Interim Results

GB Group PLC 28 November 2006 Embargoed until 7.00am 28 November 2006 GB GROUP PLC ('GB' or the 'Group') Interim Results for the Six Months Ended 30 September 2006 Highlights •Group revenue increased by 18% to £7.0 million (2005: £5.9 million) due to increased sales in DataAuthentication which provides online age and identity verification solutions. •DataAuthentication revenues increased to £2.5 million (2005: £0.9 million). •Investment phase in DataAuthentication in the UK is now nearing completion and this business should be cash generative, ahead of schedule, in the final quarter of this financial year. •DataAuthentication currently has 138 clients compared to 114 in July. •4 of the top 5 retail banks now have URU (TM) either under evaluation or installed in one or more of their divisions. Financial Services sector is now our largest sector. •GB is leading the market in the delivery of online data capture services to address competition in its traditional business areas. •Group loss before tax was £637,000 (2005: £183,000), which included £500,000 increased investment to support growth plans for DataAuthentication in the UK and overseas. •Cash balances at 30 September were £6.1 million (2005: £6.4 million). •Dick Linford has been appointed as a Non-Executive Director. John Walker-Haworth, Chairman, commented: 'The Group's revenue performance during the final half of the financial year was ahead of our expectations and the Board continues to be excited by the future prospects for the Group.' - Ends - For further information, please contact: GB Group plc Richard Law, Chief Executive 01244 657333 Mona Navin-Mealey, Finance Director Weber Shandwick Square Mile 020 7067 0700 Richard Hews/ Helen Thomas Website www.gb.co.uk Notes to Editors About URU (TM) URU is an online identity verification service which was developed jointly with BT and is DataAuthentication's principle offering. URU, which is powered by GB's ID3 (TM) search engine and decision making technology, provides access to GB's comprehensive range of identity data and BT's high capacity web delivery. It helps organisations to protect themselves from the growing problem of identity theft and fraud, which is estimated to cost the UK economy over £1.7 billion per annum. URU enables companies subscribing to the service to make an instant decision whether to accept the identity claimed by any given individual and confirm their age in seconds. URU works by cross checking personal information provided by an individual at the point of acquisition against a comprehensive range of datasources to confirm that an individual is who they claim to be, live where they claim to live and meet certain minimum legal age requirements. No personal data is disclosed by the reference databases and as a result URU is compliant with the Data Protection Act. URU also provides a valuable audit trail demonstrating that the necessary checks have taken place, thereby helping companies comply with legislation, including the 2nd European Money Laundering Directive, Proceeds of Crime Act and Minimum Legal Age requirements of certain industry sectors. The addition of data from CallCredit also enables users of URU to incorporate credit reference data. As a result of legislation, new opportunities and social responsibility requirements, the market for online ID verification is significant and growing. Although an estimated 0.5 billion manual ID checks are conducted annually in the UK, less than 3% of these are currently performed electronically. URU has demonstrated that online checks are more effective, less expensive and more robust. The market is moving towards online checks as fraudulent documents become ever more sophisticated, more readily available and more difficult to check manually. It is estimated that by 2010, the market for online ID checks could be 300 million checks per annum. GB works closely with trade and industry associations, such as the Finance and Leasing Association, the Remote Gambling Association and the Financial Technology Research Centre, to advise businesses that more robust processes can prevent financial crime. We have worked closely with the Gaming Industry to address social issues such as underage gambling and addiction and our Social Responsibility Consultancy helps Gaming operators formulate best practice to comply with regulatory requirements and improve profitability. About ID3-Check ID3-Check is an international online identity verification service developed by GB's DataAuthentication business. It is a hybrid international version of the technology underpinning URU, GB's joint project with BT which is now the UK's leading online age and identity verification service. The service helps organisations to protect themselves from the growing global problem of identity theft and fraud. ID3-Check enables organisations subscribing to the service to make an instant decision whether to accept the identity claimed by an individual and confirm their age in seconds. ID3-Check can confirm the age and identity of nearly half a billion people in 21 countries including Australia, Canada, the USA and most Western European countries. ID3-Check works by cross checking personal information provided by an individual at the point of acquisition against a comprehensive range of data sources to confirm that an individual is who they claim to be, live where they claim to live and meet certain minimum legal age requirements. No personal data is disclosed by the reference databases and as a result ID3-Check is compliant with Data Protection laws. ID3-Check also provides a valuable audit trail demonstrating that the necessary checks have taken place, thereby helping companies comply with legislation, including the 2nd European Money Laundering Directive, Proceeds of Crime Act and Minimum Legal Age requirements of certain industry sectors. As a result of legislation, new opportunities and social responsibility requirements, the market for online ID verification across borders is significant and growing. About GB Group plc GB Group plc provides a range of products and services to enable organisations to capitalise on one of their greatest assets - customer data. The Company has expertise across a range of sectors and is able to transform customer data into valuable information, enabling clients to make better, more informed decisions. The development of innovative software and services, through to the provision of the UK's most comprehensive consumer business databases - The National Register (R) and the National Authentication Register - positions GB Group as a widely acknowledged industry leader in its specialist markets. We are constantly improving business processes by building on our core values of Innovation, Quality and Excellence. This is reflected in our customer satisfaction surveys and also through research, carried out by Manchester Business School, which confirms our products are out-performing the competition. GB Group plc has three complementary offerings: • DataAuthentication helps businesses validate personal identity information and provides anti-fraud solutions to fight crime. • DataIntegrity helps companies capture and maintain accurate customer contact data, an essential foundation for any profitable customer relationship. • DataSolutions empowers companies to consolidate and analyse customer data from various sources, enabling them to make better, more informed decisions. Established since 1989, GB's core competencies combined with industry sector knowledge have enabled the company to deliver significant value to organisations such as Standard Life, Scottish Power and TD Waterhouse in helping them derive maximum value from their customer data and sustain real advantage over their competition. GB Group is supported by its key relationships with major organisations with whom it works with on major initiatives (an example being British Telecom), together with a team of highly talented and motivated staff successfully delivering business solutions. GB Group plc is listed on the London Stock Exchange (www.gb.co.uk). CHAIRMANS HALF YEAR STATEMENT Overview I am pleased to report a strong performance in the first six months of the financial year. Group revenue increased to £7.0 million, an increase of 18%, compared to the same period last year. This was due entirely to increased sales in the DataAuthentication business which provides online age and identity verification solutions. DataAuthentication revenues during the period were £2.5 million (2005: £0.9 million). The investment phase in DataAuthentication for the UK is now nearing completion and DataAuthentication in the UK should be cash generative, ahead of schedule, in the final quarter of this financial year. Overall, Group losses before taxation for the six month period were £637,000 (2005: £183,000). This included increased investment of approximately £500,000 to put in place the resource and infrastructure to support our aggressive growth plans for DataAuthentication both in the UK and overseas. This increase in resource and infrastructure provides the Group with the opportunity to continue its revenue growth. Cash balances at 30 September were £6.1 million (2005: £6.4 million). DataAuthentication As indicated above, DataAuthentication continued its fast pace of growth and, during the first half of the financial year, the number of individual transaction searches increased to 1.6 million compared to 575,000 in the corresponding period last year. During the recent month of October, the number of searches was in excess of 335,000. The number and quality of new clients continue to increase and DataAuthentication currently has 138 clients compared to 114 announced in July. Your Board considers that the Financial Services sector represents GB's largest and most valuable target market, and it is highly encouraging that during the first half 41% of GB's DataAuthentication revenues came from that sector, compared to 29% in the corresponding period last year. This is now our largest sector and 4 of the top 5 UK retail banks now have URU (TM) either under evaluation or installed in one or more of their divisions. Identity fraud is a global issue for DataAuthentication's major clients and this requires a global solution. DataAuthentication has recently launched its international online age and identity verification service called ID3-Check, enabling clients to verify customers in 21 countries including the USA, Canada, Australia and a number of European countries. Revenues from international checks will be modest in the current financial year and may be marginally reduced by recent legislation affecting Online Gaming in the USA, although this has not diminished GB's positive outlook for the development of its international DataAuthentication business. We expect that, as a result of the new US legislation, major Online Gaming operators will now focus their attention on European and other markets where GB has a strong market position. DataAuthentication now occupies a leading position in the developing market for the online authentication of individuals. We are excited by its considerable success to date and its very significant potential for the future. DataIntegrity and DataSolutions The markets in which DataIntegrity and DataSolutions operate are mature and competition remains keen. This competition has resulted in the loss to GB of some business, and in the eight months to the end of November 2006 the combined revenues in these businesses declined by approximately 12% compared to the same period last year. GB has developed new products in these markets and, at the same time, has further improved its existing services. GB is now leading the market in the delivery of online data capture services, based on the same technology developed for our DataAuthentication business. These online services are the first to market of their kind and are targeted at replacing services based on older technology currently used in the market. Accordingly, they provide an opportunity for GB to address competition in these areas. Board of Directors Your Board is very pleased to announce that Dick Linford has been appointed today as a Non-Executive Director. Dick was previously Chief Finance Officer of News International. Prospects The Group's revenue performance during the first half of the financial year was ahead of our expectations and the Board continues to be excited by the future prospects for the Group. John Walker-Haworth Chairman 28 November 2006 CONSOLIDATED INCOME STATEMENT For the six months ended 30 September 2006 ---------------------------------------------------- Note Unaudited Unaudited Audited 6 months to 6 months to Year to 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 Revenue 7,032 5,939 12,835 Cost of sales (3,763) (2,640) (5,800) --------- -------- -------- Gross profit 3,269 3,299 7,035 Other operating expenses (4,059) (3,638) (7,547) Exceptional items - - (58) --------- -------- -------- Loss before tax and finance revenue (790) (339) (570) Finance revenue 153 156 302 --------- -------- -------- Loss before tax (637) (183) (268) Income tax - - 26 --------- -------- -------- Loss for the period (637) (183) (242) --------- -------- -------- Loss per share - basic loss for the period 4 (0.8)p (0.2)p (0.3)p - diluted loss for the period 4 (0.8)p (0.2)p (0.3)p Dividends - Dividend paid per share 5 0.75p 0.5p 0.5p - Dividend paid 5 621 404 404 ---------------------------------------------------- CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 September 2006 ---------------------------------------------------- Equity Merger Capital Retained Total share reserve redemption earnings equity capital reserve £'000 £'000 £'000 £'000 £'000 Balance at 1 April 2005 5,171 6,575 3 1,869 13,618 ------ ------- ------- ------ ----- Loss for the period - - - (183) (183) ------ ------- ------- ------ ----- Total income and expense for the period - - - (183) (183) Exercise of options 102 - - - 102 Cost of share-based payments - - - 84 84 Equity dividend - - - (404) (404) ------ ------- ------- ------ ----- Balance at 30 September 2005 5,273 6,575 3 1,366 13,217 Loss for the period - - - (59) (59) ------ ------- ------- ------ ----- Total income and expense for the period - - - (59) (59) Exercise of options 177 - - - 177 Cost of share-based payments - - - 115 115 ------ ------- ------- ------ ----- Balance at 1 April 2006 5,450 6,575 3 1,422 13,450 Loss for the period - - - (637) (637) ------ ------- ------- ------ ----- Total income and expensefor the period - - - (637) (637) Exercise of options 167 - - - 167 Cost of share-based payments - - - 88 88 Equity dividend - - - (621) (621) ------ ------- ------- ------ ----- Balance at 30 September 2006 5,617 6,575 3 252 12,447 ------ ------- ------- ------ ----- CONSOLIDATED BALANCE SHEET As at 30 September 2006 ---------------------------------------------------- Unaudited Unaudited Audited As At As At As At 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 ASSETS Non-current assets Property, plant and equipment 792 362 331 Goodwill 6,506 6,506 6,506 Deferred tax asset 360 346 360 -------- ------- ------- 7,658 7,214 7,197 -------- ------- ------- Current assets Inventories - 1 - Trade and other receivables 2,937 2,052 2,868 Current tax 12 45 57 Cash and cash equivalents 6,111 6,434 6,747 -------- ------- ------- 9,060 8,532 9,672 -------- ------- ------- TOTAL ASSETS 16,718 15,746 16,869 -------- ------- ------- EQUITY AND LIABILITIES Capital and reserves Equity share capital 5,617 5,273 5,450 Merger reserve 6,575 6,575 6,575 Capital redemption reserve 3 3 3 Retained earnings 252 1,366 1,422 -------- ------- ------- Total equity attributable to equity holders of the parent 12,447 13,217 13,450 -------- ------- ------- Non-current liabilities Provisions - 182 - -------- ------- ------- Current liabilities Trade and other payables 4,246 2,347 3,311 Provisions 25 - 108 -------- ------- ------- 4,271 2,347 3,419 -------- ------- ------- TOTAL LIABILITIES 4,271 2,529 3,419 -------- ------- ------- TOTAL EQUITY AND LIABILITIES 16,718 15,746 16,869 -------- ------- ------- ---------------------------------------------------- CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 September 2006 ---------------------------------------------------- Unaudited Unaudited Audited 6 months to 6 months to Year to 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 Cash flows from operating activities Operating loss (790) (339) (570) Depreciation 87 100 187 Loss on disposal of property, plant and equipment - 1 3 Share-based payments 88 84 199 Decrease in inventory - (1) - Decrease in provisions (83) (48) (122) (Increase)/decrease in trade and other receivables (69) 128 (688) Increase in trade and other payables 935 7 972 -------- -------- ------- Cash generated/(consumed) from operations 168 (68) (19) Income tax received 45 - - -------- -------- ------- Net cash generated/(consumed) from operating activities 213 (68) (19) -------- -------- ------- Cash flows from investing activities Purchase of property, plant and equipment (548) (101) (160) Interest received 153 156 302 -------- -------- ------- Net cash from investing activities (395) 55 142 -------- -------- ------- Cash flows from financing activities Proceeds from issue of shares 167 102 279 Dividends paid to equity shareholders of the parent (621) (404) (404) -------- -------- ------- Net cash flows used in financing activities (454) (302) (125) -------- -------- ------- Net decrease in cash and cash equivalents (636) (315) (2) Cash and cash equivalents at beginning of period 6,747 6,749 6,749 -------- -------- ------- Cash and cash equivalents at end of period 6,111 6,434 6,747 -------- -------- ------- NOTES TO THE INTERIM REPORT ---------------------------------------------------- 1. CORPORATE INFORMATION The interim report of GB Group plc for the six months ended 30 September 2006 was authorised for issue in accordance with a resolution of the directors on 27 November 2006. GB Group plc is a public limited company incorporated in the United Kingdom whose shares are publicly traded. 2. BASIS OF PREPARATION AND ACCOUNTING POLICIES Basis of Preparation This interim report of GB Group plc is for the six months ended 30 September 2006. The Group has not applied IAS 34, Interim Financial Reporting, which is not mandatory for UK groups, in the preparation of this interim report. The interim report is presented in sterling and all values are rounded to the nearest thousand (£'000) except when otherwise indicated. The interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985 and therefore does 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 2006. The financial information for the preceding year is based on the statutory accounts for the year ended 31 March 2006. These accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. Accounting Policies The accounting policies adopted in the preparation of the report are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 March 2006. 3. SEGMENTAL INFORMATION All of the revenue, (losses)/profits, operating assets and liabilities relate to the Group's principal business activities, all of which are continuing, being the development, sale and support of business application software, the provision of marketing database and anti-fraud services and the licensing of technology. Revenue is stated net of value added tax. Revenue and operating losses arise principally in the United Kingdom. 4. 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 year. Unaudited 6 months Unaudited 6 months Audited Year to to 30 September to 30 September 31 March 2006 2005 2006 Pence pence pence per per per share £'000 share £'000 share £'000 Loss attributable to equity holders of the parent (0.8) (637) (0.2) (183) (0.3) (242) ------ ------ ------ ------ ------ ------ Diluted Diluted earnings per share amounts are calculated by dividing the net profit for the year attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year 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. 30 Sept 30 Sept 31 March 2006 2005 2006 No. No. No. Basic weighted average number of shares in issue 83,023,079 80,667,324 81,061,685 Diluted effect of share options - - - -------- -------- -------- Diluted weighted average number of shares in issue 83,023,079 80,667,324 81,061,685 -------- -------- -------- The loss for the period and the weighted average number of ordinary shares used for calculating the diluted earnings per share are identical to those used for the basic earnings per share. This is because the outstanding share options would have the effect of reducing the loss per ordinary share and would therefore not be dilutive under the terms of IAS 33, Earnings per Share. 5. DIVIDENDS PAID AND PROPOSED Unaudited Unaudited Audited 6 months to 6 months to Year to 30 Sept 30 Sept 31 March 2006 2005 2006 £'000 £'000 £'000 Declared and paid during the period Final dividend for 2006: 0.75p (2005: 0.5p) 621 404 404 Proposed for approval at AGM (not recognised as a liability at 31 March 2006) Final dividend for 2006: 0.75p - - 621 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 2006 which comprises Consolidated Income Statement, Consolidated Balance Sheet, Consolidated Cash Flow Statement, Consolidated Statement of Changes in Equity, and the related notes 1 to 5. 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. This report is made solely to the company in accordance with guidance contained in Bulletin 1999/4 'Review of interim financial information' 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 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 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 International Standards on Auditing (UK and Ireland) 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 2006. Ernst & Young LLP Manchester 28 November 2006 This information is provided by RNS The company news service from the London Stock Exchange

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