Interim Results
GB Group PLC
28 November 2002
For immediate Release
Thursday, 28 November 2002
GB Group plc
Interim Results for the Six Months Ended 30 September 2002
Highlights
- GB Group continued to make good progress and results are
slightly ahead of market expectations in the half-year
- Profit before tax improved to £0.3 million (2001: £2.4
million loss)
- Like-for-like operating profits in the continuing
Customer Relationship Management ('CRM') business increased to
£0.2 million (2001: £0.2 million loss) as a result of focus on
high margin business. Profitability is weighted towards the
second half of the financial year due to contract renewals
- Turnover remained steady at £5.2 million (2001:£5.2 million)
- Net cash inflow increased to £0.9 million (2001: £0.3
million) as a result of improved cash flow and a lower capital
expenditure requirement
- Net cash at 30 September 2002 was £6.2 million (2001: £1.2 million)
- Contracts have been signed with Gemserv for access to 28
million electricity Meter Point Asset Numbers and with Optima
for access to International Address Data for 220 countries
(Further details of theses contracts are available from GB
Group's website: www.gb.co.uk)
- Acquisition of eWare Interactive in October 2002 is
expected to be earnings enhancing (Further details of this
acquisition are available from GB Group's website:
www.gb.co.uk)
Commenting on the results, John Walker-Haworth, Chairman,
said; 'The Group has demonstrated progress in the first half.
It has delivered improved profitability and cash flow and
entered into a number of new business development contracts.
Our markets remain competitive, and our focus for the
remainder of the year is to continue to improve profitability,
cash flow and turnover growth, but not at the expense of
margins.'
For further information, please contact:
GB Group plc
Richard Law, Chief Executive 01244 657 333
Weber Shandwick Square Mile
Richard Hews 020 7950 2800
Website www.gb.co.uk
Notes for Editors:
1. GB Group plc is a Customer Relationship Management
('CRM') company based in Chester. GB Group's clients
include Coral, De Vere Hotels, Bank of Ireland, npower,
WHSmith - plus many government agencies, such as HM
Customs & Excise, National Criminal Intelligence Service
and the National Crime Squad.
2. Customer Relationship Management is one of the world's
fastest growing industries. CRM enables businesses to
focus on those customers who make a positive impact on
the bottom line by targeting them with tailored services
and incentives to improve loyalty. Additionally, CRM
techniques also help businesses predict when existing
customers are most likely to move on and how to target
more of the customers they really want.
3. GB Group enables businesses to build lasting
relationships with their customers by providing four
unique data solutions for DataCapture, DataCare,
DataInsight and DataManagement.
4. Businesses are currently using Customer Relationship
Management to:
- Manage customer databases
- Increase customer retention and acquisition
- Quantify customer profitability
- Identify cross-sell/up-sell opportunities
- Assess marketing profitability
CHAIRMAN'S HALF YEAR STATEMENT
I am pleased to report that the Group has continued to make progress
in the year to date.
Financial Performance for the Six Months to 30 September 2002
On 31 December 2001, the Group disposed of its Travel Interests for £4
million in cash to pursue its strategy of developing its specialist
Customer Relationship Management ('CRM') business. This enabled the
Group to focus on a single activity and improve its financial position
and profit performance in the half-year to 30 September 2002 as
follows:
- The Group achieved improved performance with profits on ordinary
activities before tax of £0.2 million, compared to a loss on ordinary
activities before tax of £2.4 million in the previous year. Like-for-
like operating profits in the continuing CRM business improved by £0.4
million to a profit of £0.3 million (2001: £0.2 million loss).
- The Group's strategy of improving profitability and margins to
create a business model that delivers an attractive level of
profitability and is capable of replication moving forward meant that
some work was forgone in competitive markets. Accordingly like-for-
like turnover remained in line with last year at £5.2 million.
- Net cash inflow, after taking account of capital expenditure,
increased to £0.9 million (2001: £0.3 million) as a result of improved
cash flow from operations and a lower requirement for capital
expenditure following the disposal of the Travel Interests.
- Group liquidity improved significantly. Net cash at 30 September
2002 was £6.2 million compared to £1.2 million last year.
Business Development
Data
Access to high quality data, which is used in the provision of the
Group's products and services, is fundamental to the success of the
business. Since the last year-end the Group's strategy to gain access
to valuable new databases has made good progress. Contracts have been
entered into with Gemserv Limited (a UK company owned by all of the
major electricity supply and distribution companies) for access to 28
million electricity Meter Point Asset Numbers (MPAN) in Great Britain,
and with Optima Database Management Limited for access to International
Address Data for 220 countries. Further details of these agreements
can be found on the Group's website at www.gb.co.uk
Restrictions on the use of Electoral Roll data for direct marketing
purposes which were introduced in October 2002, and which were
referred to in the Annual Report issued in May, have so far had
limited impact on the business. GB will continue to pursue its
strategy of developing relationships with other owners of data with
the aim of securing further sources of data where required.
Acquisition
In October, GB announced that it had expanded its operations and
strengthened its management team with the acquisition of eWare
Interactive Limited for a contingent consideration of up to £0.5
million in cash based on the post-acquisition profitability. eWare
Interactive's customer base and operations are complementary to GB and
the acquisition is expected to be earnings enhancing. Further details
of this acquisition can be found on the Group's website.
Prospects
The Group has demonstrated progress in the first half. It has
delivered improved profitability and cash flow and entered into a
number of new business development contracts. Our markets remain
competitive, and our focus for the remainder of the year is to
continue to improve profitability, cash flow and turnover growth, but
not at the expense of margins.
The Group's profitability is very much weighted to the end of the
financial year due to contract renewals. We are encouraged with the
progress made in the first half of the financial year to 30 September
and the period since then.
John Walker-Haworth
Chairman
28 November 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 30 September 2002
Restated*
Unaudited Unaudited Audited
6 Months to 6 Months to Year to
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Note
Turnover
Continuing Operations
- Customer Relationship Management 5,183 5,231 12,017
Discontinued Operations
- Travel Interests - 3,637 5,172
________ ________ ________
5,183 8,868 17,189
Cost of sales (2,283) (2,599) (5,459)
________ ________ ________
Gross profit 4 2,900 6,269 11,730
Other operating expenses
(excluding goodwill amortisation
and exceptional items) 3 (2,475) (6,508) (11,328)
Exceptional items 5 - (1,846) (2,166)
Goodwill amortisation 6 (224) (335) (560)
________ ________ ________
Operating profit/(loss) 4
Continuing Operations
- Customer Relationship Management 178 (216) 679
Continuing Operations
- Head Office 7 23 (354) (538)
Discontinued Operations
- Travel Interests - (1,850) (2,465)
________ ________ ________
201 (2,420) (2,324)
Share of operating
(loss)/profit in associate (5) - 12
________ ________ ________
Total operating profit/(loss):
Group and share of associate 196 (2,420) (2,312)
Interest receivable less payable 105 9 52
________ ________ ________
Profit/(loss) on ordinary
activities before taxation 301 (2,411) (2,260)
Taxation (31) 1 517
________ ________ ________
Profit/(loss) on ordinary
activities after taxation 270 (2,410) (1,743)
Dividend - - -
________ ________ ________
Profit/(loss) attributable to
shareholders 270 (2,410) (1,743)
======== ======== ========
Profit/(loss) per 2.5p
ordinary share (pence) 9 0.3 (3.0) (2.2)
________ ________ ________
Profit/(loss) per 2.5p
ordinary share (pence) - diluted 9 0.3 (3.0) (2.2)
________ ________ ________
Adjusted profit/(loss) per 9
2.5p ordinary share (pence) -
before goodwill amortisation
and operating exceptional items 0.6 (0.3) 1.2
======== ======== ========
* In the year ended 31 March 2002 there was a change in accounting
classification whereby the direct salary and other direct costs
associated with the fulfilment of revenue previously charged to
administrative expenses were charged to cost of sales (see note 3).
CONSOLIDATED BALANCE SHEET
As at 30 September 2002
Unaudited Unaudited Audited
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Fixed assets
Intangible assets 7,101 9,422 7,325
Tangible assets 558 1,783 613
Investments 29 - 33
________ ________ ________
7,688 11,205 7,971
________ ________ ________
Current assets
Stocks 18 1 -
Debtors 2,690 7,970 4,143
Cash and short term deposits 6,203 1,593 5,338
________ ________ ________
8,911 9,564 9,481
Creditors : amounts falling due
within one year (2,765) (7,780) (3,860)
________ ________ ________
Net current assets 6,146 1,784 5,621
________ ________ ________
Total assets less current liabilities 13,834 12,989 13,592
Creditors : amounts due in more
than one year - (310) -
Provisions for liabilities and charges (218) - (246)
________ ________ ________
13,616 12,679 13,346
======== ======== ========
Capital and reserves
Called up share capital 1,991 1,991 1,991
Share premium account 3,132 31,219 3,132
Merger reserve 6,575 11,526 6,575
Profit and loss account 1,918 (32,057) 1,648
________ ________ ________
13,616 12,679 13,346
======== ======== ========
CONSOLIDATED CASHFLOW STATEMENT
For the six months ended 30 September 2002
Unaudited Unaudited Audited
6 Months to 6 Months to Year to
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Note
Net cash inflow from
operating activities 8(a) 840 466 715
________ ________ ________
Returns on investments and
servicing of finance
Interest received 105 24 229
Interest paid - (14) (177)
________ ________ ________
105 10 52
________ ________ ________
Capital expenditure and
financial investment
Payments to acquire tangible
fixed assets (89) (264) (432)
Receipts from the sale of
tangible fixed assets 9 38 214
________ ________ ________
(80) (226) (218)
Acquisitions and disposals ________ ________ ________
Disposal of subsidiary undertakings - - 4,021
Fees associated with the dispoal of
subsidiary undertakings - - (247)
Net cash transferred with subsidiary - - (190)
Undertakings
Purchase of associate - - (25)
________ ________ ________
3,559
________ ________ ________
Cash inflow before management of liquid
resources and financing 865 250 4,108
________ ________ ________
Management of liquid resources
Cash deposited to short term deposits (1,178) (4) (3,833)
________ ________ ________
Financing
Repayment of capital element of finance
Leases and loans - (61) (80)
________ ________ ________
(Decrease)/increase in cash 8(b) (313) 185 195
======== ======== ========
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The interim financial statements are prepared on the basis of the
accounting policies set out in the annual report and accounts for
the year ended 31 March 2002.
2. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in this interim statement does
not constitute statutory accounts as defined in section 240 of the
Companies Act 1985. The financial information for the full
preceding year is based on the statutory accounts for the
financial year ended 31 March 2002. Those accounts, upon which
the auditors issued an unqualified opinion, have been delivered to
the Registrar of Companies.
3. RESTATEMENT OF RESULTS
In the year ended 31 March 2002 there was a change in accounting
classification whereby the direct salary and other direct costs
associated with the fulfilment of revenue previously charged to
administrative expenses were charged to cost of sales.
For consistency, the unaudited results for the 6 months to 30
September 2001 have been restated to reflect the same
classification as follows:
Restated
Unaudited Unaudited Audited
6 Months to 6 Months to Year to
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Operating expenses before
reclassification 3,463 7,397 13,268
Costs previously
classified as operating expenses
moved to cost of sales (988) (889) (1,896)
________ ________ ________
2,475 6,508 11,372
________ ________ ________
NOTES TO THE INTERIM FINANCIAL STATEMENTS continued
4. COMPARATIVE ANALYSIS
Unaudited Unaudited
Continuing Discontinued
Unaudited Unaudited Operations Operations
6 months to 6 months to 6 months to 6 momths to
30 September 30 September 30 September 30 September
2002 2001 2001 2001
Turnover
Continuing Operations
- Customer Relationship Management 5,183 5,231 5,231 -
Discontinued Operations
- Travel Interests - 3,637 - 3,637
_________ _________ _________ _________
5,183 8,868 5,231 3,637
Cost of sales (2,283) (2,599) (2,537) (62)
_________ _________ _________ _________
2,900 6,269 2,694 3,575
Gross profit
Other operating expenses
(excluding goodwill amortisation
and exceptional items) (2,475) (6,508) (3,040) (3,468)
Exceptional items - (1,846) (82) (1,764)
Goodwill amortisation (224) (335) (224) (111)
_________ _________ _________ _________
Operating profit/(loss)
Continuing Operations
- Customer Relationship Management 178 (216) (298) 82
Continuing Operations
- Head Office 23 (354) (354) -
Discontinued Operations
- Travel Interests - (1,850) - (1,850)
_________ _________ _________ _________
201 (2,420) (652) (1,768)
_________ _________ _________ _________
NOTES TO THE INTERIM FINANCIAL STATEMENTS continued
5. EXCEPTIONAL COSTS
Unaudited Unaudited Audited
6 Months to 6 Months to Year to
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Continuing Operations:
Impairment of Prenton site
arising through closure - 50 50
Profit on sale of Prenton site - - (38)
Provision for redundancy and other
closure costs at Prenton site - 32 32
Discontinued Operations:
Impairment of goodwill on
travel related business - 1,764 1,764
Compensation for loss of ofice - - 112
Provision against lease rentals - - 246
________ ________ ________
- 1,846 2,166
________ ________ ________
6. GOODWILL AMORTISATION
Unaudited Unaudited Audited
6 Months to 6 Months to Year to
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Continuing Operations
- Customer Realtionship
Management (224) (224) (449)
Discontinued Operations
- Travel Interests - (111) (111)
________ ________ ________
(224) (335) (560)
________ ________ ________
7. HEAD OFFICE COST ANALYSIS
Head office costs for the half-year reduced from £0.4 million last
year to £0.1 million following the sale of the Travel Interests.
The reversal of a balance sheet provision at the half-year means
that the accounts show a small profit from head office. Underlying
head office costs are approximately £0.25 million per annum.
Unaudited Unaudited Audited
6 Months to 6 Months to Year to
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Operating profit/(loss)
Continuing Operations
- Head Office (105) (354) (538)
Reversal of balance sheet accruals 128 - -
________ ________ ________
23 (354) (538)
________ ________ ________
8. NOTES TO THE STATEMENT OF CASH FLOWS
a) Reconciliation of total operating profit/(loss) to operating cash flows
Unaudited Unaudited Audited
6 Months to 6 Months to Year to
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
Total operating profit/(loss) 196 (2,420) (2,312)
Depreciation 136 240 431
Goodwill amortisation and impairment 224 2,099 2,324
Amortisation of intangible fixed assets - 80 120
Provision against tangible fixed assets - 50 50
Share of loss/(profit) of associated
undertaking 5 - (12)
(Profit)/loss on disposal of fixed assets (1) 1 (40)
(Increase)/decrease in stocks (18) - -
(Decrease)/increase in provisions (28) - 246
Decrease/(increase) in debtors 1,453 (226) (154)
(Decrease)/increase in creditors (1,127) 642 62
_________ _________ ________
840 466 715
========= ========= ========
b) Reconciliation of net cashflow to movement in net funds
Unaudited Unaudited Audited
6 Months to 6 Months to Year to
30 September 30 September 31 March
2002 2001 2002
£'000 £'000 £'000
At the beginning of the period 5,338 939 939
Loans transferred on dispoal of
subsidiary undertaking - - 291
Decrease in debt - 61 80
(Decrease)/increase in cash (313) 185 195
Movement in short term deposits
with banks 1,178 4 3,833
_________ _________ _________
At the end of the period 6,203 1,189 5,338
========= ========= =========
c) Analysis of net funds
At 31 March Cashflow At 30 September
2002 Six Months 2002
£'000 £'000 £'000
Cash 1,312 (313) 999
Short term deposits 4,026 1,178 5,204
_________ _________ __________
5,338 865 6,203
========= ========= ==========
9. EARNINGS PER SHARE
Earnings per share has been calculated in accordance with
Financial Reporting Standard 14 by reference to the following:
Unaudited 6 Months Unaudited 6 Months Audited Year to
to 30 September to 30 September 31 March
2002 2001 2002
Pence £'000 Pence £'000 Pence £'000
Profit/(loss) after taxation 0.3 270 (3.0) (2,410) (2.2) (1,743)
Add operating exceptional items - - 2.3 1,846 2.7 2,166
Add goodwill amortisation 0.3 224 0.4 335 0.7 560
_______ _______ _______ _______ _______ _______
Adjusted profit/(loss) after
taxation 0.6 494 (0.3) (229) 1.2 983
======= ======= ======= ======= ======== =======
Weighted average number of
shares in issue 79,665,527 79,665,527 79,665,527
Dilution effect of share options 240,968 - -
___________ ___________ ___________
Diluted weighted average number
of shares (pence) 79,906,495 79,665,527 79,665,527
=========== =========== ===========
Diluted earnings per share 0.3 (3.0) (2.2)
___________ ___________ ___________
INDEPENDENT REVIEW REPORT TO GB GROUP PLC
Introduction
We have been instructed by the company to review the financial
information for the six months ended 30 September 2002 which comprises
the Consolidated Profit and Loss Account, the Consolidated Balance
Sheet, the Consolidated Cash Flow Statement and the related notes 1 to
9. We have read the other information contained in the interim report
and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained
therein, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the interim
report in accordance with the Listing Rules of the Financial Services
Authority which require that the accounting policies and presentation
applied to the interim figures should be consistent with those applied
in preparing the preceding annual accounts except where any changes,
and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in
Bulletin 1999/4 'Review of Interim Financial Information' issued by
the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and
applying analytical procedures to the financial information and
underlying financial data and based thereon, assessing whether the
accounting policies and presentation have been consistently applied
unless otherwise disclosed. A review excludes audit procedures such
as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and
therefore provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material
modifications that should be made to the financial information as
presented for the six months ended 30 September 2002.
Ernst & Young LLP
Manchester
28 November 2002
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