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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Gb Group Plc | LSE:GBG | London | Ordinary Share | GB0006870611 | ORD 2.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -12.40 | -4.10% | 290.20 | 289.00 | 290.80 | 305.00 | 288.60 | 305.00 | 510,672 | 16:35:09 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computer Programming Service | 278.81M | -119.79M | -0.4743 | -6.11 | 732.48M |
TIDMGBG
RNS Number : 4626H
GB Group PLC
01 December 2015
Embargoed until 7.00 a.m. 1st December 2015
GB GROUP PLC
("GBG" or the "Group")
Half Yearly Report
GB Group plc (AIM: GBG), the global identity data intelligence specialist, announces its unaudited results for the six months ended 30 September 2015.
Financial Highlights
-- Strong trading performance for the six months to 30 September:
o Revenue up 39% to GBP32.4 million (2014: GBP23.2 million)
o Adjusted operating profits increased by 21% to GBP4.5 million (2014: GBP3.7 million)
o Adjusted basic earnings per share(++) of 3.4p (2014: 3.3p)
o 18% increase in overall organic revenue growth (2014: 13%)
o Both segments of the Group, Identity Proofing and Identity Solutions, contributing to revenue growth
o 32% increase in profit after tax to GBP2.3 million (2014: GBP1.7 million)
-- The Group has had a good start to the year and anticipates delivering full year results in line with market expectations.
-- Highly cash generative with net cash from operating activities increasing by 61% to GBP5.7 million (2014: GBP3.5 million).
-- Net cash balances of GBP1.2 million (2014: GBP8.6 million) after payments for dividends, the acquisition of Loqate and an earn-out relating to DecTech.
Operational Highlights
-- Our acquisition strategy, to create truly international services and to support GBG's customers globally, continued with the successful acquisition of Loqate Inc. completed in April 2015. DecTech, based in Melbourne and acquired in April 2014, continues to perform strongly.
-- Excellent progress in growing revenues from international clients who now account for 26% of GBG's business with a number of major financial services sector contract wins in the Asia Pacific region secured in the first half.
-- GBG products and services have the ability to conduct KYC (Know Your Customer) checks for 40 countries (2014: 31).
-- New banking facility arrangements agreed with Barclays and Lloyds to support future acquisition and growth activities.
Richard Law, CEO, commented,
"The Group continues to perform well and this reflects our focus on delivering the Group's Vision, Objectives and Strategies (VOS). As we build upon our market-leading position and the strong differentiation we have against our competitors, I expect this progressive trend of profitable growth to continue."
Notes:
Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payments, exceptional items, share of associate investment result, interest and tax.
Net cash means cash and short-term deposits less borrowings.
(++) Adjusted earnings per share is defined as adjusted operating profit less net finance costs and tax divided by the basic weighted average number of ordinary shares of the Company. In prior periods the Group reported adjusted earnings per share on a pre-tax basis and the comparative numbers have been restated to take in account the change to a post-tax basis.
For further information, please contact:
GBG Richard Law, Chief Executive Dave Wilson, Group Finance Director & Operations Director 01244 657333 Peel Hunt LLP (Nominated Adviser and Broker) Richard Kauffer 020 7418 8900 Newgate Andrew Jones Bob Huxford 020 7653 9850 Website www.gbgplc.com
About GBG
GBG is a global specialist in Identity Data Intelligence. We help organisations make decisions about the customers they serve and the people they employ.
Through our fundamental belief that the digital economy relies on everyone having access to data they can trust, GBG enables companies and governments to fight fraud and --crime, to improve the customer experience and help to protect the more vulnerable people in our society.
Headquartered in Chester (UK) and with 18 offices across the world, GBG provides solutions to many of the world's biggest organisations, from established brands like Nike and Harrods to disruptive newcomers such as Taskrabbit and Stripe.
Find out more about how we use identity data intelligently by visiting www.gbgplc.com and following us on Twitter: @gbgplc
About GBG's solutions
We provide a number of business solutions aimed at informing decisions about customers or employees in key areas:
Employing people - we provide thorough background checks through the online verification of individuals and key documents such as a driver's licence, enabling organisations to safeguard, recruit and engage with confidence.
Registering identities - GBG solutions facilitate the registration of identity data, such as name and address, contact information and social network IDs, quickly and with minimum impact on the customer experience.
Verifying identities - we provide more innovative ways of confirming identity than simply relying on credit data. Our solutions check the identities of more than 4 billion people worldwide and also verify citizens of the world's largest economies to the rigorous standards set by the world's financial regulators.
Building relationships - we work collaboratively with clients to make sure they use the data their customers share with them to create personalised customer journeys for each individual, responding to every interaction in real time.
Fighting fraud - our fraud prevention solutions not only check new customer details in real time as they register but monitor and detect application and transaction fraud on an ongoing basis.
Locating people - voted 'Most Innovative Online Product' at the 2015 UK Retail Fraud Awards, GBG technology confirms and locates the people our clients need to connect with. It saves valuable time and resource and ensures that good customers don't incur the cost of inefficient processes.
GBG is listed on the London Stock Exchange (GBG). For more information visit www.gbgplc.com
CHAIRMAN'S STATEMENT
I am pleased to report that GBG has delivered another strong performance in the first half of the year. Revenue has grown year-on-year by 39% and pleasingly almost half of this increase (18%) came from organic growth. We also saw improved adjusted operating profit, up by 21% on last year after investing circa GBP1.3 million in our product and business development capabilities.
I recently joined the Chief Executive when we visited some of GBG's offices in the Asia Pacific region as well as the West Coast of the USA. During these visits I met with our team members at leadership and operational levels and it is clear from these meetings that the Group is extremely well-positioned to take advantage of growth opportunities in our markets.
Our continuing commitment to the development of our product portfolio has clear attractions to our clients. This provides us with a competitive advantage enabling us to grow sales and secure market share. One of GBG's strongest differentiators is the international nature of our services which access data from some of the largest and most reputable data owners across 40 countries (2014: 31).
The global impact of cybercrime and financial fraud means that businesses and governments need to make increasing investment in technology, software and compliance solutions to match these major threats. This environment offers exciting international opportunities for our data intelligence and fraud prevention solutions and should provide rewarding growth for the Group.
Results
The Group's performance in the first half year is in line with the guidance given in the pre-close trading update statement issued in October 2015. Group revenues increased to GBP32.4 million (2014: GBP23.2 million) and our adjusted operating profits increased to GBP4.5 million (2014: GBP3.7 million).
GBG continues to be highly cash generative with net cash from operating activities increasing by 61% to GBP5.7 million (2014: GBP3.5 million). At 30 September 2015, the Group had net cash balances of GBP1.2 million (2014: GBP8.6 million) after payments for dividends, the acquisition of Loqate and an earn-out relating to DecTech.
We have made excellent progress in growing our revenues from international clients who now account for 26% of GBG's business. It is also encouraging that we have secured a number of important contract wins in the Asia Pacific region including: Bank of New Zealand; Maybank (Malaysia's largest bank); and Ping An Puhui, China's largest consumer lender.
Identity Proofing (IDP)
The Identity Proofing business, which provides the Group's global fraud, risk, compliance, ID verification solutions and employee background checking solutions, continued to make good strategic progress and grew revenues by 36% to GBP15.4 million (2014: GBP11.3 million).
GBG's identity verification service for the UK Government's identity assurance scheme, GOV.UK Verify, is expected to be launched early in the fourth quarter of our financial year through our own brand CitizenSafe(R) and also through our collaboration with Royal Mail on its solution for the same project.
Identity Solutions (IDS)
The Identity Solutions business, which provides domestic and international registration, tracing and engagement solutions also performed well in the first half, seeing revenues grow by 43% to GBP17.0 million (2014: GBP11.9 million).
Value Enhancing Acquisition Strategy
(MORE TO FOLLOW) Dow Jones Newswires
December 01, 2015 02:00 ET (07:00 GMT)
Our acquisition strategy is an important factor for the Group's future growth. The Loqate and DecTech transactions have enabled us to acquire the product capability and geographical presence needed to create truly international services and to support our customers globally. Our latest acquisition of San Francisco based Loqate, completed in April 2015, provides specialist location intelligence services. A good strategic fit, it offers exciting opportunities in the US market and internationally through its high quality distribution partners such as IBM and Oracle. DecTech, acquired in April 2014, our Melbourne-based provider of anti-fraud solutions, continues to perform strongly and has now become GBG's platform for expansion in Asia.
We continue to seek further strategic acquisitions that can help develop our markets and enhance our product portfolio. To this end, in November we agreed new banking facility arrangements with Barclays Bank PLC and Lloyds Bank PLC. This comprises a GBP50 million revolving credit facility (incorporating a GBP20 million accordion option) and an AUS$7.4 million term loan facility which replaces the existing loan.
Outlook
Our progress to date supports the strategic platform of our international expansion and demonstrates our credentials of investing in attractive growth areas organically and through acquisition. This will strengthen our market-leading position and build shareholder value.
We have had a good start to the year and we anticipate delivering full year results in line with market expectations.
On behalf of the Board I would like to thank the Group's leadership team and employees for their accomplishments.
David Rasche
Chairman
Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payments, exceptional items, share of associate investment result, interest and tax.
Net cash means cash and short-term deposits less borrowings.
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Interim Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2015
-------------------------------------------------------
Note Unaudited Unaudited Audited
6 months 6 months Year to
to to 31 March
30 September 30 September
2015 2014 2015
GBP'000 GBP'000 GBP'000
Revenue 32,368 23,232 57,283
Cost of sales (7,813) (6,809) (16,448)
------------- ------------- ----------
Gross profit 24,555 16,423 40,835
Operating expenses before amortisation
of acquired intangibles,
share-based payments and exceptional
items (20,065) (12,695) (30,079)
Other operating income 46 22 34
------------- ------------- ----------
Operating profit before amortisation
of acquired intangibles, share-based
payments, exceptional items and share
of associate investment result (adjusted
operating profit) 4,536 3,750 10,790
Amortisation of acquired intangibles 11 (1,254) (968) (1,986)
Share-based payments charge 13 (582) (443) (971)
Exceptional items 5 (21) (809) (1,629)
Share of associate investment result 12 - (10) (10)
Group operating profit 2,679 1,520 6,194
Finance revenue 8 13 25
Finance costs (117) (145) (291)
Profit before tax 2,570 1,388 5,928
Income tax (expense)/credit 7 (311) 323 (1,127)
------------- ------------- ----------
Profit for the period attributable
to equity holders of the parent 2,259 1,711 4,801
============= ============= ==========
Other comprehensive income:
Exchange differences on retranslation
of foreign operations (net of tax)* (1,257) (203) (684)
------------- ------------- ----------
Total comprehensive income for the
period attributable to equity holders
of the parent 1,002 1,508 4,117
Earnings per share
- adjusted basic earnings per share
for the period 8 3.4p 3.3p 7.9p
- basic earnings per share for the
period 8 1.8p 1.5p 4.0p
- diluted earnings per share for the
period 8 1.8p 1.4p 3.9p
* Upon a disposal of a foreign operation, this would be recycled to
the Income Statement
Interim Consolidated Statement of Changes in Equity
For the six months ended 30 September 2015
------------------------------------------------------------------------------------------------
Note Equity Merger Capital Foreign Retained Total
share reserve redemption currency earnings shareholders
capital reserve translation equity
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2014
(audited) 14,964 6,575 3 - 9,291 30,833
-------- -------- ----------- ------------ --------- -------------
Profit for the period - - - - 1,711 1,711
Other comprehensive
income (203) - (203)
-------- -------- ----------- ------------ --------- -------------
Total comprehensive
income
for the period - - - (203) 1,711 1,508
Issue of share capital 16 11,224 - - - - 11,224
Share issue costs 16 (330) - - - - (330)
Share-based payments
charge 13 - - - - 443 443
Deferred tax on share
options - - - - 491 491
Equity dividend 9 - - - - (1,955) (1,955)
-------- -------- ----------- ------------ --------- -------------
Balance at 30 September
2014 (unaudited) 25,858 6,575 3 (203) 9,981 42,214
Profit for the period - - - - 3,090 3,090
Other comprehensive
income - - - (481) - (481)
-------- -------- ----------- ------------ --------- -------------
Total comprehensive
income
for the period - - - (481) 3,090 2,609
Issue of share capital 560 - - - - 560
Share-based payments
charge - - - - 528 528
Deferred tax on share
options - - - - 223 223
------------
Balance at 1 April 2015
(audited) 26,418 6,575 3 (684) 13,822 46,134
Profit for the period - - - - 2,259 2,259
Other comprehensive
income - - - (1,257) - (1,257)
-------- -------- ----------- ------------ --------- -------------
Total comprehensive
income
for the period - - - (1,257) 2,259 1,002
Issue of share capital 16 412 - - - - 412
Share-based payments
charge 13 - - - - 582 582
Deferred tax on share
options - - - - 371 371
(MORE TO FOLLOW) Dow Jones Newswires
December 01, 2015 02:00 ET (07:00 GMT)
Equity dividend 9 - - - - (2,277) (2,277)
-------- -------- ----------- ------------ --------- -------------
Balance at 30 September
2015 (unaudited) 26,830 6,575 3 (1,941) 14,757 46,224
-------- -------- ----------- ------------ --------- -------------
Interim Consolidated Balance Sheet
As at 30 September 2015
-----------------------------------
Note Unaudited Unaudited Audited
As at As at As at
30 September 30 September 31 March
2015 2014 2015
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 10 2,900 2,630 2,829
Intangible assets 11 51,885 43,380 45,296
Investments accounted for using the equity
method 12 - - -
Deferred tax asset 2,891 2,952 3,113
57,676 48,962 51,238
------------- ------------- -----------
Current assets
Trade and other receivables 17,109 12,092 17,408
Cash and short-term deposits 4,806 13,604 15,778
------------- ------------- -----------
21,915 25,696 33,186
------------- ------------- -----------
TOTAL ASSETS 79,591 74,658 84,424
------------- ------------- -----------
EQUITY AND LIABILITIES
Capital and reserves
Equity share capital 26,830 25,858 26,418
Merger reserve 6,575 6,575 6,575
Capital redemption reserve 3 3 3
Foreign currency translation reserve (1,941) (203) (684)
Retained earnings 14,757 9,981 13,822
Total equity attributable to equity holders
of the parent 46,224 42,214 46,134
------------- ------------- -----------
Non-current liabilities
Loans 14 2,958 4,221 3,643
Provisions - 33 -
Contingent consideration 18 - 886 895
Deferred tax liability 3,522 3,146 2,968
------------- ------------- -----------
6,480 8,286 7,506
Current liabilities
Loans 14 675 785 746
Trade and other payables 24,045 17,875 23,984
Contingent consideration 18 1,850 4,749 5,733
Provisions 39 388 48
Current tax 278 361 273
26,887 24,158 30,784
------------- ------------- -----------
TOTAL LIABILITIES 33,367 32,444 38,290
------------- ------------- -----------
TOTAL EQUITY AND LIABILITIES 79,591 74,658 84,424
------------- ------------- -----------
Interim Consolidated Cash Flow Statement
For the six months ended 30 September 2015
-----------------------------------------------------------------------------------------------
Note Unaudited Unaudited Audited
6 months 6 months Year to
to to 31 March
30 September 30 September 2015
2015 2014
GBP'000 GBP'000 GBP'000
Group profit before tax 2,570 1,388 5,928
Adjustments to reconcile Group profit
before tax to net cash flows
Share of associate investment result 12 - 10 10
Finance revenue (8) (13) (25)
Finance costs 115 145 291
Depreciation of plant and equipment 10 543 339 873
Amortisation/impairment of intangible
assets 11 1,348 1,057 2,167
Loss on disposal of fixed assets - 57 55
Fair value adjustment on contingent consideration 5 148 268 403
Fair value gain on revaluation of associate
investment 5 (247) - -
Share-based payments 13 582 443 971
(Decrease)/increase in provisions (9) 106 (267)
Decrease/(increase) in receivables 3,864 804 (2,852)
(Decrease)/increase in payables (3,255) (1,093) 4,130
Cash generated from operations 5,651 3,511 11,684
Income tax received/(paid) 9 - (337)
------------- ------------- ---------
Net cash generated from operating activities 5,660 3,511 11,347
------------- ------------- ---------
Cash flows used in investing activities
Acquisition of subsidiaries, net of cash
acquired 17 (13,058) (14,084) (18,672)
Investment in associates 12 - - -
Purchase of property, plant and equipment 10 (548) (1,451) (1,961)
Proceeds from disposal of plant and equipment - 11 13
Expenditure on product development 11 (421) (42) (63)
Interest received 8 13 25
Net cash flows used in investing activities (14,019) (15,553) (20,658)
------------- ------------- ---------
Cash flows from/(used in) financing activities
Finance costs (115) (145) (291)
Proceeds from issue of shares 16 412 11,224 11,284
Share issue costs 16 - (330) (330)
Proceeds from new borrowings 14 - 5,487 5,487
Repayment of borrowings 14 (351) (401) (781)
Dividends paid to equity shareholders 9 (2,277) (1,955) (1,955)
Net cash flows from/(used in) financing
activities (2,331) 13,880 13,414
------------- ------------- ---------
Net increase/(decrease) in cash and cash
equivalents (10,690) 1,838 4,103
Effect of exchange rates on cash and
cash equivalents (282) (80) (171)
Cash and cash equivalents at the beginning
of period 15,778 11,846 11,846
(MORE TO FOLLOW) Dow Jones Newswires
December 01, 2015 02:00 ET (07:00 GMT)
------------- ------------- ---------
Cash and cash equivalents at the end
of period 4,806 13,604 15,778
------------- ------------- ---------
Notes to the Interim Report
-----------------------------------------------------------------------------------------------------
1. CORPORATE INFORMATION
The interim condensed consolidated financial statements of GB Group plc ('the Group') for the six months ended 30 September 2015 were authorised for issue in accordance with a resolution of the directors on 1 December 2015. GB Group plc is a public limited company incorporated in the United Kingdom whose shares are publicly traded on the Alternative Investment Market (AIM) of the London Stock Exchange.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Basis of Preparation
These interim condensed consolidated financial statements for the six months ended 30 September 2015 have been prepared in accordance with IAS 34 Interim Financial Reporting. The annual financial statements of the company are prepared in accordance with IFRSs as adopted by the European Union.
The interim condensed consolidated financial statements are presented in sterling and all values are rounded to the nearest thousand (GBP'000) except when otherwise indicated.
After making appropriate enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, the Board continues to adopt the going concern basis in preparing the interim report.
The interim condensed consolidated financial statements do not constitute statutory financial statements as defined in section 435 of the Companies Act 2006 and therefore do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 March 2015. The financial information for the preceding year is based on the statutory financial statements for the year ended 31 March 2015. These financial statements, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. These financial statements did not require a statement under either section 498(2), or section 498(3) of the Companies Act 2006.
Accounting Policies
The Group applies IFRS 3: Business Combinations and as a consequence of the acquisition of the remaining 73.3% of shares in Loqate, the area of the standard applicable to business combinations achieved in stages became relevant to the Group. If the business combination is achieved in stages, the acquisition date fair value of the Group's previously held investment in the acquiree is remeasured to fair value at the acquisition date with any resultant gain or loss recognised through profit or loss.
The other accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 March 2015, except for the adoption of new Standards and Interpretations noted below. Adoption of these Standards and Interpretations did not have any effect on the financial position or performance of the Group.
EU Adoption
date
International Accounting Standards (IAS / IFRS)
IAS 19 Defined Benefit Plans: Employee Contributions - 1 February
Amendments to IAS 19 2015
Various Annual Improvements to IFRS - 2010-2012 Cycle 1 February
2015
Various Annual Improvements to IFRS - 2011-2013 Cycle 1 January
2015
Notes to the Interim Report
----------------------------
3. CYCLICALITY
Due to the cyclicality of our software renewal business, higher renewals in the second half traditionally result in the Group's performance being biased towards the second half of the year.
4. RISKS & UNCERTAINTIES
Management identifies and assesses risks to the business using an established control model. The Group has a number of exposures which can be summarised as follows: regulatory risk resulting from regulatory developments; changes in the Group's competitive position; non-supply by a major supplier; disaster recovery and business continuity; new product development; and intellectual property risk. These risks and uncertainties facing our business were reported in detail in the 2015 Annual Report and Accounts and all of them are monitored closely by the Group. Following the acquisition of Loqate Inc., based in the USA, the Group has an increased exposure to currency translation and transaction risks and these risks are monitored closely by the Group.
The Group's accounting policy on the acquisition of subsidiaries is to allocate purchase consideration to the fair value of identifiable assets and liabilities with any excess consideration representing goodwill. Determining the fair value of assets and liabilities acquired requires significant estimates and assumptions. The determination of these fair values is based upon management's judgement and includes assumptions on the economic lives of intangible assets, the timing and amount of future cash flows generated by the assets and the selection of appropriate discount rates.
5. EXCEPTIONAL ITEMS
Unaudited Unaudited Audited
6 months 6 Year
to months to
30 Sept to 31 March
2015 30 Sept 2015
2014
GBP'000 GBP'000 GBP'000
Fair value adjustments to contingent consideration 148 18 403
Fair value gain on revaluation of investment (247) - -
in associate (note 12)
Acquisition related costs 120 248 452
Costs associated with staff reorganisations - 119 331
Provision for dilapidation obligations
on the relocation of the Group head office - 138 138
Costs associated with the relocation of
Group head office - 286 305
21 809 1,629
---------- ---------- ----------
Fair value adjustments to contingent consideration in the six months to 30 September 2015 include a GBP42,000 downwards adjustment relating to contingent purchase price adjustment relating to Loqate (note 18) along with a GBP190,000 charge relating to the partial unwinding of discounting relating to the contingent consideration on the acquisition of DecTech Solutions Pty Ltd and CDMS Limited (Note 18). This charge arises because contingent consideration due to be paid at a future date is discounted for the time value of money at the point of initial recognition and over the passage of time, this discount unwinds within the Consolidated Statement of Comprehensive Income. These are non-cash items.
An exceptional fair value gain of GBP247,000 has been recognised as a consequence of the Group revaluing its previously held equity stake in Loqate at the date of its acquisition of the remaining 73.3% of shares in accordance with IFRS 3. This is a non-cash item.
Notes to the Interim Report ----------------------------
6. SEGMENTAL INFORMATION
The Group's operating segments are internally reported to the Group's Chief Executive Officer as two operating segments: Identity Proofing Division- which provides ID Verification and ID Employ & Comply services and Identity Solutions Division - which provides ID Registration, ID Engagement and ID Trace & Investigate services. The measure of performance of those segments that is reported to the Group's Chief Executive Officer is adjusted operating profit before amortisation of acquired intangibles as shown below.
Segment results include items directly attributable to either Identity Proofing or Identity Solutions.
Unallocated items for the six months to 30 September 2015 represent Group head office costs GBP492,000 (2014: GBP357,000), share of associate investment result GBPnil (2014: GBP10,000), exceptional items GBP21,000 (2014: GBP809,000), Group finance income GBP8,000 (2014: GBP13,000), Group finance costs GBP117,000 (2014: GBP145,000), Group income tax expense GBP311,000 (2014: GBP323,000 credit) and share-based payments charge GBP582,000 (2014: GBP443,000). Unallocated items for the year ended 31 March 2015 represent Group head office costs GBP591,000, share of associate investment result GBP10,000, exceptional costs GBP1,629,000, Group finance income GBP25,000, Group finance costs GBP291,000, Group income tax charge GBP1,127,000 and share-based payments charge GBP971,000.
Information on segment assets and liabilities is not regularly provided to the Group's Chief Executive Officer and is therefore not disclosed below.
(MORE TO FOLLOW) Dow Jones Newswires
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Loqate, which was acquired during the period, is reported within the Identity Solutions Division.
Total Unaudited
6 months
to
Identity Identity 30 September
Proofing Solutions Unallocated 2015
Six months ended 30 September GBP'000 GBP'000 GBP'000 GBP'000
2015
Total revenue 15,423 16,945 - 32,368
----------- ------------ -------------- ----------------
Adjusted operating profit 3,219 1,809 (492) 4,536
Amortisation of acquired intangibles (545) (709) - (1,254)
Share-based payments charge - - (582) (582)
Exceptional items - - (21) (21)
----------- ------------ -------------- ----------------
Operating profit 2,674 1,100 (1,095) 2,679
Finance revenue 8
Finance costs (117)
Income tax charge (311)
----------------
Profit for the period 2,259
----------------
Total Unaudited
6 months
to
Identity Identity 30 September
Proofing Solutions Unallocated 2014
Six months ended 30 September GBP'000 GBP'000 GBP'000 GBP'000
2014
Total revenue 11,346 11,886 - 23,232
----------- ------------ -------------- ----------------
Adjusted operating profit 2,049 2,058 (357) 3,750
Amortisation of acquired intangibles (605) (363) - (968)
Share-based payments charge - - (443) (443)
Exceptional items - - (809) (809)
Share of associate investment
result - - (10) (10)
----------- ------------ -------------- ----------------
Operating profit 1,444 1,695 (1,619) 1,520
Finance revenue 13
Finance costs (145)
Income tax credit 323
----------------
Profit for the period 1,711
----------------
Notes to the Interim Report
----------------------------
6. SEGMENTAL INFORMATION (continued)
Total
Audited
Identity Identity Year to
Proofing Solutions Unallocated 31 March
2015
Year ended 31 March 2015 GBP'000 GBP'000 GBP'000 GBP'000
Total revenue 25,167 32,116 - 57,283
----------- ------------ -------------- -----------
Adjusted operating profit 4,304 7,077 (591) 10,790
Amortisation of acquired intangibles (1,097) (889) - (1,986)
Share-based payments charge - - (971) (971)
Exceptional items - - (1,629) (1,629)
Share of associate investment
result - - (10) (10)
----------- ------------ -------------- -----------
Operating profit 3,207 6,188 (3,201) 6,194
Finance revenue 25
Finance costs (291)
Income tax charge (1,127)
-----------
Profit for the year 4,801
-----------
7. TAXATION
The Group calculates the period income tax expense using a best estimate of the tax rate that would be applicable to the expected total earnings for the year ending 31 March 2016.
Notes to the Interim Report ----------------------------
8. EARNINGS PER ORDINARY SHARE
Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the basic weighted average number of ordinary shares in issue during the period.
Unaudited 6 Unaudited 6 Audited Year
months to 30 months to 30 to
September 2015 September 2014 31 March
2015
pence pence pence
per per per
share GBP'000 share GBP'000 share GBP'000
Profit attributable to
equity holders of the parent 1.8 2,259 1.5 1,711 4.0 4,801
------- ---------- ------- ---------- ------- ----------
Diluted
Diluted earnings per share amounts are calculated by dividing the profit for the period attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
Unaudited 6 Unaudited 6 Audited Year
months to 30 months to 30 to
September 2015 September 2014 31 March
2015
pence pence pence
per per per
share GBP'000 share GBP'000 share GBP'000
Profit attributable to
equity holders of the parent 1.8 2,259 1.4 1,711 3.9 4,801
------- ---------- ------- ---------- ------- ----------
30 Sept 30 Sept 31 March
2015 2014 2015
No. No. No.
Basic weighted average number
of shares in issue 122,121,920 117,676,223 119,144,442
Dilutive effect of share
options 4,127,693 5,491,132 5,395,880
------------
Diluted weighted average
number of shares in issue 126,249,613 123,167,355 124,540,322
------------ ------------ --------------
Adjusted
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Adjusted earnings per share is defined as adjusted operating profit less net finance costs and tax divided by the basic weighted average number of ordinary shares of the Company. In prior periods the Group reported adjusted earnings per share on a pre-tax basis and the comparative numbers below have been restated to take in account the change to a post-tax basis.
Unaudited 6 Unaudited 6 Audited Year
months to 30 months to 30 to
September 2015 September 2014 31 March 2015
pence pence pence
per per per
share GBP'000 share GBP'000 share GBP'000
Adjusted operating profit 3.7 4,536 3.2 3,750 9.1 10,790
Less net finance costs (0.1) (109) (0.1) (132) (0.3) (266)
Less tax (0.2) (311) 0.2 323 (0.9) (1,127)
------- ---------- ------- ---------- ------- ----------
Adjusted earnings 3.4 4,116 3.3 3,941 7.9 9,397
------- ---------- ------- ---------- ------- ----------
Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payments, exceptional items, share of associate investment result, interest and tax.
Notes to the Interim Report ----------------------------
9. DIVIDENDS PAID AND PROPOSED
Unaudited Unaudited Audited
6 months 6 Year
to months to
30 Sept to 31 March
2015 30 Sept 2015
2014
GBP'000 GBP'000 GBP'000
Declared and paid during the period
Final dividend for 2015: 1.85p
per share (2014: 1.65p per share) 2,277 1,955 1,955
---------- ---------- ----------
Proposed for approval at AGM (not
recognised as a liability at 31
March 2015)
Final dividend for 2015: 1.85p
per share - - 2,234
---------- ---------- ----------
10. PROPERTY, PLANT AND EQUIPMENT
During the six months ended 30 September 2015, the Group acquired property, plant and equipment with a cost of GBP548,000 (2014: GBP1,451,000).
Property, plant and equipment with a fair value of GBP73,000 was acquired with the acquisition of Loqate Inc. (see note 17).
Depreciation provided during the six months ended 30 September 2015 was GBP543,000 (2014: GBP339,000).
No disposals were made in the six months ended 30 September 2015 (2014: GBP69,000).
Notes to the Interim Report ----------------------------
11. INTANGIBLE ASSETS
Group Customer Other Total Goodwill Internally Total
relationships acquisition acquisition developed
intangibles intangibles software
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 April 2014 7,237 1,311 8,548 16,542 1,041 26,131
Additions - business
combinations 5,059 2,162 7,221 14,184 - 21,405
Additions - product
development - - - - 42 42
Foreign exchange
adjustments (82) (35) (117) (231) - (348)
--------------- ------------- ------------- ---------
At 30 September 2014 12,214 3,438 15,652 30,495 1,083 47,230
Additions - business
combinations 2,816 420 3,236 700 - 3,936
Additions - product
development - - - - 21 21
Foreign exchange
adjustments (191) (72) (263) (690) - (953)
--------------- ------------- ------------- --------- ----------- ---------
At 31 March 2015 14,839 3,786 18,625 30,505 1,104 50,234
Additions - business
combinations 1,912 819 2,731 6,623 20 9,374
Additions - product
development - - - - 421 421
Foreign exchange
adjustments (404) (162) (566) (1,364) (2) (1,932)
--------------- ------------- ------------- ---------
At 30 September 2015 16,347 4,443 20,790 35,764 1,543 58,097
Amortisation and
impairment
At 1 April 2014 1,514 843 2,357 - 445 2,802
Foreign exchange
adjustments (5) (4) (9) - - (9)
Amortisation during
the period 574 394 968 - 89 1,057
--------------- ------------- ------------- --------- ----------- ---------
At 30 September 2014 2,083 1,233 3,316 - 534 3,850
Foreign exchange
adjustments (12) (10) (22) - - (22)
Amortisation during
the period 683 335 1,018 - 92 1,110
--------------- ------------- ------------- --------- ----------- ---------
At 31 March 2015 2,754 1,558 4,312 - 626 4,938
Foreign exchange
adjustments (41) (33) (74) - - (74)
Amortisation during
the period 808 446 1,254 - 94 1,348
--------------- ------------- ------------- --------- ----------- ---------
At 30 September 2015 3,521 1,971 5,492 - 720 6,212
Net book value
At 30 September 2015 12,826 2,472 15,298 35,764 823 51,885
--------------- ------------- ------------- --------- ----------- ---------
At 31 March 2015 12,085 2,228 14,313 30,505 478 45,296
--------------- ------------- ------------- --------- ----------- ---------
At 30 September 2014 10,131 2,205 12,336 30,495 549 43,380
--------------- ------------- ------------- --------- ----------- ---------
Goodwill arose on the acquisition of GB Mailing Systems Limited, e-Ware Interactive Limited, Data Discoveries Holdings Limited, Advanced Checking Services Limited, Capscan Parent Limited, TMG.tv Limited, CRD (UK) Limited, DecTech Solutions Pty Ltd, CDMS Limited and Loqate Inc.. Under IFRS, goodwill is annually tested for impairment.
Notes to the Interim Report ----------------------------
12. INVESTMENTS IN ASSOCIATES
The Group had a 26.7% interest in Loqate Inc., a private company based in the USA which develops international addressing solutions, geocoding solutions and location based services which are used in the Group's portfolio of products and services. The associated undertaking was accounted for using the equity method. On 27 April 2015, the Group acquired the remaining 73.3% of the shares in Loqate Inc. and its performance is included in the consolidated financial statements since that date.
The following table illustrates summarised financial information of the Group's associate investment in Loqate Inc.:
Unaudited Unaudited Audited
30 Sept 30 Sept 31 March
2015 2014 2015
GBP'000 GBP'000 GBP'000
Opening investment value - 10 10
Additional investment in - - -
the associate
Share of loss for the period - (10) (10)
----------
Closing investment value - - -
------------ ---------- ----------
At the acquisition date of the remaining 73.3% of shares in Loqate, the Group revalued its previously held equity stake in Loqate at its acquisition-date fair value in accordance with IFRS 3. The resulting gain of GBP247,000 has been recognised in the Consolidated Statement of Comprehensive Income.
13. SHARE-BASED PAYMENTS
The Group operates Executive Share Option Schemes under which executive directors, managers and staff of the Company are granted options over shares.
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During the six months ended 30 September 2015, the following share options were granted to executive directors, managers and staff of the Company.
Scheme Date No. of options Exercise Fair
price value
5 July
Executive Share Matching Plan 2015 782,611 2.5p 204.87p
3 July
Executive Share Options 2015 50,000 209.0p 52.52p
Save As You Earn Options - 3 20 July
Year 2015 364,354 163.0p 58.19p
Save As You Earn Options - 5 20 July
Year 2015 235,199 163.0p 65.90p
The charge recognised from equity-settled share-based payments in respect of employee services received during the period was GBP582,000 (2014: GBP443,000).
Notes to the Interim Report ----------------------------
14. LOANS
In April 2014, the Group secured an Australian dollar three year term loan of AUS$10 million. The debt bears an interest rate of +1.90% above the Australian Dollar bank bill interest swap rate ('BBSW'). Security on the debt is provided by way of an all asset debenture.
30 Sept 30 Sept 31 March
2015 2014 2015
GBP'000 GBP'000 GBP'000
Opening bank loan 4,389 - -
New borrowings - 5,487 5,487
Repayment of borrowings (351) (401) (781)
Foreign currency translation
adjustment (405) (80) (317)
--------
Closing bank loan 3,633 5,006 4,389
-------- -------- ---------
Analysed as:
Amounts falling due within
12 months 675 785 746
Amounts falling after one
year 2,958 4,221 3,643
-------- -------- ---------
3,633 5,006 4,389
-------- -------- ---------
15. RELATED PARTY TRANSACTIONS
During the period, the Group entered into transactions, in the ordinary course of business, with related parties. Transactions entered into and trading balances outstanding at 30 September are as follows:
Group Sales Purchases Net amounts
to related from related owed to/(due
parties parties from) related
parties
GBP'000 GBP'000 GBP'000
Associates:
30 September 2015 1 - -
30 September 2014 - 41 7
31 March 2015 - 150 -
Directors (see below):
30 September 2015 - 1 -
30 September 2014 - - -
31 March 2015 - 33 8
Other related parties (see
below):
30 September 2015 19 - -
30 September 2014 23 - (5)
31 March 2015 55 - (5)
Associate related party disclosures for the six months ended 30 September 2015 are prior to the acquisition of the remaining shares in Loqate.
The Chairman of the Company previously undertook some general and operational consultancy for the business outside of his directorship remit through his consultancy business Rasche Consulting Limited. Purchases in the six months ended 30 September 2015 were only in extent of expenses incurred in relation to those activities.
The Chief Executive of the Company is a director of Car Loan 4U Limited which is a client of the Group. Transactions with them have been reported under the heading of 'other related parties' in the table above.
A Non-Executive Director of the Company is a director of Avanti Communications Group PLC which is a client of the Group. Transactions with them have been reported under the heading of 'other related parties'.
Notes to the Interim Report ----------------------------
15. RELATED PARTY TRANSACTIONS (continued)
Terms and conditions of transactions with related parties
Sales and balances between related parties are made at normal market prices. Outstanding balances with entities other than subsidiaries are unsecured, interest free and cash settlement is expected within 30 days of invoice. Terms and conditions for transactions with subsidiaries are the same, with the exception that balances are placed on intercompany accounts with no specified credit period. During the year ended 30 September 2015, the Group has not made any provision for doubtful debts relating to amounts owed by related parties (2014: nil).
Compensation of key management personnel (including directors)
Unaudited Unaudited Audited
6 months 6 Year
to months to
30 Sept to 31 March
2015 30 Sept 2015
2014
GBP'000 GBP'000 GBP'000
Short-term employee benefits 440 420 1,412
Post-employment benefits 12 43 23
Share-based payments 929 634 769
1,381 1,097 2,204
---------- ---------- ----------
16. SHARE CAPITAL
During the period 2,332,024 (2014: 10,041,614) ordinary shares with a nominal value of 2.5p were issued for an aggregate cash consideration of GBP412,000 (2014: GBP11,224,000). The cost associated with the issue of shares was GBPnil (2014: GBP330,000).
Notes to the Interim Report ----------------------------
17. BUSINESS COMBINATIONS
Acquisition of Loqate Inc
On 27 April 2015, the Company acquired additional shares in Loqate Inc. ('Loqate') taking its shareholding to 100% of the voting shares. Loqate is an unlisted company based in the United States of America and is a leading provider of global location intelligence data and technology. The Company acquired to bring together all the data that sits behind its address and identity verification solutions into one common global platform - making for a seamless integration of registration, on-boarding and identity checking processes. It will also further support GBG's expansion by allowing access to the North American market through Loqate's significant partnerships with some of the world's largest software companies. The Consolidated Statement of Comprehensive Income includes the results of Loqate for the five month period from the acquisition date.
The fair value of the identifiable assets and liabilities of Loqate as at the date of acquisition was:
Fair value
recognised
on acquisition
GBP'000
Assets
Technology intellectual property 756
Customer relationships 1,912
Non-compete agreements 63
Plant and equipment 73
Internally developed software 20
Trade and other receivables 1,173
Cash 667
Trade and other payables (2,412)
Deferred tax liabilities (929)
----------------
Total identifiable net assets at fair value 1,323
Goodwill arising on acquisition 6,623
----------------
Total purchase consideration transferred 7,946
----------------
Purchase consideration:
Cash 8,979
Value of original equity stake 247
Contingent consideration adjustment (1,280)
Total purchase consideration 7,946
----------------
Analysis of cash flows on acquisition:
Transaction costs of the acquisition (included in cash
flows from operating activities) (119)
Net cash acquired with the subsidiary (included in cash
flows from investing activities) 667
Cash paid (8,979)
----------------
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Net cash outflow (8,431)
----------------
The fair values above contain certain provision amounts which will be finalised no later than one year after the date of acquisition. Provisional amounts have been included at 30 September 2015 as a consequence of the timing and complexity of the acquisition.
The fair value of the acquired trade receivables amounts to GBP693,000. The gross amount of trade receivables is GBP693,000. None of the trade receivables have been impaired and it is expected that the full contractual amounts can be collected.
The goodwill recognised above is attributed to intangible assets that cannot be individually separated and reliably measured from Loqate due to their nature. These items include the expected value of synergies and an assembled workforce. None of the goodwill is expected to be deductible for income tax purposes.
The transaction costs of GBP119,000 associated with this acquisition have been expensed and are included in exceptional items in the Consolidated Statement of Comprehensive Income and are part of operating cash flows in the Cash Flow Statement.
Notes to the Interim Report ----------------------------
17. BUSINESS COMBINATIONS (continued)
From the date of acquisition, Loqate has contributed GBP1,596,000 of revenue and operating losses of GBP171,000 to the Group. If the combination had taken place at the beginning of the year, the Group revenue and operating profits would have been GBP32,745,000 and GBP2,350,000 respectively.
Contingent consideration - Loqate
As part of the share sale and purchase agreement, a purchase price adjustment mechanism has been agreed which will either result in a further payment to the sellers of up to US$2 million or a repayment of up to US$2.5 million. This adjustment is subject to certain future sales targets being met. This adjustment will be determined by 31 December 2015. At the acquisition date the fair value of the adjustment was estimated to be a purchase price reduction of GBP1.28 million having been determined from management's estimates of the ranges and their respective likelihoods. At 30 September the fair value of the adjustment was estimated to be a purchase price reduction of GBP1.32 million.
Other business combination adjustments - DecTech
During the six months ended 30 September 2015, final settlement of AU$9.5 million (GBP4.7 million) was made relating to the first tranche of the contingent consideration on the acquisition of DecTech resulting in reduction in the contingent consideration liability on the balance sheet. At 30 September 2015, the value of the second tranche of contingent consideration after partial unwinding of the discounting was AU$1.85 million (GBP0.86 million). Adjustments to the fair value of the contingent consideration are made in the Consolidated Statement of Comprehensive Income under IFRS 3 (Revised) Business Combinations (Note 5).
18. CONTINGENT CONSIDERATION
ASSETS Unaudited Unaudited Audited
30 Sept 30 Sept 31 March
2015 2014 2015
GBP'000 GBP'000 GBP'000
Opening - - -
Recognition on the acquisition of subsidiary 1,280 - -
undertakings
Fair value adjustment to contingent consideration 42 - -
Closing 1,322 - -
---------- ---------- ----------
Analysed as:
Amounts falling due within 1,322 - -
12 months
1,322 - -
------
LIABILITIES Unaudited Unaudited Audited
30 Sept 30 Sept 31 March
2015 2014 2015
GBP'000 GBP'000 GBP'000
Opening 6,628 750 750
Recognition on the acquisition of subsidiary
undertakings - 5,461 6,351
Reversal of contingent consideration to
the Income Statement - (250) (250)
Settlement of consideration (4,745) (500) (500)
Unwinding of discount 190 268 653
Exchange differences on retranslation (223) (94) (376)
---------- ---------- ----------
Closing 1,850 5,635 6,628
---------- ---------- ----------
Analysed as:
Amounts falling due within
12 months 1,850 4,749 5,733
Amounts falling after one
year - 886 895
------ ------ ------
1,850 5,635 6,628
------ ------ ------
Notes to the Interim Report
----------------------------
19. FINANCIAL INSTRUMENTS - FAIR VALUE MEASUREMENT
The objectives, policies and strategies pursued by the Group in relation to financial instruments are described within the 2015 Annual Report. Set out below is an overview of financial instruments, other than cash and short-term deposits, held by the Group:
30 September 2015 31 March 2015
Loans and Fair value Loans Fair
Receivables profit and Receivables value
or loss profit
or loss
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets:
Trade and other receivables 13,162 - 15,592 -
Contingent consideration - 1,322 - -
------------- ----------- ----------------- ---------
Total current 13,162 1,322 15,592 -
Total financial assets 13,162 1,322 15,592 -
------------- ----------- ----------------- ---------
Financial liabilities:
Loans 2,958 - 3,643 -
Contingent consideration - - - 895
------------- ----------- ----------------- ---------
Total non-current 2,958 - 3,643 895
Trade and other payables 12,195 - 14,078 -
Loans 675 - 746 -
Contingent consideration - 1,850 - 5,733
------------- ----------- ----------------- ---------
Total current 12,870 1,850 14,824 5,733
Total financial liabilities 15,828 1,850 18,467 6,628
------------- ----------- ----------------- ---------
Trade and other receivables exclude the value of any prepayments or accrued income. Trade and other payables exclude the value of deferred income. All financial assets and liabilities have a carrying value that approximates to fair value. For trade and other receivables, allowances are made within the book value for credit risk. The Group does not have any derivative financial instruments.
Contingent consideration
The fair value of contingent consideration is the present value of expected future cash flows based on latest forecasts of future performance.
Unaudited Unaudited Audited
30 Sept 30 Sept 31 March
2015 2014 2015
GBP'000 GBP'000 GBP'000
Fair value within current assets:
Contingent consideration 1,322 - -
---------- ---------- ----------
Fair value within current liabilities:
Contingent consideration 1,850 4,749 5,733
---------- ---------- ----------
Fair value within non-current liabilities:
Contingent consideration - 886 895
---------- ---------- ----------
Assets and liabilities for contingent consideration are Level 3 financial instruments under IFRS 13. The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of inputs used in making measurements of fair value. The fair value hierarchy has the following levels:
-- Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
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