ADVFN Logo

We could not find any results for:
Make sure your spelling is correct or try broadening your search.

Trending Now

Toplists

It looks like you aren't logged in.
Click the button below to log in and view your recent history.

Hot Features

Registration Strip Icon for discussion Register to chat with like-minded investors on our interactive forums.

GBG Gb Group Plc

272.40
4.40 (1.64%)
28 Mar 2024 - Closed
Delayed by 15 minutes
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
  4.40 1.64% 272.40 271.60 272.40 272.60 267.20 270.20 672,368 16:35:10
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Computer Programming Service 278.81M -119.79M -0.4743 -5.73 686.51M

GB Group PLC Half Yearly Report (6554X)

28/11/2017 7:01am

UK Regulatory


TIDMGBG

RNS Number : 6554X

GB Group PLC

28 November 2017

 
 Embargoed until 7.00   28(th) November 2017 
  a.m. 
 

GB GROUP PLC

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

HALF YEAR RESULTS FOR SIX MONTHSED 30 SEPTEMBER 2017

International expansion and organic growth drive rise in profitability

GB Group plc (AIM: GBG), the global identity data intelligence specialist, announces its unaudited results for the six months ended 30 September 2017.

Financial highlights

 
                                 2017        2016      %change 
 Revenue                       GBP52.6m    GBP37.5m     +40% 
 Adjusted operating profits    GBP10.4m     GBP5.2m     +101% 
 Adjusted basic earnings 
  per share(++)                  6.1p        3.6p       +69% 
 Profit after tax               GBP2.4m     GBP1.2m     +98% 
 Deferred revenue balances     GBP23.7m    GBP15.5m     +53% 
 Net assets                    GBP149.2m   GBP82.8m     +80% 
 Net cash/(debt)                GBP4.1m    GBP(4.0)m    +201% 
 

Operational highlights and outlook

 
 New contract wins 
  and international                -- International revenues increased 
  expansion drive                  by 36% to GBP15.9 million. 
  organic growth 
------------------------ 
 
                                   -- Growing global footprint and 
                                   strengthening international brand: 
                                   continued expansion throughout 
                                   APAC, USA and EMEA regions. 
------------------------ 
 
                                   -- New customer wins during the 
                                   period in the UK include NFU Mutual 
                                   and Sky and internationally, LEGO 
                                   and KBC Ireland. 
------------------------  ------------------------------------------------ 
 Acquisition integration 
  and performance                  -- Acquisition of PCA Predict positions 
                                   GBG as a leader of UK and international 
                                   address validation services. 
 
                                   -- PCA Predict delivering growth 
                                   opportunities. 
 Senior appointments 
                                   -- During the period two Executive 
                                   Team appointments were announced 
                                   adding strength to the Group's 
                                   focus on customers and innovation. 
------------------------  ------------------------------------------------ 
 
   Positive outlook                -- Full year results (revenue and 
                                   profit) expected to be in line 
                                   with market consensus. 
------------------------  ------------------------------------------------ 
 

Chris Clark, CEO, commented,

"I am very encouraged by the progress we have made since April and by the fact that we are on track to meet market expectations for the full year. The Group continues to perform well, demonstrating the strength of our business and the capability of our people globally. With the investments we have made in products, data and technology, we are confident of making further strategic progress in the second half of the financial year."

Notes:

Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payments, exceptional items, interest and tax. This is a non-GAAP or Adjusted Performance Measure (APM) and as this is used by the majority of our stakeholders it is deemed a more appropriate KPI in use in the business and in its external communications. See "Alternative Performance Measures" in the Interim Consolidated Financial Statements for further details.

Net cash/(debt) means cash and short-term deposits less loans.

++ 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.

For further information, please contact:

 
 GBG 
  Chris Clark, CEO 
  Dave Wilson, CFO & COO             01244 657333 
 Peel Hunt LLP (Nominated Adviser 
  and Broker) 
  Nick Prowting 
  Edward Knight                      020 7418 8900 
 Newgate Communications 
  Bob Huxford 
  Ed Treadwell                       020 7653 9850 
 
 

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 cybercrime, to improve the customer experience and help to protect the more vulnerable people in our society.

Headquartered in Chester (UK) and with people in 17 countries, GBG provides solutions to many of the world's biggest organisations, from established brands like HSBC and Zurich Insurance to disruptive newcomers such as Stripe and Plus500.

Find out more about how we use identity data intelligently at www.gbgplc.com, following us on Twitter @gbgplc and visiting our newsroom: www.gbgplc.com/newsroom

CHAIRMAN'S STATEMENT

GBG had a strong trading performance in the first six months of the year demonstrating good organic growth and further improving its position in the expanding global identity data intelligence market.

Financial performance

Trading in the first half of the year has seen increases in both revenue and profit and is in line with the pre-close trading update issued in October.

Revenue grew by 40% year on year, of which 18% was organic. Adjusted operating profits increased by 101% to GBP10.4 million (2016: GBP5.2 million). As we highlighted in October's trading update, the organic revenue growth includes GBP3.5m from the sale of a perpetual licence to a leading European bank. This was payable in full on signing and therefore was recognized in full under GAAP.

Profits after tax were GBP2.4 million (2016: GBP1.2 million) after taking account of GBP6.6 million of costs associated with the amortisation of acquired intangibles, share-based payments and exceptional items (2016: GBP3.4 million). Of these costs, GBP5.7 million (2016: GBP2.6 million) were non-cash items.

Our balance sheet is strong, with revenue deferred to future periods up by GBP8.2 million to GBP23.7 million. Net assets increased to GBP149.2 million (2016 GBP82.8 million) following the acquisition of PCA Predict.

At a divisional level:

-- Fraud, Risk & Compliance made good progress with revenues increasing by 35% to GBP32.1 million (2016: GBP23.8 million). This division provides the Group's solutions spanning ID verification, ID assurance, ID trace & investigate and employment screening.

-- Location & Customer Intelligence also had a positive first half performance and grew revenues by 50% to GBP20.6 million (2016: GBP13.8 million). This division provides our solutions across ID registration and ID engage.

Strategic progress

Products and developments

GBG remains well positioned to meet the growing demand for identity data intelligence products. Over the last six months we have developed additional product functionality and reach. This includes enhancing both our ID verification and location intelligence solutions, by adding more data and improving our matching against international data sources.

GBG has always concentrated on data security and protecting personal information. We continue to invest in these areas to address the ever prevalent threat posed by cyber-crime and the opportunities and challenges posed by new legislation (such as GDPR - the new EU legislation relating to data protection).

Customers

We are pleased that, alongside a strong renewal stream from our existing customer base, we continue to attract new, high quality customers to our portfolio.

-- LEGO is now using GBG's location intelligence services across global markets to more accurately locate customers and improve the deliverability of its marketing campaigns.

-- KBC Ireland, a division of one of Europe's most recognisable financial institutions, has recently launched a service that uses our IDscan technology. This new service means that customers using the mobile app can now open new bank accounts in just five minutes.

-- GBG DecTech continues to make good progress in the EMEA and APAC regions. New customers using our fraud solutions include: HomeChoice, South Africa's leading retailer; Hong Kong Bank of East Asia (HKBEA); and Hexindai, the Chinese consumer lending marketplace.

Acquisitions

In May 2017, GBG acquired PCA Predict, a leading provider of UK and international address validation services. The business has integrated well into the Group and is already providing us with new growth opportunities. This includes new business in the UK from NFU Mutual and Sky; and internationally from a number of leading US based fashion retailers. The combination of PCA and GBG's technologies has helped to create the world's leading location intelligence platform, equipped to handle high transaction volumes and deliver extra capacity to customers at peak times.

In line with our strategy, we will continue to seek acquisitions that will enable us to expand our capabilities, datasets and geographic presence.

People

As always, my thanks go to all of our people across the Group who have each made such an important contribution to these results.

As GBG grows internationally, expanding the variety of products available to a growing spectrum of customers, it becomes increasingly important for GBG to improve its focus on customer needs. This year we have continued to strengthen our talented Executive Team with the creation of key roles centred around improving customer insight, experience and operations. I would like to welcome all our new colleagues to the Group.

Outlook

We have made a good start to the second half of the year and are making positive progress in delivering on our strategic objectives of organic and acquisitive growth. We are growing well both in the UK and internationally and also have high visibility (over 70%) of our full year revenues. With all of this in mind, the Board remains confident of maintaining its momentum through the second half and the outlook for the full year, in respect of revenue and profit growth, is in line with consensus expectations.

David Rasche

Chairman

Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payments, exceptional items, interest and tax. This is a non-GAAP or Adjusted Performance Measure (APM) and as this is used by the majority of our stakeholders it is deemed a more appropriate KPI in use in the business and in its external communications. See "Alternative Performance Measures" in the Interim Consolidated Financial Statements for further details.

 
 Interim Consolidated Statement of Comprehensive 
  Income 
 For the six months ended 30 September 2017 
------------------------------------------------ 
 
 
                                          Note      Unaudited      Unaudited     Audited 
                                                     6 months       6 months        Year 
                                                           to             to          to 
                                                 30 September   30 September    31 March 
                                                         2017           2016        2017 
                                                      GBP'000        GBP'000     GBP'000 
 
 Revenue                                   6           52,626         37,512      87,486 
 
 Cost of sales                                       (11,281)        (8,631)    (20,320) 
                                                -------------  -------------  ---------- 
 
 Gross profit                                          41,345         28,881      67,166 
 
 Operating expenses before 
  amortisation of acquired intangibles, 
  share-based payments and exceptional 
  items                                              (30,917)       (23,700)    (50,178) 
 
 Other operating income                                     -             18          18 
                                                -------------  -------------  ---------- 
 
 Operating profit before amortisation 
  of acquired intangibles, share-based 
  payments and exceptional items 
  (adjusted operating profit)              6           10,428          5,199      17,006 
 
 Amortisation of acquired intangibles      11         (3,802)        (1,751)     (4,022) 
 
 Share-based payments charge               12         (1,101)          (659)       (994) 
 
 Exceptional items                         5          (1,741)          (996)     (1,410) 
 
 
 Group operating profit                                 3,784          1,793      10,580 
 
 Finance revenue                                           17             11          19 
 
 Finance costs                                          (289)          (244)       (517) 
 
 Profit before tax                                      3,512          1,560      10,082 
 
 Income tax (expense)/credit               7          (1,077)          (328)         668 
                                                -------------  -------------  ---------- 
 
 Profit for the period attributable 
  to equity holders of the parent                       2,435          1,232      10,750 
                                                =============  =============  ========== 
 
 
 Other comprehensive income: 
 
 Exchange differences on retranslation 
  of foreign operations (net 
  of tax)*                                            (1,554)          2,564       3,685 
                                                -------------  -------------  ---------- 
 
 Total comprehensive income 
  for the period attributable 
  to equity holders of the parent                         881          3,796      14,435 
 
 
 Earnings per share 
  - adjusted basic earnings 
   per share for the period                8             6.1p           3.6p       13.1p 
  - adjusted diluted earnings 
   per share for the period                8             6.0p           3.5p       12.8p 
  - basic earnings per share 
   for the period                          8             1.6p           1.0p        8.2p 
  - diluted earnings per share 
   for the period                          8             1.6p           0.9p        8.0p 
 
   * 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 2017 
------------------------------------------------------------------------------------------ 
 
 
 
                          Note                                           Foreign 
                                   Equity                  Capital      currency 
                                    share     Merger    redemption   translation    Retained     Total 
                                  capital    reserve       reserve       reserve    earnings    equity 
                                  GBP'000    GBP'000       GBP'000       GBP'000     GBP'000   GBP'000 
 
Balance at 1 April 
 2016 (audited)                    27,208      6,575             3           412      22,203    56,401 
                                ---------  ---------  ------------  ------------  ----------  -------- 
 
Profit for the period                   -          -             -             -       1,232     1,232 
 
Other comprehensive 
 income                                                                    2,564           -     2,564 
                                ---------  ---------  ------------  ------------  ----------  -------- 
 
Total comprehensive 
 income for the period                  -          -             -         2,564       1,232     3,796 
 
Issue of share capital     15      25,321          -             -             -           -    25,321 
 
Share issue costs          15       (750)          -             -             -           -     (750) 
 
Share-based payments 
 charge                    12           -          -             -             -         659       659 
 
Tax on share options                    -          -             -             -         103       103 
 
Equity dividend            9            -          -             -             -     (2,775)   (2,775) 
                                ---------  ---------  ------------  ------------  ----------  -------- 
 
Balance at 30 September 
 2016 (unaudited)                  51,779      6,575             3         2,976      21,422    82,755 
 
Profit for the period                   -          -             -             -       9,518     9,518 
 
Other comprehensive 
 income                                 -          -             -         1,121           -     1,121 
                                ---------  ---------  ------------  ------------  ----------  -------- 
 
Total comprehensive 
 income for the period                  -          -             -         1,121       9,518    10,639 
 
Issue of share capital                184          -             -             -           -       184 
 
Share-based payments 
 charge                                 -          -             -             -         335       335 
 
Tax on share options                    -          -             -             -         270       270 
                                                                    ------------ 
 
Balance at 1 April 
 2017 (audited)                    51,963      6,575             3         4,097      31,545    94,183 
 
Profit for the period                   -          -             -             -       2,435     2,435 
 
Other comprehensive 
 income                                 -          -             -       (1,554)           -   (1,554) 
                                ---------  ---------  ------------  ------------  ----------  -------- 
 
Total comprehensive 
 income for the period                  -          -             -       (1,554)       2,435       881 
 
Issue of share capital     15      58,255          -             -             -           -    58,255 
 
Share issue costs          15     (1,739)          -             -             -           -   (1,739) 
 
Share-based payments 
 charge                    12           -          -             -             -       1,101     1,101 
 
Tax on share options                    -          -             -             -          51        51 
 
Equity dividend            9            -          -             -             -     (3,582)   (3,582) 
                                ---------  ---------  ------------  ------------  ----------  -------- 
 
Balance at 30 September 
 2017 (unaudited)                 108,479      6,575             3         2,543      31,550   149,150 
                                ---------  ---------  ------------  ------------  ----------  -------- 
 
 
 Interim Consolidated Balance Sheet 
 As at 30 September 2017 
----------------------------------- 
 
 
                                 Note      Unaudited      Unaudited    Audited 
                                               As at          As at      As at 
                                        30 September   30 September   31 March 
                                                2017           2016       2017 
                                             GBP'000        GBP'000    GBP'000 
 
 ASSETS 
 
 Non-current assets 
 
 Plant and equipment              10           4,216          2,796      2,856 
 Intangible assets                11         167,551         99,700     98,753 
 Deferred tax asset                            4,190          3,014      4,044 
 
                                             175,957        105,510    105,653 
                                       -------------  -------------  --------- 
 
 Current assets 
 
 Inventories                                     211             97        233 
 Trade and other receivables                  28,951         21,746     30,569 
 Current tax                                       -              -        494 
 Cash and short-term deposits                 17,923         11,654     17,618 
                                       -------------  -------------  --------- 
 
                                              47,085         33,497     48,914 
                                       -------------  -------------  --------- 
 
 TOTAL ASSETS                                223,042        139,007    154,567 
                                       -------------  -------------  --------- 
 
 
 EQUITY AND LIABILITIES 
 
 Capital and reserves 
 
 Equity share capital                        108,479         51,779     51,963 
 Merger reserve                                6,575          6,575      6,575 
 Capital redemption reserve                        3              3          3 
 Foreign currency translation 
  reserve                                      2,543          2,976      4,097 
 Retained earnings                            31,550         21,422     31,545 
 
 Total equity attributable to 
  equity holders of the parent               149,150         82,755     94,183 
                                       -------------  -------------  --------- 
 
 Non-current liabilities 
 
 Loans                             13         12,974         12,000     11,499 
 Contingent consideration          17              -          6,845          - 
 Deferred tax liability                        9,431          4,860      4,441 
                                       -------------  -------------  --------- 
                                              22,405         23,705     15,940 
 Current liabilities 
 
 Loans                             13            850          3,701        886 
 Trade and other payables                     42,111         28,328     36,401 
 Contingent consideration          17          7,929              -      7,122 
 Provisions                                       25             29         35 
 Current tax                                     572            489          - 
 
                                              51,487         32,547     44,444 
                                       -------------  -------------  --------- 
 
 TOTAL LIABILITIES                            73,892         56,252     60,384 
                                       -------------  -------------  --------- 
 
 TOTAL EQUITY AND LIABILITIES                223,042        139,007    154,567 
                                       -------------  -------------  --------- 
 Interim Consolidated Cash Flow Statement 
  For the six months ended 30 September 2017 
-------------------------------------------------------------------------------- 
 
 
 
 
                                          Note      Unaudited      Unaudited    Audited 
                                                     6 months       6 months       Year 
                                                           to             to         to 
                                                 30 September   30 September   31 March 
                                                         2017           2016       2017 
                                                      GBP'000        GBP'000    GBP'000 
 
Group profit before tax                                 3,512          1,560     10,082 
 
Adjustments to reconcile Group 
 profit before tax to net cash 
 flows 
Finance revenue                                          (17)           (11)       (19) 
Finance costs                                             289            246        517 
Depreciation of plant and equipment         10            635            452      1,031 
Amortisation of intangible 
 assets                                     11          4,200          2,095      4,719 
Loss on disposal of plant and 
 equipment                                                 36              2          2 
Adjustments to contingent consideration      5            807            194        471 
Share-based payments                        12          1,101            659        994 
(Decrease)/increase in provisions                        (10)            (2)          4 
Decrease/(increase) in inventories                         22              -       (78) 
Decrease/(increase) in receivables                      3,663          5,158    (3,690) 
(Decrease)/increase in payables                       (3,725)        (5,735)      2,272 
 
Cash generated from operations                         10,513          4,618     16,305 
Income tax paid                                         (611)          (973)    (2,193) 
                                                -------------  -------------  --------- 
 
Net cash generated from operating 
 activities                                             9,902          3,645     14,112 
                                                -------------  -------------  --------- 
 
 
Cash flows from/(used in) investing 
 activities 
 
Acquisition of subsidiaries, 
 net of cash acquired                       16       (62,903)       (36,818)   (36,840) 
Purchase of plant and equipment             10          (588)          (744)    (1,437) 
Purchase of software                        11           (82)          (211)      (774) 
Proceeds from disposal of plant 
 and equipment                                             96              4          5 
Expenditure on product development          11              -           (21)       (21) 
Interest received                                          17             11         19 
 
Net cash flows used in investing 
 activities                                          (63,460)       (37,779)   (39,048) 
                                                -------------  -------------  --------- 
 
 
Cash flows from/(used in) financing 
 activities 
 
Finance costs paid                                      (289)          (246)      (517) 
Proceeds from issue of shares               15         58,255         25,321     25,505 
Share issue costs                           15        (1,739)          (750)      (750) 
Proceeds from new borrowings                13         10,000         12,000     12,000 
Repayment of borrowings                     13        (8,430)          (400)    (3,838) 
Dividends paid to equity shareholders        9        (3,582)        (2,775)    (2,775) 
 
Net cash flows from financing 
 activities                                            54,215         33,150     29,625 
                                                -------------  -------------  --------- 
 
 
Net increase/(decrease) in 
 cash and cash equivalents                                657          (984)      4,689 
Effect of exchange rates on 
 cash and cash equivalents                              (352)            223        514 
 
Cash and cash equivalents at 
 the beginning of the period                           17,618         12,415     12,415 
                                                -------------  -------------  --------- 
 
Cash and cash equivalents at 
 the end of the period                                 17,923         11,654     17,618 
                                                -------------  -------------  --------- 
 
 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 2017 were authorised for issue in accordance with a resolution of the directors on 28 November 2017. 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 2017 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 pounds 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 2017. The financial information for the preceding year is based on the statutory financial statements for the year ended 31 March 2017. 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 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 2017. The IASB and IFRIC have issued the following Standards and Interpretations with an effective date after these financial statements:

 
 International Accounting Standards (IAS/IFRS)             Effective 
                                                                date 
 
 IFRS              Revenue from Contracts with Customers   1 January 
  15                                                            2018 
 IFRS              Financial Instruments                   1 January 
  9                                                             2018 
 IFRS              Leases                                  1 January 
  16                                                            2019 
 

IFRS 15 'Revenue from Contracts with Customers' replaces IAS 18 'Revenue', IAS 11 'Construction Contracts' and related interpretations. For the Group, transition to IFRS 15 will take place on 1 April 2018. Half yearly and annual results in the 2018/19 financial year will be IFRS 15 compliant. The standard requires entities to apportion revenue earned from contracts to individual promises, or performance obligations, on a relative standalone selling price basis, based upon a five-step revenue recognition model where revenue is recognised at the point that control of goods or services is transferred to the customer. Whilst some further work is required to determine the impact on reported revenue across all the lines of business, the Group is reviewing and updating its revenue recognition policies in light of the updated requirements in readiness for the transition. Based on the initial findings of this process, management do not currently anticipate that there will be a material change to the quantum and timing of profitability. The new standard also introduces expanded disclosure requirements and these are expected to change the nature and extent of the group's disclosures about its revenue recognition in future reports, when the new standard is adopted.

IFRS 9 'Financial Instruments' replaces IAS 39. The standard is effective for the year ending 31 March 2019 and will impact the classification and measurement of financial instruments and will require certain additional disclosures. Whilst an assessment of the new standard is ongoing, the changes to recognition and measurement of financial instruments and changes to hedge accounting rules are not currently considered likely to have any major impact on the Group's current accounting treatment or hedging activities.

IFRS 16 'Leases' (effective for the year ending 31 March 2020) will require most leases to be recognised on the balance sheet. The new standard brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. IFRS 16 supersedes IAS 17 'Leases' and related interpretations. The Group has a number of operating lease arrangements and will consider the financial impact of IFRS 16 in due course but in broad terms the impact will be to recognise a lease liability and corresponding asset for the Group's operating lease commitments.

 
 
 

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 AND 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, business continuity and cyber risk; new product development; and intellectual property risk. These risks and uncertainties facing our business were reported in detail in the 2017 Annual Report and Accounts and all of them are monitored closely by the Group.

The outcome of the recent UK referendum has caused uncertainty in both the political and economic environments in which we operate. Our business model means that we are comparatively well-placed to manage the consequences of the result and of its effect on the economic environment. However, there is the potential for our costs to increase, for example, through any changes required to our systems to reflect new taxes; regulatory risk to increase as a result of any future divergence with the EU regime; and supplier disruption to occur as a result of challenges in suppliers' own organisations and supply chains. At this time, the outcome of Brexit negotiations and post-Brexit arrangements remains unclear and as such, like all companies, we continue to monitor the situation and manage the practical implications as they occur.

Accounting Estimates

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The main judgements and key sources of estimation uncertainty applied in these interim consolidated financial statements are detailed in the Group's annual financial statements for the year ending 31 March 2017. Specific new judgements and estimates which have had an impact on amounts recognised in the financial statements the six months ended 30 September 2017 include the following:

Valuation and Asset Lives of Separately Identifiable Intangible Assets

In determining the fair value of intangible assets arising on acquisition, management are required to make judgements regarding the timing and amount of future cash flows applicable to the businesses being acquired, discounted using an appropriate discount rate. Such judgements are based on current budgets and forecasts, extrapolated for an appropriate period taking into account growth rates and expected changes to selling prices and operating costs. During the year, the Company acquired Postcode Anywhere (Holdings) Limited and in valuing the separately identifiable intangible assets made specific judgements as to the life of those assets. The most significant of those were the estimated useful lives of the customer relationship and technology IP assets of 10 and 5 years, respectively. Judgements were made on these lives with reference to both historical indicators within the acquired business such as customer or technology lifecycles along with estimates of the impact on such lives that convergence of technology and relationships would have over time.

Contingent Consideration

Contingent consideration relating to acquisitions is included based on management estimates of the most likely outcome (note 17). Those judgements include the forecasting of a number of different outcomes against the performance targets and estimating a probability and risk of each outcome before arriving at a risk weighted value of contingent consideration. Management's revision of these estimates during the period resulted in an increased contingent consideration liability being recognised.

5. EXCEPTIONAL ITEMS

 
                                                       Unaudited   Unaudited     Audited 
                                                        6 months    6 months        Year 
                                                              to          to          to 
                                                         30 Sept     30 Sept    31 March 
                                                            2017        2016        2017 
                                                         GBP'000     GBP'000     GBP'000 
 
 Adjustments to contingent consideration 
  (note 17)                                                  807         194         471 
 Acquisition related costs                                   735         574         574 
 Costs associated with staff reorganisations                 199         228         365 
 
                                                           1,741         996       1,410 
                                                ----------------  ----------  ---------- 
 

Fair value adjustments to contingent consideration in the period to 30 September 2017 relate to the acquisition of IDscan and include GBP421,000 relating to a contingent purchase price adjustment along with a GBP386,000 charge relating to the partial unwinding of the discounting relating to the contingent consideration (note 17). 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.

Fair value adjustments to contingent consideration in the six months to 30 September 2016 include a charge of GBP177,000 relating to the partial unwind of the discount applied to the contingent consideration arising on the acquisition of ID Scan Biometrics Limited (note 17) and GBP17,000 relating to the unwind of the remaining discounted amount in relation to the contingent consideration that arose on the acquisition of DecTech Solutions Pty Ltd (note 17).

Fair value adjustments to contingent consideration in the year to 31 March 2017 include a GBP92,000 adjustment relating to the contingent purchase price of IDscan (note 17) along with a GBP546,000 charge relating to the partial unwinding of the discounting relating to the contingent consideration of the acquisition of IDscan (note 17) and GBP17,000 relating to the unwind of the remaining discounted amount in relation to the contingent consideration that arose on the acquisition of DecTech Solutions Pty Ltd.

Transaction costs of GBP735,000 relate to the acquisition of PCA (note 16). In prior periods, transaction costs of GBP513,000 were incurred in relation to the acquisition of IDscan (note 16). Such costs include those directly attributable to the transaction and exclude operating or integration costs relating to an acquired business, and due to the size and nature of these costs, management consider that they would distort the Group's underlying business performance.

Costs associated with staff reorganisations in both years relate to exit costs of personnel leaving the business on an involuntary basis due to reorganisations within our operating divisions. Due to the nature of these costs, management deem them to be exceptional in order to better reflect our underlying performance.

6. SEGMENTAL INFORMATION

The Group's operating segments are internally reported to the Group's Chief Executive Officer as two operating segments: Fraud, Risk & Compliance Division - which provides ID verification, ID assurance, ID trace & investigate and employment screening and Location & Customer Intelligence Division - which provides ID registration and ID engage solutions. 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.

Postcode Anywhere (Holdings) Limited ('PCA'), which was acquired during the period, is reported within the Location & Customer Intelligence division.

Segment results include items directly attributable to either Fraud, Risk & Compliance or Location & Customer Intelligence. Unallocated items for the six months to 30 September 2017 represent Group head office costs GBP707,000 (2016: GBP377,000), exceptional items GBP1,741,000 (2016: GBP996,000), Group finance income GBP17,000 (2016: GBP11,000), Group finance costs GBP289,000 (2016: GBP244,000), Group income tax expense GBP1,077,000 (2016: GBP328,000) and share-based payments charge GBP1,101,000 (2016: GBP659,000). Unallocated items for the year ended 31 March 2017 represent Group head office costs GBP675,000, exceptional costs GBP1,410,000, Group finance income GBP19,000, Group finance costs GBP517,000, Group income tax credit GBP668,000 and share-based payments charge GBP994,000.

As previously reported in the Annual Report and Accounts, in order to reflect how the Group is presenting its lines of business to its stakeholders going forward, the naming and structure of the operating segments were amended with effect from 1 April 2017. Going forward 'Identity Proofing' is now known as 'Fraud, Risk & Compliance' and 'Identity Solutions' is known as 'Location & Customer Intelligence'. Furthermore, the 'ID Trace & Investigate' line of business has transferred into Fraud, Risk & Compliance.

 
                                                                                        Total 
                                                                                    Unaudited 
                                                     Location                        6 months 
                                      Fraud,       & Customer                              to 
                                        Risk     Intelligence     Unallocated    30 September 
                                & Compliance                                             2017 
 Six months ended 30                 GBP'000          GBP'000         GBP'000         GBP'000 
  September 2017 
 Total revenue                        32,055           20,571               -          52,626 
                             ---------------  ---------------  --------------  -------------- 
 Adjusted operating profit             7,693            3,442           (707)          10,428 
 Amortisation of acquired 
  intangibles                        (1,480)          (2,322)               -         (3,802) 
 Share-based payments 
  charge                                   -                -         (1,101)         (1,101) 
 Exceptional items                         -                -         (1,741)         (1,741) 
                             ---------------  ---------------  --------------  -------------- 
 Operating profit                      6,213            1,120         (3,549)           3,784 
 Finance revenue                                                                           17 
 Finance costs                                                                          (289) 
 Income tax expense                                                                   (1,077) 
                                                                               -------------- 
 Profit for the period                                                                  2,435 
                                                                               -------------- 
 
 
                                                                                        Total 
                                                                                    Unaudited 
                                                     Location                        6 months 
                                      Fraud,       & Customer                              to 
                                        Risk     Intelligence     Unallocated    30 September 
                                & Compliance                                             2016 
 Six months ended 30                 GBP'000          GBP'000         GBP'000         GBP'000 
  September 2016 
 Total revenue                        23,754           13,758               -          37,512 
                             ---------------  ---------------  --------------  -------------- 
 Adjusted operating profit             4,412            1,164           (377)           5,199 
 Amortisation of acquired 
  intangibles                        (1,003)            (748)               -         (1,751) 
 Share-based payments 
  charge                                   -                -           (659)           (659) 
 Exceptional items                         -                -           (996)           (996) 
 Operating profit                      3,409              416         (2,032)           1,793 
 Finance revenue                                                                           11 
 Finance costs                                                                          (244) 
 Income tax expense                                                                     (328) 
                                                                               -------------- 
 Profit for the period                                                                  1,232 
                                                                               -------------- 
 
 
 
                                                                                    Total 
                                                     Location                     Audited 
                                      Fraud,       & Customer                        Year 
                                        Risk     Intelligence     Unallocated       to 31 
                                & Compliance                                        March 
                                                                                     2017 
 Year ended 31 March                 GBP'000          GBP'000         GBP'000     GBP'000 
  2017 
 Total revenue                        54,814           32,672               -      87,486 
                             ---------------  ---------------  --------------  ---------- 
 Adjusted operating profit            12,923            4,758           (675)      17,006 
 Amortisation of acquired 
  intangibles                        (2,507)          (1,515)               -     (4,022) 
 Share-based payments 
  charge                                   -                -           (994)       (994) 
 Exceptional items                         -                -         (1,410)     (1,410) 
 Operating profit                     10,416            3,243         (3,079)      10,580 
 Finance revenue                                                                       19 
 Finance costs                                                                      (517) 
 Income tax credit                                                                    668 
                                                                               ---------- 
 Profit for the year                                                               10,750 
                                                                               ---------- 
 

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 2018.

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            Unaudited             Audited 
                                6 months             6 months              Year to 
                             to 30 September      to 30 September         31 March 
                                  2017                 2016                 2017 
                            Pence                Pence                Pence 
                              per                  per                  per 
                            share     GBP'000    share     GBP'000    share     GBP'000 
 
 
   Profit attributable 
   to equity holders 
   of the company             1.6       2,435      1.0       1,232      8.2      10,750 
                          -------  ----------  -------  ----------  -------  ---------- 
 
 

Diluted

Diluted earnings per share amounts are calculated by dividing the profit for the period attributable to equity holders of the company 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.

 
                                  30 Sept       30 Sept        31 March 
                                     2017          2016            2017 
                                      No.           No.             No. 
 
 Basic weighted average 
  number of shares in 
  issue                       148,506,098   128,812,008     131,608,788 
 Dilutive effect of 
  share options                 2,781,683     3,174,680       2,435,799 
                                           ------------ 
 Diluted weighted average 
  number of shares in 
  issue                       151,287,781   131,986,688     134,044,587 
                             ------------  ------------   ------------- 
 
 
 
                               Unaudited            Unaudited             Audited 
                                6 months             6 months              Year to 
                             to 30 September      to 30 September         31 March 
                                  2017                 2016                 2017 
                            Pence                Pence                Pence 
                              per                  per                  per 
                            share     GBP'000    Share     GBP'000    share     GBP'000 
 
 
   Profit attributable 
   to equity holders 
   of the company             1.6       2,435      0.9       1,232      8.0      10,750 
                          -------  ----------  -------  ----------  -------  ---------- 
 
 

Adjusted

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.

 
                         Unaudited                     Unaudited                      Audited 
                        6 months to                   6 months to                     Year to 
                        30 September                  30 September                 31 March 2017 
                            2017                          2016 
                Basic   Diluted               Basic   Diluted                Basic   Diluted 
                pence     pence               pence     pence                pence     pence 
                  per       per                 per       per                  per       per 
                share     share     GBP'000   share     share     GBP'000    share     share    GBP'000 
 
   Adjusted 
   operating 
   profit         7.0       6.9      10,428     4.0       3.9       5,199     12.9      12.7     17,006 
 Less net 
  finance 
  costs         (0.2)     (0.2)       (272)   (0.2)     (0.2)       (233)    (0.3)     (0.4)      (498) 
 (Less)/add 
  tax           (0.7)     (0.7)     (1,077)   (0.2)     (0.2)       (328)      0.5       0.5        668 
               ------  --------  ----------  ------  --------  ----------  -------  --------  --------- 
 Adjusted 
  earnings        6.1       6.0       9,079     3.6       3.5       4,638     13.1      12.8     17,176 
               ------  --------  ----------  ------  --------  ----------  -------  --------  --------- 
 
 

Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payment charges, exceptional items, net finance costs and tax.

9. DIVIDS PAID AND PROPOSED

 
                                        Unaudited   Unaudited   Audited 
                                         6 months    6 months      Year 
                                            to 30       to 30        to 
                                             Sept        Sept        31 
                                             2017        2016     March 
                                                                   2017 
                                          GBP'000     GBP'000   GBP'000 
 Declared and paid during the 
  period 
 Final dividend for 2017: 2.35p 
  per share (2016: 2.08p per share)         3,582       2,775     2,775 
                                       ----------  ----------  -------- 
 
 Proposed for approval at AGM 
  (not recognised as a liability 
  at 31 March 2017) 
 Final dividend for 2017: 2.35p 
  per share                                     -           -     3,566 
                                       ----------  ----------  -------- 
 

10. PLANT AND EQUIPMENT

During the six months ended 30 September 2017, the Group acquired plant and equipment with a cost of GBP588,000 (2016: GBP744,000).

Land and buildings with a fair value of GBP1,251,000, and plant and equipment with a fair value of GBP341,000, were acquired with the acquisition of PCA (note 16).

Depreciation provided during the six months ended 30 September 2017 was GBP635,000 (2016: GBP452,000).

Assets with a net book value of GBP132,000 were disposed of during the six months ended 30 September 2017 (2016: GBP6,000).

11. INTANGIBLE ASSETS

 
 Group                                      Other         Total                            Internally 
                           Customer   acquisition   acquisition                Purchased    developed 
                      relationships   intangibles   intangibles    Goodwill     software     software      Total 
                            GBP'000       GBP'000       GBP'000     GBP'000      GBP'000      GBP'000    GBP'000 
 
 Cost 
 At 1 April 
  2016                       16,981         4,698        21,679      37,765        2,379        1,747     63,570 
 Additions 
  - business 
  combinations                3,917         5,872         9,789      34,853            9            -     44,651 
 Additions 
  - product 
  development                     -             -             -           -            -           21         21 
 Additions 
  - purchased 
  software                        -             -             -           -          211            -        211 
 Foreign exchange 
  adjustments                   638           259           897       2,129            -            2      3,028 
                    ---------------  ------------  ------------  ---------- 
 At 30 September 
  2016                       21,536        10,829        32,365      74,747        2,599        1,770    111,481 
 
 Additions 
  - business 
  combinations                    -             -             -          46          (2)            -         44 
 Additions 
  - purchased 
  software                        -             -             -           -          563            -        563 
 Disposals                        -             -             -           -      (1,275)            -    (1,275) 
 Reclassification                 -             -             -           -           23            -         23 
 Foreign exchange 
  adjustments                   240            99           339         805            -            1      1,145 
                    ---------------  ------------  ------------  ----------  -----------  -----------  --------- 
 At 31 March 
  2017                       21,776        10,928        32,704      75,598        1,908        1,771    111,981 
 
 Additions 
  - business 
  combinations               24,865         6,102        30,967      43,376            -            -     74,343 
 Additions 
  - purchased 
  software                        -             -             -           -           82            -         82 
 Foreign exchange 
  adjustments                 (337)         (138)         (475)     (1,123)            -            -    (1,598) 
                    ---------------  ------------  ------------  ---------- 
 At 30 September 
  2017                       46,304        16,892        63,196     117,851        1,990        1,771    184,808 
 
 
 Amortisation 
  and impairment 
 At 1 April 
  2016                        4,449         2,469         6,918           -        1,700          839      9,457 
 Amortisation 
  during the 
  period                        965           786         1,751           -          159          185      2,095 
 Foreign exchange 
  adjustments                   121           108           229           -            -            -        229 
                    ---------------  ------------  ------------  ----------  -----------  -----------  --------- 
 At 30 September 
  2016                        5,535         3,363         8,898           -        1,859        1,024     11,781 
 
 Amortisation 
  during the 
  period                      1,081         1,190         2,271           -          171          182      2,624 
 Disposals                        -             -             -                  (1,275)            -    (1,275) 
 Foreign exchange 
  adjustments                    52            45            97           -            -            1         98 
                    ---------------  ------------  ------------  ----------  -----------  -----------  --------- 
 At 31 March 
  2017                        6,668         4,598        11,266           -          755        1,207     13,228 
 
 Amortisation 
  during the 
  period                      2,114         1,688         3,802           -          222          176      4,200 
 Foreign exchange 
  adjustments                  (89)          (82)         (171)           -            -            -      (171) 
                    ---------------  ------------  ------------  ----------  -----------  -----------  --------- 
 At 30 September 
  2017                        8,693         6,204        14,897           -          977        1,383     17,257 
 
 
 Net book value 
 At 30 September 
  2017                       37,611        10,688        48,299     117,851        1,013          388    167,551 
                    ---------------  ------------  ------------  ----------  -----------  -----------  --------- 
 
 At 31 March 
  2017                       15,108         6,330        21,438      75,598        1,153          564     98,753 
                    ---------------  ------------  ------------  ----------  -----------  -----------  --------- 
 
 At 30 September 
  2016                       16,001         7,466        23,467      74,747          740          746     99,700 
                    ---------------  ------------  ------------  ----------  -----------  -----------  --------- 
 
 

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, Loqate Inc., ID Scan Biometrics Limited and Postcode Anywhere (Holdings) Limited. Under IFRS, goodwill is not amortised and is tested annually for impairment.

Intangible assets categorised as 'other acquisition intangibles' include asset such as non-compete clauses and software technology.

During the year ending 31 March 2017, GBP23,000 of purchased software assets (at net book value) were reclassified as intangible assets (previously classified as tangible assets).

12. SHARE-BASED PAYMENTS

The Group operates Executive Share Option Schemes under which executive directors, managers and staff of the Company are granted options over shares.

During the six months ended 30 September 2017, the following share options were granted to executive directors and staff.

 
 
   Scheme                  Date          No. of        Exercise        Fair value 
                                        options           price 
 
                         1 April 
 Compensatory options     2017          400,000            2.5p   283.90p-286.20p 
                         1 April 
 Section A options        2017           10,238          293.0p     79.86p-87.99p 
                         1 April 
 Section B options        2017          989,762          293.0p     79.86p-87.99p 
                         19 July 
 Section B options        2017           50,000          345.0p            95.37p 
 GBG Sharesave scheme    15 August      451,250   272.0p-370.0p    70.38p-113.83p 
  - 3 year                2017 
 GBG Sharesave scheme    15 August 
  - 5 year                2017          140,743          272.0p           127.39p 
 

The charge recognised from equity-settled share-based payments in respect of employee services received during the period was GBP1,101,000 (2016: GBP659,000).

13. LOANS

In April 2014, the Group secured an Australian dollar three year term loan of AUS$10,000,000. The debt bears an interest rate of +1.90% above the Australian Dollar bank bill interest swap rate ('BBSW'). During the year ending 31 March 2017, this term loan was extended from its original maturity of April 2017 to November 2018. Security on the debt is provided by way of an all asset debenture. During the period, GBP430,000 (2016: GBP400,000) was repaid in relation to the Australian dollar term loan.

The Group has a three year revolving credit facility agreement expiring in November 2020 which is subject to a limit of GBP50,000,000. The facility bears an initial interest rate of LIBOR +1.50%. This interest rate is subject to an increase of 0.25% should the business exceed certain leverage conditions. The acquisition of PCA (note 16) was part funded through a GBP10,000,000 draw down on the Group's existing borrowing facilities, of which GBP8,000,000 was repaid in the six months to 30 September 2017.

 
                                  30 Sept   30 Sept   31 March 
                                     2017      2016       2017 
                                  GBP'000   GBP'000    GBP'000 
 
 Opening bank loan                 12,385     3,742      3,742 
 New borrowings                    10,000    12,000     12,000 
 Repayment of borrowings          (8,430)     (400)    (3,838) 
 Foreign currency translation 
  adjustment                        (131)       359        481 
                                           -------- 
 Closing bank loan                 13,824    15,701     12,385 
                                 --------  --------  --------- 
 
 Analysed as: 
 Amounts falling due 
  within 12 months                    850     3,701        886 
 Amounts falling due 
  after one year                   12,974    12,000     11,499 
                                 --------  --------  --------- 
                                   13,824    15,701     12,385 
                                 --------  --------  --------- 
 

14. RELATED PARTY TRANSACTIONS

During the period, the Group entered into transactions, in the ordinary course of business, with other related parties. Transactions entered into and trading balances outstanding at 30 September are as follows:

 
 
   Group                                     Purchases     Net amounts 
                                   Sales          from            owed 
                              to related       related      by related 
                                 parties       parties         parties 
                                 GBP'000       GBP'000         GBP'000 
 
 Directors (see below): 
  30 September 2017                    -             -               - 
  30 September 2016                    -             -               - 
  31 March 2017                        -             3               - 
 
 Other related parties 
  (see below): 
  30 September 2017                    -             -               - 
  30 September 2016                   23             -            (14) 
  31 March 2017                       55             -               7 
 
 

The Chairman of the Company incurred some expenses via his consultancy business Rasche Consulting Limited.

Richard Law, the Chief Executive of the Company in the year ending 31 March 2017, is a director of Zuto Limited which is a client of the Group. Transactions with Zuto Limited have been reported under the heading of 'other related parties' in the table above.

In prior periods, a Non-Executive Director of the Company was a director of Avanti Communications Group Plc which is a client of the Group. A Non-Executive Director of the Company is a Director of Removal Stars Limited which is a client of the Group. Transactions with these companies have been reported under the heading of 'other related parties' in the table above.

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 with subsidiaries are the same, with the exception that balances are placed on intercompany accounts with no specified credit period. During the six months ended 30 September 2017, the Group has not made any provision for doubtful debts relating to amounts owed by related parties (2016: GBPnil).

Compensation of key management personnel (including directors)

 
                              Unaudited   Unaudited     Audited 
                               6 months    6 months        Year 
                                     to          to          to 
                                30 Sept     30 Sept    31 March 
                                   2017        2016        2017 
                                GBP'000     GBP'000     GBP'000 
 
 Short-term employee 
  benefits                          753         579       1,731 
 Post-employment benefits            31          16          31 
 Fair value of share 
  options awarded                 1,980         393         393 
                                  2,764         988       2,155 
                             ----------  ----------  ---------- 
 

15. EQUITY SHARE CAPITAL

During the period 17,793,273 (2016: 10,296,940) ordinary shares with a nominal value of 2.5p were issued for an aggregate cash consideration of GBP58,255,000 (2016: GBP25,321,000). The cost associated with the issue of shares was GBP1,739,000 (2016: GBP750,000).

 
                         30 Sept   30 Sept   31 March 
                            2017      2016       2017 
                         GBP'000   GBP'000    GBP'000 
 Issued 
 Allotted, called up 
  and fully paid           3,812     3,355      3,368 
 Share premium           104,667    48,424     48,595 
                         108,479    51,779     51,963 
                        --------  --------  --------- 
 
 

16. BUSINESS COMBINATIONS

Acquisitions in the Period Ended 30 September 2017

Acquisition of Postcode Anywhere (Holdings) Limited

On 11 May 2017, the Company acquired 100% of the voting shares of Postcode Anywhere (Holdings) Limited ('PCA'), a provider of UK and International address validation and data quality services, for a total consideration of GBP73,852,423. The combination of the two businesses represents a highly complementary capability alongside GBG's existing ID registration solutions. The Consolidated Statement of Comprehensive Income includes the results of PCA for the five month period from the acquisition date.

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

 
                                                           Fair value 
                                                           recognised 
                                                       on acquisition 
                                                              GBP'000 
 Assets 
 Technology intellectual property                               5,733 
 Customer relationships                                        24,865 
 Non-compete agreements                                           369 
 Land and buildings                                             1,251 
 Plant and equipment                                              341 
 Deferred tax assets                                              379 
 Trade and other receivables                                    1,763 
 Cash                                                          10,949 
 Trade and other payables                                     (9,280) 
 Deferred tax liabilities                                     (5,736) 
                                                     ---------------- 
 Total identifiable net assets at fair value                   30,634 
 Goodwill arising on acquisition                               43,218 
                                                     ---------------- 
 Total purchase consideration transferred                      73,852 
                                                     ---------------- 
 
 Purchase consideration: 
 Cash                                                          73,852 
 Total purchase consideration                                  73,852 
                                                     ---------------- 
 
 Analysis of cash flows on acquisition: 
 Transaction costs of the acquisition (included 
  in cash flows from operating activities)                      (735) 
 
 Net cash acquired with the subsidiary                         10,949 
 Cash paid                                                   (73,852) 
                                                     ---------------- 
 Acquisition of subsidiaries, net of cash 
  acquired (included in cash flows from investing 
  activities)                                                (62,903) 
 
 Net cash outflow                                            (63,638) 
                                                     ---------------- 
 

The fair value of the acquired trade receivables amounts to GBP1,763,000. The gross amount of trade receivables is GBP1,763,000. 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 PCA due to their nature. These items include the capability for synergies from bringing the businesses together, combining propositions and capabilities that will help the business achieve accelerated consolidated growth from both cross-sell and up-sell. None of the goodwill is expected to be deductible for income tax purposes.

The transaction costs of GBP735,000 associated with this acquisition have been expensed and are included in exceptional items in the Consolidated Statement of Comprehensive Income and are part of operating cash flows in the Cash Flow Statement.

From the date of acquisition, PCA has contributed GBP6,599,000 of revenue and operating profits of GBP2,388,000 to the Group. If the combination had taken place at the beginning of the period, the Group revenue and adjusted operating profits would have been GBP53,995,000 and GBP10,446,000, respectively.

Acquisitions in the Period Ended 30 September 2016

Acquisition of ID Scan Biometrics Limited

On 1 July 2016, the Company acquired 100% of the voting shares of ID Scan Biometrics Limited ('IDscan'), a provider of software that automates on-boarding of customers and employees by simplifying the identity verification and data capture process. IDscan helps authentication of documents including passports, visas, ID cards, driving licenses, utility bills and work permits while also capturing facial biometrics which provides proof that those documents are not stolen. The combination represents a highly complementary capability set alongside GBG's unique global Know Your Customer, Anti-Money Laundering and fraud detection solutions. For the period ending 30 September 2016, the Consolidated Statement of Comprehensive Income includes the results of IDscan for the three month period from the acquisition date.

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

 
                                                           Fair value 
                                                           recognised 
                                                       on acquisition 
                                                              GBP'000 
 Assets 
 Technology intellectual property                               5,405 
 Customer relationships                                         3,917 
 Non-compete agreements                                           467 
 Plant and equipment                                              222 
 Purchased software                                                 7 
 Inventory                                                        155 
 Trade and other receivables                                    2,408 
 Cash                                                           1,186 
 Trade and other payables                                     (2,911) 
 Corporation tax liabilities                                    (427) 
 Deferred tax liabilities                                     (1,818) 
                                                     ---------------- 
 Total identifiable net assets at fair value                    8,611 
 Goodwill arising on acquisition                               35,057 
                                                     ---------------- 
 Total purchase consideration transferred                      43,668 
                                                     ---------------- 
 
 Purchase consideration: 
 Cash                                                          37,000 
 Contingent consideration adjustment                            6,668 
 Total purchase consideration                                  43,668 
                                                     ---------------- 
 
 Analysis of cash flows on acquisition: 
 Transaction costs of the acquisition (included 
  in cash flows from operating activities)                      (513) 
 
 Net cash acquired with the subsidiary                          1,186 
 Cash paid                                                   (37,000) 
                                                     ---------------- 
 Acquisition of subsidiaries, net of cash 
  acquired (included in cash flows from investing 
  activities)                                                (35,814) 
 
 Net cash outflow                                            (36,327) 
                                                     ---------------- 
 

The fair value of the acquired trade receivables amounts to GBP2,200,000. The gross amount of trade receivables is GBP2,211,000. 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 IDscan 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 GBP513,000 associated with this acquisition have been expensed and are included in exceptional items in the Consolidated Statement of Comprehensive Income and are part of operating cash flows in the Cash Flow Statement.

From the date of acquisition to 30 September 2016, IDscan contributed GBP1,758,000 of revenue and operating profits of GBP504,000 to the Group. If the combination had taken place at the beginning of the period ended 30 September 2016, the Group revenue and operating profits would have been GBP39,540,000 and GBP2,198,000, respectively.

The fair values reported in the Annual Report were provisional due to the ongoing determination of the fair value of certain assets. As a consequence of the finalisation of these values, the identifiable net assets at fair value has reduced by GBP177,000 compared to that previously reported with a corresponding increase in the amount of goodwill.

Contingent Consideration - IDscan

As part of the share sale and purchase agreement, a contingent consideration amount of up to GBP8,000,000 has been agreed. This payment is subject to certain future revenue and EBITDA targets between 12 and 18 months from completion date. The obligation has been classed as a liability in accordance with the provisions of IAS 32.

At the acquisition date the discounted fair value of the contingent consideration was estimated at GBP6,668,000 having been determined from management's estimates of the range of outcomes and their respective likelihoods. At 30 September 2017, the value of the contingent consideration, after a contingent purchase price adjustment and partial unwinding of the discounting, was GBP7,929,000. Adjustments to the fair value of the contingent consideration are made in the Consolidated Statement of Comprehensive Income under IFRS 3 (Revised) Business Combinations.

17. CONTINGENT CONSIDERATION

 
 LIABILITIES                              Unaudited   Unaudited     Audited 
                                            30 Sept     30 Sept    31 March 
                                               2017        2016        2017 
                                            GBP'000     GBP'000     GBP'000 
 
 Opening                                      7,122       1,050       1,050 
 Recognition on the acquisition 
  of subsidiary undertakings                      -       6,668       6,668 
 Fair value adjustment to contingent 
  consideration                                 421           -        (92) 
 Settlement of consideration                      -     (1,026)     (1,026) 
 Unwinding of discount                          386         194         563 
 Exchange differences on retranslation            -        (41)        (41) 
                                         ----------  ----------  ---------- 
 Closing                                      7,929       6,845       7,122 
                                         ----------  ----------  ---------- 
 
 
 Analysed as: 
 Amounts falling due 
  within 12 months       7,929       -   7,122 
 Amounts falling due         -   6,845       - 
  after one year 
                        ------  ------  ------ 
                         7,929   6,845   7,122 
                        ------  ------  ------ 
 

The closing balance at 30 September 2017 relates to provisions for contingent consideration for IDscan.

The opening balance at 1 April 2016 represented contingent consideration amounts relating to the acquisition of DecTech. During the year ending 31 March 2017, a final payment of AUS$2,000,000 (GBP1,026,000) was made to settle the outstanding obligation on DecTech. The closing balance at 31 March 2017 relates to provisions for contingent consideration for IDscan. Exchange differences of GBP41,000 arose from the retranslation of DecTech into pounds Sterling for consolidation purposes and are not part of the fair value movement on the underlying contingent consideration.

In prior periods, the fair value of contingent consideration was estimated having been determined from management's estimates of the range of outcomes to certain future revenue and EBITDA forecasts for periods between 12 and 18 months from completion date and their estimated respective likelihoods. The contractual cash flows were therefore based on future trading activity, which is estimated based on latest forecasts (Level 3 as defined by IFRS 13). In the current period, management have assessed that it is highly likely that the maximum contingent consideration amount will be payable.

18. FINANCIAL INSTRUMENTS - FAIR VALUE MEASUREMENT

The objectives, policies and strategies pursued by the Group in relation to financial instruments are described within the 2017 Annual Report. Set out below is an overview of financial instruments, other than cash and short-term deposits, held by the Group:

 
                                  30 September              30 September              31 March 2017 
                                       2017                      2016 
                                                Fair                      Fair                      Fair 
                                     Loans     value           Loans     value           Loans     value 
                                       and    profit             and    profit             and    profit 
                               receivables        or     receivables        or     receivables        or 
                                                loss                      loss                      loss 
                                   GBP'000   GBP'000         GBP'000   GBP'000         GBP'000   GBP'000 
 
 Financial assets: 
 Trade and other 
  receivables                       23,601         -          17,669         -          26,160         - 
 Total current                      23,601         -          17,669         -          26,160         - 
 
 Total financial 
  assets                            23,601         -          17,669         -          26,160         - 
                            --------------  --------  --------------  --------  --------------  -------- 
 
 Financial liabilities: 
 Loans                              12,974         -          12,000         -          11,499         - 
 Contingent consideration                -         -               -     6,845               -         - 
                            --------------  --------  --------------  --------  --------------  -------- 
 Total non-current                  12,974         -          12,000     6,845          11,499         - 
 
 Trade and other 
  payables                          18,421         -          12,832         -          17,404         - 
 Loans                                 850         -           3,701         -             886         - 
 Contingent consideration                -     7,929               -         -               -     7,122 
                            --------------  --------  --------------  --------  --------------  -------- 
 Total current                      19,271     7,929          16,533         -          18,290     7,122 
 
 Total financial 
  liabilities                       32,245     7,929          28,533     6,845          29,789     7,122 
                            --------------  --------  --------------  --------  --------------  -------- 
 

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 
                                                2017        2016        2017 
                                             GBP'000     GBP'000     GBP'000 
 
 Fair value within current liabilities: 
 Contingent consideration                      7,929           -       7,122 
                                          ----------  ----------  ---------- 
 
 Fair value within non-current 
  liabilities: 
 Contingent consideration                          -       6,845           - 
                                          ----------  ----------  ---------- 
 

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; 

-- Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

-- Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

18. FINANCIAL INSTRUMENTS - FAIR VALUE MEASUREMENT (continued)

For financial instruments that are recognised at the fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Financial Liabilities

The Group has an Australian dollar three year term loan of AUS$10,000,000 maturing in November 2018. The debt bears an interest rate of +1.90% above the Australian Dollar bank bill interest swap rate ('BBSW').

The Group has a 3 year revolving credit facility agreement expiring in November 2018 with an option to extend by a further year. The facility is subject to a limit of GBP50,000,000 and bears an initial interest rate of LIBOR +1.50%.

The facilities are secured by way of an all asset debenture.

The Group is subject to a number of covenants in relation to its borrowings which, if breached, would result in loan balances becoming immediately repayable. These covenants specify certain maximum limits in terms of the following:

   --      Leverage 
   --      Interest cover 

At 30 September 2017, 31 March 2017 and 30 September 2016 the Group was not in breach of any bank covenants.

ALTERNATIVE PERFORMANCE MEASURES

Management assess the performance of the group using a variety of alternative performance measures. In the discussion of the Group's reported operating results, alternative performance measures are presented to provide readers with additional financial information that is regularly reviewed by management. However, this additional information presented is not uniformly defined by all companies including those in the Group's industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, certain information presented is derived from amounts calculated in accordance with IFRS but is not itself an expressly permitted GAAP measure. Such measures are not defined under IFRS and are therefore termed 'non-GAAP' measures and should not be viewed in isolation or as an alternative to the equivalent GAAP measure.

The Group's income statement and segmental analysis separately identify trading results before certain items. The directors believe that presentation of the Group's results in this way is relevant to an understanding of the Group's financial performance, as such items are identified by virtue of their size, nature or incidence. This presentation is consistent with the way that financial performance is measured by management and reported to the Board and assists in providing a meaningful analysis of the trading results of the Group. In determining whether an event or transaction is presented separately, management considers quantitative as well as qualitative factors such as the frequency or predictability of occurrence. Examples of charges or credits meeting the above definition and which have been presented separately in the current and/or prior years include amortisation of acquired intangibles, share-based payments charges, acquisition related costs and business restructuring programmes. In the event that other items meet the criteria, which are applied consistently from year to year, they are also presented separately.

The following are the key non-GAAP measures used by the Group:

Adjusted Operating Profit

Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payment charges, exceptional items, net finance costs and tax. This is used throughout the Group by management for internal performance analysis and to assess the execution of our strategies. Management believe that it is both useful and necessary to report these measures as they are used for internal performance reporting, these measures are used in setting director and management remuneration and they are useful in connection with discussion with the investment analyst community and debt rating agencies.

Organic Growth

Organic growth is defined by the Group as year-on-year continuing revenue growth, excluding acquisitions, until the date of their anniversary and represents performance on a comparable basis. Whilst organic growth is neither intended to be a substitute for reported growth, nor is it superior to reported growth, the Group believes that these measures provide useful and necessary information to investors and other interested parties. Specifically, it provides additional information on the underlying growth of the business, it is used for internal performance analysis and it facilitates comparability of underlying growth with other companies (although the term 'organic' is not a defined term under IFRS and may not, therefore, be comparable with similarly titled measures reported by other companies).

Net debt

Net debt means cash and short-term deposits less loans. Net debt is a measure of the Group's net indebtedness that provides an indicator of the overall balance sheet strength. It is also a single measure that can be used to assess both the Group's cash position and its indebtedness. The use of the term 'net debt' does not necessarily mean that the cash included in the net debt calculation is available to settle the liabilities included in this measure. Net debt is considered to be an alternative performance measure as it is not defined in IFRS.

Adjusted Earnings and Adjusted Earnings Per Share

Adjusted earnings represents adjusted operating profit less net finance costs and tax and adjusted EPS represents adjusted earnings divided by the weighted average number of shares in issue, and is disclosed to indicate the underlying profitability of the Group.

Independent Review Report to GB Group plc

Introduction

We have been engaged by the GB Group plc (the 'Company') to review the condensed set of consolidated financial statements in the half-yearly financial report for the 6 months ended 30 September 2017 which comprises Interim Consolidated Statement of Comprehensive Income, Interim Consolidated Statement of Changes in Equity, Interim Consolidated Balance Sheet, Interim Consolidated Cash Flow Statement and the related explanatory notes 1 to 18. We have read the other information contained in the half- yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of consolidated financial statements.

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

Directors' Responsibilities

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

As disclosed in note 2, the annual financial statements of the company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of consolidated financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standards 34 'Interim Financial Reporting' as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of consolidated financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated financial statements in the half-yearly financial report for the 6 months ended 30 September 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union.

Ernst & Young LLP

Manchester

28 November 2017

The maintenance and integrity of the GB Group plc web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial information since it was initially presented on the web site.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR BRBLTMBBTBPR

(END) Dow Jones Newswires

November 28, 2017 02:01 ET (07:01 GMT)

1 Year Gb Chart

1 Year Gb Chart

1 Month Gb Chart

1 Month Gb Chart

Your Recent History

Delayed Upgrade Clock