual property		756
Customer relationships		1,912
Non-compete agreements		63
Plant and equipment		73
Internally developed software		20
Trade and other receivables		1,173
Cash		667
Trade and other payables		(2,412)
Deferred tax liabilities		(929)
Total identifiable net assets at fair value		1,323
Goodwill arising on acquisition		6,623
Total purchase consideration transferred		7,946
Purchase consideration:
Cash		8,979
Value of original equity stake		247
Contingent consideration adjustment		(1,280)
Total purchase consideration		7,946
Analysis of cash flows on acquisition:
Transaction costs of the acquisition (included in cash flows from operating activities)		(119)
Net cash acquired with the subsidiary (included in cash flows from investing activities)		667
Cash paid		(8,979)
Net cash outflow		(8,431)

The fair values above contain certain provision amounts which will be finalised no later than one year after the date of acquisition.  Provisional amounts have been included at 30 September 2015 as a consequence of the timing and complexity of the acquisition.

The fair value of the acquired trade receivables amounts to £693,000.  The gross amount of trade receivables is £693,000.  None of the trade receivables have been impaired and it is expected that the full contractual amounts can be collected.

The goodwill recognised above is attributed to intangible assets that cannot be individually separated and reliably measured from Loqate due to their nature.  These items include the expected value of synergies and an assembled workforce.  None of the goodwill is expected to be deductible for income tax purposes.

The transaction costs of £119,000 associated with this acquisition have been expensed and are included in exceptional items in the Consolidated Statement of Comprehensive Income and are part of operating cash flows in the Cash Flow Statement.

Notes to the Interim Report

17.  BUSINESS COMBINATIONS (continued)

From the date of acquisition, Loqate has contributed £1,596,000 of revenue and operating losses of £171,000 to the Group.  If the combination had taken place at the beginning of the year, the Group revenue and operating profits would have been £32,745,000 and £2,350,000 respectively.

Contingent consideration - Loqate

As part of the share sale and purchase agreement, a purchase price adjustment mechanism has been agreed which will either result in a further payment to the sellers of up to US$2 million or a repayment of up to US$2.5 million.  This adjustment is subject to certain future sales targets being met.  This adjustment will be determined by 31 December 2015.  At the acquisition date the fair value of the adjustment was estimated to be a purchase price reduction of £1.28 million having been determined from management's estimates of the ranges and their respective likelihoods.  At 30 September the fair value of the adjustment was estimated to be a purchase price reduction of £1.32 million.

Other business combination adjustments - DecTech

During the six months ended 30 September 2015, final settlement of AU$9.5 million (£4.7 million) was made relating to the first tranche of the contingent consideration on the acquisition of DecTech resulting in reduction in the contingent consideration liability on the balance sheet.  At 30 September 2015, the value of the second tranche of contingent consideration after partial unwinding of the discounting was AU$1.85 million (£0.86 million).  Adjustments to the fair value of the contingent consideration are made in the Consolidated Statement of Comprehensive Income under IFRS 3 (Revised) Business Combinations (Note 5).

18.  CONTINGENT CONSIDERATION

ASSETS	Unaudited 30 Sept 2015		Unaudited 30 Sept 2014		Audited 31 March 2015
	£'000		£'000		£'000
Opening	-		-		-
Recognition on the acquisition of subsidiary undertakings	1,280		-		-
Fair value adjustment to contingent consideration	42		-		-
Closing	1,322		-		-

Analysed as:
Amounts falling due within 12 months		1,322		-		-
		1,322		-		-

LIABILITIES	Unaudited 30 Sept 2015		Unaudited 30 Sept 2014		Audited 31 March 2015
	£'000		£'000		£'000
Opening	6,628		750		750
Recognition on the acquisition of subsidiary undertakings	-		5,461		6,351
Reversal of contingent consideration to the Income Statement	-		(250)		(250)
Settlement of consideration	(4,745)		(500)		(500)
Unwinding of discount	190		268		653
Exchange differences on retranslation	(223)		(94)		(376)
Closing	1,850		5,635		6,628

Analysed as:
Amounts falling due within 12 months		1,850		4,749		5,733
Amounts falling after one year		-		886		895
		1,850		5,635		6,628

Notes to the Interim Report

19.  FINANCIAL INSTRUMENTS - FAIR VALUE MEASUREMENT

The objectives, policies and strategies pursued by the Group in relation to financial instruments are described within the 2015 Annual Report.  Set out below is an overview of financial instruments, other than cash and short-term deposits, held by the Group:

	30 September 2015				31 March 2015
	Loans and Receivables		Fair value profit or loss		Loans and Receivables		Fair value profit or loss
	£'000		£'000		£'000		£'000
Financial assets:
Trade and other receivables	13,162		-		15,592		-
Contingent consideration	-		1,322		-		-
Total current	13,162		1,322		15,592		-
Total financial assets	13,162		1,322		15,592		-
Financial liabilities:
Loans	2,958		-		3,643		-
Contingent consideration	-		-		-		895
Total non-current	2,958		-		3,643		895
Trade and other payables	12,195		-		14,078		-
Loans	675		-		746		-
Contingent consideration	-		1,850		-		5,733
Total current	12,870		1,850		14,824		5,733
Total financial liabilities	15,828		1,850		18,467		6,628

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.

Contingent consideration

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

	Unaudited 30 Sept 2015		Unaudited 30 Sept 2014		Audited 31 March 2015
	£'000		£'000		£'000
Fair value within current assets:
Contingent consideration	1,322		-		-
Fair value within current liabilities:
Contingent consideration	1,850		4,749		5,733
Fair value within non-current liabilities:
Contingent consideration	-		886		895

Assets and liabilities for contingent consideration are Level 3 financial instruments under IFRS 13.  The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of inputs used in making measurements of fair value.  The fair value hierarchy has the following levels:

·      Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

·      Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

·      Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Notes to the Interim Report

19.  FINANCIAL INSTRUMENTS - FAIR VALUE MEASUREMENT (continued)

For financial instruments that are recognised at the fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

20.  POST BALANCE SHEET EVENTS

On 3 November 2015, final settlement of £1.0 million was made relating to the contingent consideration on the acquisition of CDMS Limited resulting in reduction in the contingent consideration liability on the balance sheet.

In November 2015, the Group entered into a new banking facility arrangements with Barclays Bank PLC and Lloyds Bank PLC.  This arrangement comprises a £50m revolving credit facility (incorporating a £20m accordion option).

Independent Review Report to GB Group plc

Introduction

We have been engaged by the GB Group plc (the "Company") to review the condensed set of consolidated financial statements in the half-yearly financial report for the 6 months ended 30 September 2015 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 2015 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 2015

 

END

 

 

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