Half Yearly Report

RNS Number : 7858T

GB Group PLC

25 November 2013

 



Embargoed until 7.00 a.m.

25 November 2013

GB GROUP PLC

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

Half Yearly Report

GBGroup, the identity intelligence specialist announces its unaudited results for the six months ended 30 September 2013.

Highlights - Financial

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

o  Adjusted^†† revenue growth of 12% to £18.1 million (2012 adjusted††: £16.2 million)

o  Both divisions, Identity Proofing and Identity Solutions, contributing to revenue growth

o  Adjusted operating profit^† growth of 70% to £2.6 million (2012: £1.5 million)

o  165% increase in profit before tax to £1.3 million (2012: £0.5 million)

o  Adjusted basic earnings per share of 2.3p (2012: 1.4p)

·     Group cash balances of £6.0 million (2012: £5.8 million) after payment of a £1.6 million dividend and net cash payments of £1.4 million for acquisitions.

·     Adjusted^†† organic revenue growth was 3%, however, deferred revenue balances for release in the second half and future periods increased by 18% (£0.9 million) to £5.8 million (2012: £4.9 million).

·     CRD (UK) Limited, whose acquisition in July 2013 extended the Identity Proofing businesses, has shown good revenue growth.

Highlights - Operational

·     Encouraging growth in our international services.

·     First phase of the new ID3Global service launched in mid-September.

·     International verification capabilities extended into five more countries - GBG can now provide verification services on over 3.6 billion individuals.

·     Newer and more powerful versions of market leading tracing and investigation services, Etrace6 and IQ6, launched during the period.

·     Matchcode, GBG's improved international address, telephone and email validation service also launched during the period.    

Richard Law, CEO, commented, "I am very pleased with our performance in the first half and GBG has progressed strategically as planned.  Our forward momentum is positive and we continue to invest in the development of our products, services and team to maintain this.  New versions of our principal tracing and verification services were released at the end of the period under review and we are confident of increased organic growth in the second half of the year and beyond.

Notes:

†  Adjusted operating profit means profits before share of results from associates, interest, tax, share based payment charges, amortisation of acquired intangibles and exceptional items.

†† Adjusted Results Analysis

During the previous financial year, GBG restructured its commercial relationship with BT which meant that ID Verification margins under the revised agreement are higher in absolute terms but revenues are reduced in the current financial year.   For ease of comparison, the revenue for the comparative period has been adjusted to show the true underlying growth.

Statutory results

	6 months ending 30 September 2013 £000s	6 months ending 30 September 2012 £000s	Growth
Revenue	18,138	17,724	2%
Cost of sales	(6,519)	(7,843)	(17%)
Gross margin	11,619	9,881	18%

Adjusted^††results

	6 months ending 30 September 2013 £000s	Adjusted† 6 months ending 30 September 2012 £000s	Growth	Organic growth
Revenue	18,138	16,204	12%	3%
Cost of sales	(6,519)	(6,323)	3%	(2%)
Gross margin	11,619	9,881	18%	8%

For further information, please contact:

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

Notes to Editors

About GBGroup

The most profitable and successful organisations recognise the value of understanding the individual identity of their customers and employees. GBG combines this concept of identity with technology to create an environment of trust, so that organisations can employ people and connect, communicate and transact with consumers, safely and responsibly.

We call this Identity Intelligence.

GBG's solutions include:

Register & Verify  -  International software and services for quick and accurate customer registration; and the verification of identities of individuals & businesses remotely.

Cleanse & Engage - Innovative software and services which provide accurate and up-to-date identity information to deliver improved intelligent customer contact strategies.

Employ & Comply - Thorough background checks through online verification and authentication of individuals enabling organisations to safeguard, recruit and engage with confidence.

Trace & Investigate - Leading software and services which provide the most accurate and up-to-date picture of the UK's population, properties and businesses to quickly locate, investigate and contact the right individual, first time.

- Ends -

CHAIRMAN'S STATEMENT

I am very pleased to report that GBG has made strong financial and strategic progress in the first half of the year. Recent strategic reviews lead the board to believe that we will continue to grow our business in several sectors over the coming months and years. We are delivering high quality and important products and services to our domestic and international clients and we are continuing to invest in the development of key global platforms for both of our businesses. This creates real value for ourselves and our clients and together with our strategic acquisitions adds capabilities that further differentiate us from our competition.   

Results

GBG has performed in line with market expectations with growth coming from both our organic activities and our acquired businesses. 

Group revenues for the period grew 12 per cent. on an adjusted basis to £18.1 million (2012 adjusted: £16.2 million¹) with a 70 per cent. increase in adjusted operating profit² to £2.6 million (2012: £1.5 million).  This profit result is £0.3 million ahead of the guidance given in the trading update statement that the Group issued on 17 October 2013.  These results also include a full six months of trading for the acquired TMG business and three months of trading from the acquired CRD business.

As envisaged, revenue growth compared to the first half of last year has been mostly through acquisition with organic revenues increasing by a modest 3%, due in part to the application of the Group's revenue recognition policies.   However, deferred revenue into the balance sheet for release in the second half and future periods increased by a further 18% (£0.9 million) to £5.8 million (2012: £4.9 million).  In addition to the increased value within deferred income, our existing businesses were managed more efficiently and so the majority of the profit uplift experienced in the first half came from increased organic margins.

The Group continues to be highly cash generative with operating cash flow before working capital movements increasing by 89% to £2.8 million (2012: £1.5 million).  At 30 September 2013, the Group had cash balances of £6.0 million (2012: £5.8 million) after the payment of £1.6 million in respect of the final dividend and £1.4 million for acquisitions.

Net profit after the deduction of non-cash items, exceptional costs³ and taxation was 100% higher than the previous year at £1.2 million (2012: £0.6 million).

Identity Proofing (IDP)

The Identity Proofing business, which provides domestic and international electronic ID verification and people checking solutions, made good strategic progress in the year to date with the first phase launch of ID3global, GBG's new identity verification solution, taking place in mid-September.  ID3global brings together our UK and international electronic identity verification offerings through a single portal or API, and we will continue to roll this out in the second half of the year.

We have also been able to expand our verification capabilities into Brazil, India, Mexico, Spain and Belgium, meaning that GBG can now verify individuals in countries accounting for over 3.6 billion people worldwide. Further services for other countries are expected to be added before the end of the current financial year.

IDP also had a good first half financial performance and saw its revenues grow (on an adjusted¹ basis) by 24% to £7.1 million (2012 adjusted¹: £5.7 million).  With the acquisition of CRD (UK) Limited in July 2013, GBG became the largest criminal records disclosure umbrella provider in the UK.

GBG restructured its commercial relationship with BT last year in relation to the Technology & Supply and Distribution Agreements established in 2004.  The renegotiated commercial terms of these agreements now mean that although GBG no longer receives a royalty for the use of its technology we no longer pay BT a proportion of the revenue associated with the transactions for clients served through ID3global.  The net effect is that revenue associated with the Technology & Supply Agreement has reduced but at the same time, lower costs under the Distribution Agreement have been negotiated and, accordingly, overall margins have increased.

Identity Solutions (IDS)

The Identity Solutions business, which provides domestic and international identity-based registration, tracing and engagement solutions, made solid progress in growing both its revenues and profitability.  Overall its revenue grew 5% to £11.0 million (2012: £10.5 million) and adjusted operating profit increased by 72% to £1.9 million (2012: £1.1 million).

IDS continued to build upon its existing successful products and services with the launch of new versions of two of its flagship solutions.  In the Trace & Investigate space it launched ETrace6 and IQ6, which are newer, more powerful versions of its market leading services that allow clients to search for, investigate and contact individuals quickly and responsibly. These services combine multiple datasets to give the most comprehensive current and historic view of UK individuals. 

Within ID Registration, we have seen the release of the new Matchcode service, currently the only solution that validates UK and global postal and email addresses, as well as mobile and landline telephone numbers across more than 240 countries or territories worldwide - all through a single interface.  Additional powerful features include the ability to transliterate data (translating multiple language character sets for improved functionality for international applications) and to append important geographical information (geo-codes).

Market Overview

We continue to see a growing demand for electronic international identity intelligence solutions as the opportunities to buy, sell and outsource in the online world increase.  Businesses now have access to billions of new customers and additional revenue streams that were previously inconceivable.  Those able to seize the opportunities for international trade and take full advantage of developing markets will gain a competitive edge over their rivals.

In order to maximise on these opportunities, organisations will need to be able to combat fraud, financial crime and money laundering in order to protect their business interests and reputation as they develop and expand their online presence.  At the same time, they need to gain in-depth views of their customers for better decision making and more effective sales and marketing across international borders.  GBG is very well placed to support the present and developing international demands of both its existing and potential clients through its suite of award winning and innovative offerings.

Outlook

The growing potential business and market opportunities make this a very exciting time for the Group.  We remain committed to a growth strategy of investing in our businesses both organically and through strategic acquisition and we will continue to explore further opportunities to drive this strategy forward.  We also remain committed to investing in the development of our products and service portfolios and add capacity to develop new markets both domestically and internationally.  These results show that GBG remains firmly on its path to deliver improved operating performance and we are confident of achieving second half profits in line with current expectations, which in turn underpins our confidence in our future performance.

Note 1: the 2012 comparison figures for revenue and gross profit have been adjusted and re-presented to make a more meaningful comparison following the restructuring of its commercial relationship with BT in the current year which resulted in a reduction in revenues but higher margins.

Note 2: adjusted operating profit means operating profits before share of associate investment result, share based payment charges, amortisation of acquired intangibles and exceptional items.

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 2013

	Note		Unaudited 6 months to 30 September		Unaudited 6 months to 30 September			Audited Year to 31 March
			2013		2012			2013
			£'000		£'000			£'000
Revenue	5		18,138		17,724			39,424
Cost of sales			(6,519)		(7,843)			(16,663)
Gross profit			11,619		9,881			22,761
Operating expenses before amortisation of acquired intangibles, share-based payments and exceptional items			(9,087)		(8,382)			(17,258)
Other operating income			22		-			19
Operating profit before amortisation of acquired intangibles, share-based payments, exceptional items and share of associate investment result (adjusted operating profit)			2,554		1,499			5,522
Amortisation of acquired intangibles			(542)		(393)			(889)
Share-based payments charge			(338)		(201)			(488)
Exceptional items	6		(152)		(266)			(409)
Share of associate investment result	13		(155)		(97)			(146)
Group operating profit			1,367		542			3,590
Finance revenue			2		1			1
Finance costs			(42)		(42)			(85)
Profit before tax			1,327		501			3,506
Income tax (expense)/credit	8		(133)		95			831
Profit for the period attributable to equity holders of the parent and total comprehensive income for the period			1,194		596			4,337
Earnings per share
- adjusted basic earnings per share for the period	9		2.3p		1.4p			5.0p
- basic earnings per share for the period	9		1.1p		0.6p			4.0p
- diluted earnings per share for the period	9		1.0p		0.5p			3.8p

Interim Consolidated Statement of Changes in Equity For the six months ended 30 September 2013

	Note		Equity share capital		Merger reserve		Capital redemption reserve		Retained earnings			Total equity
			£'000		£'000		£'000		£'000			£'000
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	16		144		-		-		-			144
Share-based payments charge			-		-		-		201			201
Equity dividend	10		-		-		-		(1,487)			(1,487)
Balance at 30 September 2012			14,489		6,575		3		2,260			23,327
Profit for the period			-		-		-		3,741			3,741
Total comprehensive income for the period			-		-		-		3,741			3,741
Issue of share capital			59		-		-		-			59
Deferred tax on share options			-		-		-		203			203
Share-based payments charge			-		-		-		287			287
Balance at 1 April 2013			14,548		6,575		3		6,491			27,617
Profit for the period			-		-		-		1,194			1,194
Total comprehensive income for the period			-		-		-		1,194			1,194
Issue of share capital	16		359		-		-		-			359
Share-based payments charge			-		-		-		338			338
Deferred tax on share options			-		-		-		2			2
Equity dividend	10		-		-		-		(1,632)			(1,632)
Balance at 30 September 2013			14,907		6,575		3		6,393			27,878

Interim Consolidated Balance Sheet

As at 30 September 2013

	Note		Unaudited As at 30 September		Unaudited As at 30 September		Audited As at 31 March
			2013		2012		2013
			£'000		£'000		£'000
ASSETS
Non-current assets
Property, plant and equipment	11		1,258		1,028		1,188
Intangible assets	12		24,020		19,891		22,706
Investments accounted for using the equity method	13		14		51		154
Deferred tax asset			2,454		2,206		2,803
			27,746		23,176		26,851
Current assets
Trade and other receivables			8,723		7,950		10,749
Current tax			-		-		82
Cash and short-term deposits			5,958		5,824		6,308
			14,681		13,774		17,139
TOTAL ASSETS			42,427		36,950		43,990
EQUITY AND LIABILITIES
Capital and reserves
Equity share capital			14,907		14,489		14,548
Merger reserve			6,575		6,575		6,575
Capital redemption reserve			3		3		3
Retained earnings			6,393		2,260		6,491
Total equity attributable to equity holders of the parent			27,878		23,327		27,617
Non-current liabilities
Provisions			25		-		25
Deferred consideration			750		571		1,307
Deferred tax liability			1,411		1,265		1,466
			2,186		1,836		2,798
Current liabilities
Trade and other payables			12,290		11,706		13,575
Current tax			73		81		-
			12,363		11,787		13,575
TOTAL LIABILITIES			14,549		13,623		16,373
TOTAL EQUITY AND LIABILITIES			42,427		36,950		43,990

Interim Consolidated Cash Flow Statement  For the six months ended 30 September 2013

	Note		Unaudited 6 months to 30 September 2013		Unaudited 6 months to 30 September 2012		Audited Year to 31 March 2013
			£'000		£'000		£'000
Group profit before tax			1,327		501		3,506
Adjustments to reconcile Group profit before tax to net cash flows
Share of associate investment result	13		155		97		146
Finance revenue			(2)		(1)		(1)
Finance costs			42		42		85
Depreciation of plant and equipment			282		230		511
Amortisation/impairment of intangible assets	12		558		404		981
Profit on disposal of fixed assets			-		-		(1)
Share-based payments			338		201		488
Decrease in receivables			2,103		2,680		528
Decrease in payables			(1,950)		(1,038)		(223)
Cash generated from operations			2,853		3,116		6,020
Income tax received/(paid)			82		-		(101)
Net cash generated from operating activities			2,935		3,116		5,919
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired	12		(1,428)		(119)		(1,855)
Investment in associates	13		(15)		(90)		(242)
Purchase of property, plant and equipment	11		(342)		(325)		(571)
Proceeds from disposal of plant and equipment			7		-		6
Expenditure on product development	12		(194)		(131)		(338)
Interest received			2		1		1
Net cash flows from investing activities			(1,970)		(664)		(2,999)
Cash flows from financing activities
Finance costs			(42)		(42)		(85)
Proceeds from issue of shares	16		359		144		203
Dividends paid to equity shareholders	10		(1,632)		(1,487)		(1,487)
Net cash flows from financing activities			(1,315)		(1,385)		(1,369)
Net (decrease)/increase in cash and cash equivalents			(350)		1,067		1,551
Cash and cash equivalents at the beginning of period			6,308		4,757		4,757
Cash and cash equivalents at the end of period			5,958		5,824		6,308

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 2013 were authorised for issue in accordance with a resolution of the directors on 25 November 2013.  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 2013 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 2013.  The financial information for the preceding year is based on the statutory accounts for the year ended 31 March 2013.  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 2013, 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 1	Presentation of Items of Other Comprehensive Income - Amendments to IAS 1	1 July 2012
IFRS 1	Government Loans - Amendments to IFRS 1	1 January 2013
IFRS 7	Disclosures - Offsetting Financial Assets and Financial Liabilities - Amendments to IFRS 7	1 January 2013
IFRS 10	Consolidated Financial Statements,	1 January 2014
IAS 27	Separate Financial Statements	1 January 2014
IFRS 11	Joint Arrangements	1 January 2014
IAS 28	Investments in Associates and Joint Ventures	1 January 2014
IFRS 12	Disclosure of Interests in Other Entities	1 January 2014
IFRS 13	Fair Value Measurement	1 January 2013
IAS 19	IAS 19 Employee Benefits (Revised)	1 January 2013
IFRS 1	First-time Adoption of International Financial Reporting Standards - Repeated application of IFRS 1	1 January 2013
IFRS 1	First-time Adoption of International Financial Reporting Standards - Borrowing costs	1 January 2013
IAS 1	Presentation of Financial Statements - Clarification of requirements for comparative information	1 January 2013
IAS 16	Property, Plant and Equipment - Classification of servicing equipment	1 January 2013
IAS 32	Financial Instruments: Presentation - Tax effects of distributions to holders of equity instruments	1 January 2013
IAS 34	Interim Financial Reporting - Interim financial reporting and segment information for total assets and liabilities	1 January 2013
International Financial Reporting Interpretation Committee (IFRIC)		Adoption date
IFRIC 20	Stripping costs in the production of a surface mine	1 January 2013

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 2013 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.  REVENUE

During the previous financial year, the Group restructured its commercial relationship with BT which meant that ID Verification revenues are reduced in the current financial year, although margins under the revised agreement are higher in absolute terms.   For ease of comparison, the revenue for the comparative period has been adjusted to illustrate the true underlying growth as follows:

Statutory results

	6 months ending 30 September 2013 £000s	6 months ending 30 September 2012 £000s	Growth
Revenue	18,138	17,724	2%
Cost of sales	(6,519)	(7,843)	(17%)
Gross margin	11,619	9,881	18%

Adjusted†† results

	6 months ending 30 September 2013 £000s	Adjusted† 6 months ending 30 September 2012 £000s	Growth	Organic growth
Revenue	18,138	16,204	12%	3%
Cost of sales	(6,519)	(6,323)	3%	(2%)
Gross margin	11,619	9,881	18%	8%

6.  EXCEPTIONAL ITEMS

Exceptional costs of £152,000 in the six months ended 30 September 2013 included £104,000 of costs associated with staff reorganisations, £85,000 of professional fees related to Company's acquisition related activities and a £37,000 release of deferred consideration associated with an acquisition made in a previous financial year.

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.

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: Identity Proofing Division- which provides ID Verification and ID PeopleSafe services and Identity Solutions Division - which provides ID Registration, ID Engagement and ID Trace & Investigate services.  Performance of those segments is reported to the Group's Chief Executive Officer as 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 Identity Proofing or Identity Solutions.

Unallocated items for the six months to 30 September 2013 represent Group head office costs (£401,000) and exceptional costs (£152,000).  Unallocated items for the six months to 30 September 2012 represent Group head office costs (£364,000) and exceptional costs (£266,000).  Unallocated items for the year ended 31 March 2013 represent Group head office costs (£504,000) and exceptional costs (£409,000).

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

	Identity Proofing		Identity Solutions		Unallocated		Total Unaudited 6 months to 30 September 2013
Six months ended 30 September 2013	£'000		£'000		£'000		£'000
Revenue	7,118		11,020		-		18,138
Operating profit before depreciation and amortisation	1,147		2,106		(553)		2,700
Depreciation of plant and equipment	(127)		(155)		-		(282)
Amortisation of intangible assets	(182)		(376)		-		(558)
Operating profit before finance revenue and income tax	838		1,575		(553)		1,860
Share of associate investment					(155)		(155)
Finance revenue					2		2
Finance costs					(42)		(42)
Share-based payments charge					(338)		(338)
Income tax charge					(133)		(133)
Profit for the period							1,194

	Identity Proofing		Identity 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

7.  SEGMENTAL INFORMATION (continued)

	Identity Proofing		Identity Solutions		Unallocated		Total Audited Year  to 31 March 2013
Year ended 31 March 2013	£'000		£'000		£'000		£'000
Total revenue	15,448		23,976		-		39,424
Operating profit before depreciation and amortisation	1,811		4,818		(913)		5,716
Depreciation of plant and equipment	(152)		(359)		-		(511)
Amortisation of intangible assets	(108)		(873)		-		(981)
Operating profit before finance revenue and income tax	1,551		3,586		(913)		4,224
Share of associate investment					(146)		(146)
Finance revenue					1		1
Finance costs					(85)		(85)
Share-based payments credit					(488)		(488)
Income tax credit					831		831
Profit for the year							4,337

8.  TAXATION

Taxation on profit on ordinary activities

		Unaudited 6 months to 30 Sept 2013		Unaudited 6 months to 30 Sept 2012		Audited Year to 31 March 2013
		£'000		£'000		£'000
Current income tax:
UK corporation tax on profit		56		-		2
Amounts overprovided in previous years		-		-		(160)
		56		-		(158)
Deferred tax:
Origination and reversal of temporary differences		123		(95)		(718)
Impact of change in tax rates		(46)		-		45
		77		(95)		(673)
Tax charge/(credit) in the Statement of Comprehensive Income		133		(95)		(831)

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 2013

Unaudited 6 months to 30 September 2012

Audited Year to 31 March 2013

pence per share

£'000

pence per share

£'000

pence per share

£'000

Profit attributable to equity holders of the parent

1.1

1,194

0.6

596

4.0

4,337

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 2013

Unaudited 6 months to 30 September 2012

Audited Year to 31 March 2013

pence per share

£'000

pence per share

£'000

pence per share

£'000

Profit attributable to equity holders of the parent

1.0

1,194

0.5

596

3.8

4,337

		30 Sept 2013		30 Sept 2012			31 March 2013
		No.		No.			No.
Basic weighted average number of shares in issue		109,207,975		108,137,511				108,313,878
Dilutive effect of share options		5,970,955		5,366,956				5,694,226
Diluted weighted average number of shares in issue		115,178,930		113,504,467				114,008,104

Adjusted

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

		Unaudited 6 months to 30 September 2013				Unaudited 6 months to 30 September 2012				Audited Year to 31 March 2013
		pence per share		£'000		pence per share		£'000		pence per share		£'000
Adjusted operating profit		2.3		2,554		1.4		1,499		5.1		5,522
Less net finance costs		-		(40)		-		(41)		(0.1)		(84)
Adjusted earnings		2.3		2,514		1.4		1,458		5.0		5,438

Adjusted operating profit means profits before share of results from associates, interest, tax, share based payment charges, amortisation of acquired intangibles and exceptional items.

10.  DIVIDENDS PAID AND PROPOSED

		Unaudited 6 months to 30 Sept 2013		Unaudited 6 months to 30 Sept 2012		Audited Year to 31 March 2013
		£'000		£'000		£'000
Declared and paid during the period
Final dividend for 2013: 1.5p per share (2012: 1.375p per share)		1,632		1,487		1,487
Proposed for approval at AGM (not recognised as a liability at 31 March 2013)
Final dividend for 2012: 1.5p per share		-		-		1,630

11.  PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 September 2013, the Group acquired property, plant and equipment with a cost of £342,000 (2012: £325,000).

Depreciation provided during the six months ended 30 September 2013 was £282,000 (2012: £230,000).

A disposal of £7,000 was made in the six months ended 30 September 2013 (2012: £nil).

12.  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 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
Additions - business combinations	1,068		407		1,475		1,710		-		3,185
Additions - product development	-		-		-		-		207		207
At 31 March 2013	6,358		1,141		7,499		16,007		802		24,308
Additions - business combinations	878		171		1,049		629		-		1,678
Additions - product development	-		-		-		-		194		194
At 30 September 2013	7,236		1,312		8,548		16,636		996		26,180
Amortisation and impairment
At 1 April 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
Impairment charge	-		-		-		-		69		69
Amortisation during the period	310		186		496		-		12		508
At 31 March 2013	812		435		1,247		-		355		1,602
Amortisation during the period	344		198		542		-		16		558
At 30 September 2013	1,156		633		1,789		-		371		2,160
Net book value
At 30 September 2013	6,080		679		6,759		16,636		625		24,020
At 31 March 2013	5,546		706		6,252		16,007		447		22,706
At 30 September 2012	4,788		485		5,273		14,297		321		19,891

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 and CRD (UK) Limited.  Under IFRS, goodwill is no longer amortised and is annually tested for impairment.

13.  INVESTMENTS IN ASSOCIATES

Following an additional investment made on 12 April 2013, the Group has a 27.37% interest in Loqate Inc., a private company which develops international addressing solutions, geocoding solutions and location based services which are used in the Group's portfolio of products and services.

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

		30 Sept 2013		30 Sept 2012		31 March 2013
		£'000		£'000		£'000
Opening investment value		154		58		58
Additional investment in the associate		15		90		242
Share of loss for the period		(155)		(97)		(146)
Closing investment value		14		51		154

14.  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 2013, the following share options were granted to executive directors, managers and staff of the Company.

Scheme		Date		No. of options		Exercise price
Executive Share Matching Plan		25 July 2013		799,933		2.50p
Employee Save As You Earn Scheme		23 July 2013		499,936		76.80p

The charge recognised from equity-settled share-based payments in respect of employee services received during the period was £338,000 (2012: £201,000).

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 related parties
		£'000		£'000		£'000
Associates:
2013		25		52		-
2012		-		12		-
Directors (see below):
2013		29		13		10
2012		-		15		-

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.

The Chief Executive of the Company is a director of Car Loan 4U Limited which is a client of the Group.

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 2013, the Group has not made any provision for doubtful debts relating to amounts owed by related parties (2012: nil).

Compensation of key management personnel (including directors)

		Unaudited 6 months to 30 Sept 2013		Unaudited 6 months to 30 Sept 2012		Audited Year to 31 March 2012
		£'000		£'000		£'000
Short-term employee benefits		307		276		828
Post-employment benefits		34		30		60
Share-based payments		333		530		530
		674		836		1,418

16.  SHARE CAPITAL

During the period 1,234,057 (2012: 499,038) ordinary shares of 2.5p were allotted on the exercise of share options for an aggregate cash consideration of £359,000 (2012: £144,000).

17.  BUSINESS COMBINATIONS

Acquisition of CRD (UK) Limited

On 2 July 2013, the Company acquired 100% of the voting shares of CRD (UK) Limited (CRD), an unlisted company based in the United Kingdom providing criminal record checking services to UK organisations.  The Company acquired CRD to broaden its client portfolio in the employment screening market.  The Consolidated Statement of Comprehensive Income includes the results of CRD for the three month period from the acquisition date.

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

		Fair value recognised on acquisition £'000
Assets
Brand and technology intellectual property		161
Customer relationships		878
Non-compete agreements		10
Plant and equipment		17
Trade and other receivables		76
Cash		449
Trade and other payables		(686)
Deferred tax liabilities		(214)
Total identifiable net assets at fair value		691
Goodwill arising on acquisition		629
Total purchase consideration transferred		1,320
Purchase consideration:
Cash		1,320
Total purchase consideration		1,320
Analysis of cash flows on acquisition:
Transaction costs of the acquisition (included in cash flows from operating activities)		(71)
Net cash acquired with the subsidiary (included in cash flows from investing activities)		449
Cash paid		(1,320)
Net cash outflow		(942)

The fair value of the acquired receivables amounts to £76,000.  The gross amount of receivables is £76,000.  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 CRD 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 £71,000 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.

From the date of acquisition, CRD has contributed £128,000 of revenue and operating profits before exceptionals of £57,000 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 £1,374,000 and revenue would have been £18,261,000.

Other business combination adjustments

During the six months ended 30 September 2013, settlements of £447,000 and £110,000 were made relating to the acquisitions of Capscan Parent Limited and TMG.tv Limited respectively, resulting in reduction in the deferred consideration liability on the balance sheet.

Exceptional items

The exceptional items associated with the costs of acquisitions within note 6 also include additional costs related to other acquisition related activities during the year.

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 6 months ended 30 September 2013 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 17.  We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

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

Directors' Responsibilities

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

As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting 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 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 6 months ended 30 September 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union.

Ernst & Young LLP

Manchester

25 November 2013

 

END

 

 

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