Half Yearly Report

RNS Number : 3144R

GB Group PLC

02 November 2011

 



Embargoed until 7.00 a.m.

2 November 2011

GB Group plc

("GB Group" or the "Group")

Half Year Results for the six months ended 30 September 2011

GB Group plc, the identity management specialist, is pleased to announce half year results for the period ended 30 September 2011. 

Highlights

·      Group revenues increased by 7% to £12.4m (2010: £11.6m).

·      Profits before exceptional items, interest, share-based payments and tax grew by 36% to £1.0m (2010: £0.75m).

·      DataAuthentication, which provides identity verification services, saw revenues grow by 14% to £5.8m (2010: £5.1m).

·      DataSolutions, which provides identity-based marketing solutions, saw revenues grow by 2% to £6.6m (2010: £6.5m).

·      Acquisitions during the period of Data Discoveries, an ID Trace business, and Advanced Checking Services ("ACS"), which undertakes electronic checking of driving licences, enhanced the Group's client, sector and product base.

·      The Group remains well financed, with period-end cash balances of £4.2m (2010: £4.6m), after the payment of £1.1m for the final dividend and £1.0m in respect of the consideration for the acquisitions of Data Discoveries and ACS.

·      Announcement today of the acquisition of Capscan, a leading supplier of customer registration and address management software solutions, for a consideration of £11.2m. In its last financial year, Capscan had revenues of £6.8m and EBITDA of £1.2m. This substantial acquisition will consolidate the Group's already strong position in the growing UK customer registration and address management market and enhances our ability to address international opportunities.

·      The Group's outlook is positive.

Richard Law CEO commented:

"GB performed strongly in the half year to 30^th September and has continued this momentum to date. We have achieved growth both organically and through acquisition and our operations have become more efficient as we have grown whilst keeping tight control of our costs.

Our acquisition of Capscan significantly advances GB's strategy of leading the rapidly developing market for Identity Management. Being able to identify individuals reliably and then to register them efficiently and accurately is, we believe, a fundamental enabler of online business and one that will show significant growth as consumer spending continues its move online.

GB Group is confident of a stronger second half and of meeting expectations for the full year.  In the longer term, we are very well positioned to pursue organic and further acquisitive growth in our markets, which offer the Group excellent opportunities."

- Ends

GB Group plc                                                                              01244 657333

Richard Law, Chief Executive

Dave Wilson, Finance Director

Peel Hunt (Nominated Adviser and Broker)                       020 7418 8900

Richard Kauffer

Daniel Harris

Weber Shandwick Financial                                                     020 7067 0700

Nick Oborne

John Moriarty

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 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 age-related purchases and gambling

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

·      ID Marketing 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™

Chairman's Statement

In my statement at the end of last year, I indicated that we would look both to accelerate top line growth and increase net margins through acquisitions, organic growth and efficiencies. The first half and year to date has seen good progress in all of these respects.

Results

Revenues for the period were £12.4m (2010: £11.6m), an increase of 7%. Profits before exceptional items, interest, share-based payments and tax grew by 36% to £1.0m (2010: £0.75m). Margins continued to improve across the Group, reflecting its operational leverage.   

Group cash balances at 30 September 2011 were £4.2m (2010: £4.6m), after payment of £1.1m for the final dividend and £1.0m in respect of consideration for acquisitions, net of cash acquired. 

This good progress has continued into the second half, which we expect to be stronger than the first in terms of revenue and profit, in line with contract renewals and past experience.

Acquisition Activity

Of particular note in the first half has been our acquisition activity. In July we acquired Data Discoveries, which has similar activities to our existing ID Trace business within DataSolutions.  The combined business enjoys an enhanced customer and sector base and is able to address the market more effectively and efficiently at a time when the demand for tracing software and services is growing fast. We also acquired Advanced Checking Services, which undertakes electronic checking of driving licences to enable organisations to comply with their obligations under health, safety and corporate manslaughter legislation.  This acquisition broadens our DataAuthentication business' product portfolio, giving us an established foothold in the driver verification market and widening our offering for the insurance market.

Prior to joining the Group, these acquisitions had combined annual revenues of approximately £2.2m. Both have been quickly and successfully integrated into the Group and, as expected, have traded well.  Given the timing of acquisition towards the end of this reporting period, their full revenue and profit impact will not be seen until the second half.

We are today announcing separately the acquisition of Capscan Parent Limited, a leading supplier of customer registration and address management software solutions, for a consideration of £11.2m net of cash acquired. This substantial acquisition will consolidate our already strong position in the fast growing UK customer registration market and enhances our ability to address international opportunities.  There are strong financial synergies and up-sell opportunities available to us from this acquisition and we will continue to look for other value enhancing acquisitions in the sector.

DataAuthentication

DataAuthentication provides the electronic ID verification component of GB Group's identity management offerings. With URU and ID3 Check, its UK and international electronic ID verification solutions, it continues to be a market leader in this developing market with a growing presence in the online retail and Government sectors and a strong presence in mobile telecoms, gaming and financial services. 

In a strong first half performance, DataAuthentication saw revenues grow by 14% to £5.8m (2010: £5.1m).

The division continued to win a good level of new, high quality, clients and renewals from current clients.  The latter included Betfair, one of the world's largest international online sports betting providers with whom we have been working with since 2004. Betfair will use our URU and ID3 Check identity verification technologies as it continues with its growth strategy to reach into global markets.   

The move from manual to electronic identity checking is accelerating worldwide and we are very well placed to assist our customers, both in domestic markets and across borders. During the first half we secured a strategic relationship with TransUnion, a leading global credit and information management business, to offer ID verification capability for the Canadian market, and subsequently extended this arrangement with a new Electronic ID Verification ("EIDV") service for South Africa.  We also developed and launched a new EIDV service for Denmark. 

Good progress was made during the period in the online financial services market.

DataSolutions

For our DataSolutions business, which provides identity-based marketing solutions (ID Customer Registration, ID Marketing Services and ID Tracing software and services), the first half was a period of good underlying progress and consolidation after a strong performance last year. Revenues grew by 2% to £6.6m (2010: £6.5m).

We continued to invest in improving, widening and differentiating our product base. We enhanced our people tracing solution, launching GB Accelerator e-Trace V5, a service designed to help businesses reconnect with missing customers in applications such as debt recovery and asset reunification and for use in anti-fraud investigations.  Together with Ikano, the international credit and loyalty provider, we also developed a solution that materially improves the technical efficiency and flexibility of retailers' loyalty schemes, allowing them to grow schemes more quickly and at less cost.  Both products have been well received. 

Our strategy for Datasolutions remains is to strongly differentiate our services from those of our competitors and increasingly to link these services with the Identity Verification services provided by DataAuthentication.

Outlook

GB Group is confident of a stronger second half and of meeting expectations for the full year. Longer term we are very well positioned to pursue organic and further acquisitive growth in our markets, which continue to offer the Group excellent opportunities.    

Interim Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2011

	Note		Unaudited 6 months to 30 September		Unaudited 6 months to 30 September			Audited Year to 31 March
			2011		2010			2011
			£'000		£'000			£'000
Revenue			12,417		11,556			24,411
Cost of sales			(5,876)		(5,461)			(11,512)
Gross profit			6,541		6,095			12,899
Other operating expenses			(5,553)		(5,379)			(10,996)
Exceptional items	6		(170)		(151)			(206)
Operating profit			818		565			1,697
Finance revenue			17		12			28
Profit before tax			835		577			1,725
Income tax (expense)/credit	8		(16)		(18)			379
Profit for the period attributable to equity holders of the parent and total comprehensive income for the period			819		559			2,104
Earnings per share	9
- basic earnings per share for the period			0.9p		0.7p			2.5p
- diluted earnings per share for the period			0.9p		0.6p			2.4p

Interim Consolidated Statement of Changes in Equity

For the six months ended 30 September 2011

	Note		Equity share capital		Merger reserve		Capital redemption reserve		Retained earnings			Total equity
			£'000		£'000		£'000		£'000			£'000
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
Issue of share capital			14		-		-		-			14
Share-based payments charge			-		-		-		30			30
Equity dividend	10		-		-		-		(1,026)			(1,026)
Balance at 30 September 2010			6,035		6,575		3		29			12,642
Profit for the period			-		-		-		1,545			1,545
Total comprehensive income for the period			-		-		-		1,545			1,545
Issue of share capital			136		-		-		-			136
Share-based payments credit			-		-		-		(36)			(36)
Balance at 1 April 2011			6,171		6,575		3		1,538			14,287
Profit for the period			-		-		-		819			819
Total comprehensive income for the period			-		-		-		819			819
Issue of share capital	14		154		-		-		-			154
Share-based payments charge			-		-		-		41			41
Equity dividend	10		-		-		-		(1,100)			(1,100)
Balance at 30 September 2011			6,325		6,575		3		1,298			14,201

Interim Consolidated Balance Sheet

As at 30 September 2011

	Note		Unaudited As at 30 September		Unaudited As at 30 September		Audited As at 31 March
			2011		2010		2011
			£'000		£'000		£'000
ASSETS
Non-current assets
Property, plant and equipment	11		791		898		848
Intangible assets			7,915		6,576		6,707
Deferred tax asset			1,200		800		1,200
			9,906		8,274		8,755
Current assets
Trade and other receivables			6,078		5,554		6,495
Cash and short-term deposits			4,238		4,636		6,168
			10,316		10,190		12,663
TOTAL ASSETS			20,222		18,464		21,418
EQUITY AND LIABILITIES
Capital and reserves
Equity share capital			6,325		6,035		6,171
Merger reserve			6,575		6,575		6,575
Capital redemption reserve			3		3		3
Retained earnings			1,298		29		1,538
Total equity attributable to equity holders of the parent			14,201		12,642		14,287
Non-current liabilities
Deferred consideration	5		124		-		-
Deferred tax liability			166		-		-
			290		-		-
Current liabilities
Trade and other payables			5,696		5,797		7,125
Current tax			35		25		6
			5,731		5,822		7,131
TOTAL LIABILITIES			6,021		5,822		7,131
TOTAL EQUITY AND LIABILITIES			20,222		18,464		21,418

Interim Consolidated Cash Flow Statement

For the six months ended 30 September 2011

			Unaudited 6 months to 30 September 2011		Unaudited 6 months to 30 September 2010		Audited Year to 31 March 2011
			£'000		£'000		£'000
Group profit before tax			835		577		1,725
Adjustments to reconcile Group profit before tax to net cash flows
Interest income			(17)		(12)		(28)
Depreciation of property, plant and equipment			179		230		431
Amortisation of intangible assets			32		28		49
Share-based payments			41		30		(6)
Decrease/(increase) in receivables			894		611		(330)
Decrease in payables			(1,877)		(1,418)		(90)
Decrease in provisions			-		(52)		(52)
Cash generated/(consumed) from operations			87		(6)		1,699
Income tax paid			-		-		(22)
Net cash generated/(consumed) from operating activities			87		(6)		1,677
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired			(920)		-		-
Purchase of property, plant and equipment			(100)		(105)		(256)
Expenditure on product development			(8)		-		(152)
Interest received			17		12		28
Net cash flows from investing activities			(1,011)		(93)		(380)
Cash flows from financing activities
Proceeds from issue of shares			94		14		150
Dividends paid to equity shareholders			(1,100)		(1,026)		(1,026)
Net cash flows from financing activities			(1,006)		(1,012)		(876)
Net (decrease)/increase in cash and cash equivalents			(1,930)		(1,111)		421
Cash and cash equivalents at the beginning of period			6,168		5,747		5,747
Cash and cash equivalents at the end of period			4,238		4,636		6,168

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 2011 were authorised for issue in accordance with a resolution of the directors on 2 November 2011.  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 2011 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 2011.  The financial information for the preceding year is based on the statutory accounts for the year ended 31 March 2011.  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 2011, 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 14	Amendment: Prepayments of a Minimum Funding Requirement	1 January 2011
IFRIC 19	Extinguishing Financial Liabilities with Equity Instruments	1 July 2010

International Accounting Standards (IAS / IFRS)		Adoption date
IFRS 1	Amendment to IFRS 1 - Limited Exemption from Comparative IFRS 7 disclosures	1 July 2010
IAS 24	Related Party Disclosures (revised)	1 January 2011

New Accounting Standards and Interpretations not Applied

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 9	Financial Instruments: Classification & Measurement	1 January 2013
IFRS 10	Consolidated Financial Statements	1 January 2013
IFRS 11	Joint Arrangements	1 January 2013
IFRS 12	Disclosure of Interests in Other Entities	1 January 2013
IFRS 13	Fair Value Measurement	1 January 2013
IAS 1	Amendment: Presentation of Financial Statements	1 July 2012
IAS 12	Amendment: Income Taxes	1 January 2012
IAS 19	Amendment: Employee Benefits	1 January 2013
IAS 27	Reissue: Consolidated and Separate Financial Statements	1 January 2013
IAS 28	Reissue: Investments in Associates and Joint Ventures	1 January 2013

International Financial Reporting Interpretations Committee (IFRIC)		Effective date
IFRIC 20	Stripping Costs in the Production Phase of a Surface Mine	1 January 2013

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.  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; and disaster recovery and business continuity.  These risks and uncertainties facing our business were reported in detail in the 2011 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.  BUSINESS COMBINATIONS

Acquisition of Data Discoveries Holdings Limited

On 30 June 2011, the Company acquired 100% of the voting shares of Data Discoveries Holdings Limited (Data Discoveries), an unlisted company based in the United Kingdom providing trace software to the debt collection industry and to UK Government agencies.  The Company acquired Data Discoveries because its activities are similar to those of GB Group's existing ID Trace business within DataSolutions and it will enlarge the customer base of the Group in this market, making the combined business the market leader.  The interim consolidated statement of comprehensive income includes the results of Data Discoveries for the three month period from the acquisition date.

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

		Unaudited Fair value recognised on acquisition £'000
Assets
Brand and technology intellectual property		42
Customer relationships		378
Non-compete agreements		3
Property, plant and equipment		18
Trade and other receivables		377
Cash		214
Trade and other payables		(375)
Deferred tax liabilities		(110)
Total identifiable net assets at fair value		547
Goodwill arising on acquisition		283
Total purchase consideration transferred		830
Purchase consideration:
Cash		770
Fair value of shares issued (150,943 shares at 39.75p)		60
Total purchase consideration		830
Analysis of cash flows on acquisition:
Transaction costs of the acquisition (included in cash flows from operating activities)		(82)
Net cash acquired with the subsidiary (included in cash flows from investing activities)		214
Cash paid		(770)
Net cash outflow		(638)

The fair value of the acquired receivables amounts to £377,000.  The gross amount of receivables is £377,000.  None of the 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 Data Discoveries 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 £82,000 associated with this acquisition have been expensed and are included in exceptional items in the statement of comprehensive income and are part of operating cash flows in the cash flow statement.

From the date of acquisition, Data Discoveries has contributed £502,000 of revenue and £69,000 to the profit before tax of the Group.  If the combination had taken place at the beginning of the year, the Group profit before taxation for the period would have been £873,000 and revenue would have been £12,868,000.

Acquisition of Advanced Checking Services Limited

On 27 July 2011, the Company acquired 100% of the voting shares of Advanced Checking Services Limited (ACS), an unlisted company based in the United Kingdom providing electronic checking of driving licences to enable organisations to comply with their obligations under health & safety and corporate manslaughter legislation.  The Company acquired ACS to broaden its product portfolio in the DataAuthentication business and widen its offering to the insurance market.  The interim consolidated statement of comprehensive income includes the results of ACS for the two month period from the acquisition date.

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

		Unaudited Fair value recognised on acquisition £'000
Assets
Brand and technology intellectual property		36
Customer relationships		198
Non-compete agreements		3
Property, plant and equipment		4
Trade and other receivables		108
Cash		88
Trade and other payables		(88)
Deferred tax liabilities		(62)
Total identifiable net assets at fair value		287
Goodwill arising on acquisition		289
Total purchase consideration transferred		576
Purchase consideration:
Cash		452
Contingent consideration		124
Total purchase consideration		576
Analysis of cash flows on acquisition:
Transaction costs of the acquisition (included in cash flows from operating activities)		(60)
Net cash acquired with the subsidiary (included in cash flows from investing activities)		88
Cash paid		(452)
Net cash outflow		(424)

The fair value of the acquired receivables amounts to £108,000.  The gross amount of receivables is £108,000.  None of the 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 ACS 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 £60,000 associated with this acquisition have been expensed and are included in exceptional items in the statement of comprehensive income and are part of operating cash flows in the cash flow statement.

From the date of acquisition, ACS has contributed £70,000 of revenue and losses before tax of £17,000 to the Group.  If the combination had taken place at the beginning of the year, the Group profit before taxation for the period would have been £814,000 and revenue would have been £12,537,000.

Contingent consideration

As part of the share sale and purchase agreement, a contingent consideration of up to a maximum of £5 million has been agreed.  There will be additional payments comprising of both cash and shares due to the previous owners of ACS annually up to 31 March 2015.  These payments are subject to certain future targets being met on profits before interest and taxation.  At the acquisition date and as at 30 September 2011, the fair value of the contingent consideration was estimated at £124,000 having been determined from management's estimates of the ranges of profit forecasts and their respective likelihoods.

6.  EXCEPTIONAL ITEMS

Exceptional costs of £170,000 in the six months ended 30 September 2011 were costs primarily associated with the Company's acquisition related activities as detailed in note 5 along with some minor staff reorganisation costs.

7.  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 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 six months to 30 September 2010 represent Group head office costs (£155,000), exceptional costs (£151,000), Group finance income (£12,000), Group income tax (£18,000) and share-based payments charge (£30,000).  Unallocated items for the year ended 31 March 2011 represent Group head office costs (£293,000), exceptional costs (£206,000), Group finance income (£28,000), Group income tax credit (£379,000) and share-based payments credit (£6,000)

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 2011
Six months ended 30 September 2011	£'000		£'000		£'000		£'000
Revenue	5,779		6,638		-		12,417
Operating profit before depreciation	529		971		(430)		1,070
Depreciation and amortisation	(41)		(148)		(22)		(211)
Operating profit before finance revenue and income tax	488		823		(452)		859
Finance revenue					17		17
Share-based payments charge					(41)		(41)
Income tax expense					(16)		(16)
Profit for the period							819

	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 charge					(30)		(30)
Income tax expense					(18)		(18)
Profit for the period							559

	Data Authentication		Data Solutions		Unallocated		Total Audited Year  to 31 March 2011
Year ended 31 March 2011	£'000		£'000		£'000		£'000
Total revenue	10,049		14,362		-		24,411
Operating profit before depreciation	619		2,051		(499)		2,171
Depreciation and amortisation	(99)		(381)		-		(480)
Operating profit before finance revenue and income tax	520		1,670		(499)		1,691
Finance revenue					28		28
Share-based payments credit					6		6
Income tax credit					379		379
Profit for the period							2,104

8.  TAXATION

Taxation on profit on ordinary activities

		Unaudited 6 months to 30 Sept 2011		Unaudited 6 months to 30 Sept 2010		Audited Year to 31 March 2011
		£'000		£'000		£'000
Current income tax:
UK corporation tax on profit		22		3		6
		22		3		6
Deferred tax:
Origination and reversal of temporary differences		(6)		-		(443)
Impact of change in tax rates		-		15		58
		(6)		15		(385)
Tax charge/(credit) in the Statement of Comprehensive Income		16		18		(379)

On 5 July 2011 a reduction in the main rate of UK corporation tax rate to 25% with effect from 1 April 2012 was substantively enacted.   The effect of the rate reduction created a reduction in the total deferred tax asset which was included in the figures shown above. This change will also reduce the Company's future current tax charge accordingly.

The Chancellor also proposed changes to further reduce the main rate of corporation tax by one per cent per annum to 23% by 1 April 2014. The overall effect of the further reductions from 26% to 23%, if these applied to the total deferred tax balance at 30 September 2011, would be to further reduce the net deferred tax asset (recognised and not recognised) by approximately £668,000.

9.  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 2011

Unaudited 6 months to 30 September 2010

Audited Year to 31 March 2011

pence per share

£'000

pence per share

£'000

pence per share

£'000

Profit attributable to equity holders of the parent

0.9

819

0.7

559

2.5

2,104

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 2011

Unaudited 6 months to 30 September 2010

Audited Year to 31 March 2011

pence per share

£'000

pence per share

£'000

pence per share

£'000

Profit attributable to equity holders of the parent

0.9

819

0.6

559

2.4

2,104

		30 Sept 2011		30 Sept 2010		31 March 2011
		No.		No.		No.
Basic weighted average number of shares in issue		86,372,174		85,543,014		85,737,711
Dilutive effect of share options		3,601,640		923,484		1,256,829
Diluted weighted average number of shares in issue		89,973,814		86,466,498		86,994,540

10.  DIVIDENDS PAID AND PROPOSED

		Unaudited 6 months to 30 Sept 2011		Unaudited 6 months to 30 Sept 2010		Audited Year to 31 March 2011
		£'000		£'000		£'000
Declared and paid during the period
Final dividend for 2011: 1.275p per share (2010: 1.2p per share)		1,100		1,026		1,026
Proposed for approval at AGM (not recognised as a liability at 31 March 2011)
Final dividend for 2011: 1.275p per share		-		-		1,099

 

11.  PROPERTY, PLANT AND EQUIPMENT & DEVELOPED INTANGIBLE ASSETS

During the six months ended 30 September 2011, the Group acquired property, plant and equipment with a cost of £100,000 (2010: £105,000).  Expenditure on product development for the six months ended 30 September 2011 was £8,000 (2010: £Nil).

No disposals were made in the six months ended 30 September 2011 (2010: £13,000).

12.  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 months ended 30 September 2011 no share options were granted.

13.  RELATED PARTY TRANSACTIONS

Compensation of key management personnel (including directors)

		Unaudited 6 months to 30 Sept 2011		Unaudited 6 months to 30 Sept 2010		Audited Year to 31 March 2011
		£'000		£'000		£'000
Short-term employee benefits		247		186		768
Post-employment benefits		28		28		62
Share-based payments		-		63		63
		275		277		893

The following other related party transactions took place in the period:

		Sales to related parties		Purchases from related parties		Balance 30 Sept 2011
		£'000		£'000		£'000
Rasche Consulting Limited		-		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. 

14.  SHARE CAPITAL

During the period 318,920 (2010: 55,513) ordinary shares of 2.5p were allotted on the exercise of share options for an aggregate cash consideration of £94,000 (2010: £14,000).  Additionally, 150,943 ordinary shares of 2.5p were allotted as part of the consideration of the acquisition of Data Discoveries Holdings Limited.  The shares were placed at market value totalling £60,000.

15.  POST BALANCE SHEET EVENTS

Acquisition of Capscan

On 2 November 2011, the Group announced that it had conditionally agreed to acquire the entire share capital of Capscan Parent Limited and its subsidiary company Capscan Limited.  This acquisition is for a gross consideration of £16.3 million, which net of estimated completion cash acquired equates to £11.2 million with the initial consideration being subject to adjustment by reference to completion accounts.

The Company acquired Capscan to create a clear number 2 in the customer registration and address management market and to enlarge the customer base of the Group.

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.

Part of the consideration is being funded through a separate placing of 20,000,000 new ordinary shares in the capital of GB Group plc which are expected to be admitted to trading on 4 November 2011.  This placing is expected to raise £7.7 million.

Further details of the acquisition are set out in a separate regulatory announcement released on 2 November 2011.

Financial Instruments

The Company has recently entered into a 4 year revolving credit facility agreement which is subject to a limit of £7.0 million.  The facility bears an initial interest rate of LIBOR +1.95%.  Security on the facility is provided by way of an all asset debenture.

 

END

 

 

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