REG - GB Group PLC - Annual Results for the Year Ended 31 March 2017 <Origin Href="QuoteRef">GBGP.L</Origin> - Part 4
06/06/2017 07:06
- Part 4: For the preceding part double click ID:nRSF1989Hc
indicators of impairment on the goodwill arising through business combinations made during the year they
are tested for impairment no later than at the end of the year.
Carrying Amount of Goodwill Allocated to CGUs 2017 2016
£'000 £'000
Identity Solutions Unit 11,672 11,672
Identity Proofing Unit 5,293 5,293
e-Ware Interactive Unit 79 79
IDscan Unit 34,899 -
DecTech Unit 15,972 13,993
Loqate Unit 7,683 6,728
75,598 37,765
Key Assumptions Used in Value in Use Calculations
The Group prepares cash flow forecasts using budgets and forecasts approved by the Directors which cover a three year
period and an appropriate extrapolation of cash flows beyond this using a long-term average growth rate not greater than
the average long-term retail growth rate in the territory where the CGU is based.
The key assumptions for value in use calculations are those regarding the forecast cash flows, discount rates and growth
rates. The Directors estimate discount rates using pre-tax rates that reflect current market assessments of the time value
of money and the risks specific to the individual CGU. Growth rates reflect long-term growth rate prospects for the
economy in which the CGU operates.
2017 2016
Pre-taxWACC Growth rate (in perpetuity) Pre-taxWACC Growth rate(in perpetuity)
% % % %
Identity Solutions Unit 6.5% 2.0% 8.2% 2.3%
Identity Proofing Unit 6.5% 2.0% 8.2% 2.3%
e-Ware Interactive Unit 6.5% - 8.2% -
IDscan Unit 6.5% 2.0% - -
DecTech Unit 16.2% 2.7% 15.6% 2.7%
Loqate Unit 12.7% 2.3% 12.7% 2.3%
In the case of the e-Ware Interactive CGU, the annual impairment review as at 31 March 2017 indicated that the recoverable
amount exceeded the carrying value by £150,000 (2016: £50,000) after assuming an annual cash flow attrition of 20%. In
assessing the future recoverable amounts, cash flow attrition is assumed on the basis that the recoverable amount is
associated with only single remaining customer attributable to that acquisition. Any decline in estimated value-in-use in
excess of that amount would be liable to result in an impairment. Since the value in use of the e-Ware Interactive CGU is
based on a single client, its loss or a significant reduction in its cash flow would cause the carrying value of the unit
to exceed its recoverable amount.
In the case of the IDscan CGU, the annual impairment review as at 31 March 2017 indicated that the recoverable amount
exceeded the carrying value of goodwill by £88,800,000 and that any decline in estimated value-in-use in excess of that
amount would be liable to result in an impairment. The sensitivities, which result in the recoverable amount equalling the
carrying value, can be summarised as follows:
· an absolute increase of 10.7% in the pre-tax weighted average cost of capital from 6.5% to 17.2%; or
· a reduction of 65% in the forecast profit margins.
In the case of the DecTech CGU, the annual impairment review as at 31 March 2017 indicated that the recoverable amount
exceeded the carrying value of goodwill by £11,200,000 (2016: £14,900,000) and that any decline in estimated value-in-use
in excess of that amount would be liable to result in an impairment. The sensitivities, which result in the recoverable
amount equalling the carrying value, can be summarised as follows:
· an absolute increase of 8.8% in the pre-tax weighted average cost of capital from 16.2% to 25%; or
· a reduction of 41% in the forecast profit margins.
In the case of the Loqate CGU, the annual impairment review as at 31 March 2017 indicated that the recoverable amount
exceeded the carrying value of goodwill by £11,500,000 (2016: £7,400,000) and that any decline in estimated value-in-use in
excess of that amount would be liable to result in an impairment. The sensitivities, which result in the recoverable
amount equalling the carrying value, can be summarised as follows:
· an absolute increase of 13.2% in the pre-tax weighted average cost of capital from 12.7% to 25.9%; or
· a reduction of 60% in the forecast profit margins.
The recoverable amount of the other CGUs exceed their carrying value on the basis of the respective assumptions shown above
and any reasonably possible changes thereof.
17. Investments
Company
£'000
Cost
At 1 April 2016 60,428
Acquisition of subsidiary undertakings 43,668
At 31 March 2017 104,096
Amounts written off
At 1 April 2016 and 31 March 2017 -
Net book value
At 31 March 2017 104,096
At 31 March 2016 60,428
60,428
The Company accounts for its investments in subsidiaries using the cost model. The Company holds 100% of the ordinary
share capital of all investments as follows:
Name of company Proportion of voting rights and shares held Country of incorporation Registered office address
Capscan Parent Limited 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Capscan Limited 1 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Data Discoveries Holdings Limited 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Data Discoveries Limited 1 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Managed Analytics Limited 1 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Fastrac Limited 1 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
e-Ware Interactive Limited 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
GB Information Management Limited 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
GB Datacare Limited 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
GB Mailing Systems Limited 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Citizensafe Limited 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
TelMe Global Traveller Limited 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
TelMe.com Limited 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Ebetsafe Limited 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Farebase Limited 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
TMG.tv Limited 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
CRD (UK) Limited 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
GBG DecTech Holding Pty Ltd 100% Australia Co Sec Consulting Pty Ltd, 59 Gipps Street, Collingwood, VIC 3066
GBG DecTech Pty Ltd 1 100% Australia Co Sec Consulting Pty Ltd, 59 Gipps Street, Collingwood, VIC 3066
GBG DecTech Sdn Bhd1 100% Malaysia Level 7 Menara Millenium, Jalan Damanlela Pusat Bandar, Damansara Heights, 50490 Kuala Lumpur, Wilayah Persekutuan
GBG DecTech Solutions S.L1 100% Spain 08002-Barcelona, Edifici The Triangle, 4th Floor, Placa de Catalunya, Barcelona, Spain
迪安科 100% China Room 1714, Building 4, China Investment Center, No.9 Guangan Road, Fengtai District, Beijing, China
Loqate Inc. 100% United States 999 Baker Way Ste 320, San Mateo, CA 94404-1566
Loqate Limited 1 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
ID Scan Biometrics Limited 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
IDscan Research Bilisim Teknolojileri Sanayi Ve Ticaret Limited Sirketi1 100% Turkey Mersin Universitesi Çiftlikköy Kampüsü, Teknopark İdari Bina No: 106 Yenişehir - Mersin
IDScan Research (Pty) Ltd1 100% South Africa 145, 5th Avenue, Franklin Roosevelt Park, Johannesburg, Gauteng, 2195 South Africa
UAB IDscan Biometrics R&D1 100% Lithuania Kauno m. Kauno m. I. Kanto g. 18-4B Lithuania
Safer Clubbing At Night Network (Scan Net) Ltd1 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Transactis Limited 1 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Inkfish Limited1 100% United Kingdom The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
1 held indirectly.
18. Investments in Associates
The Group had a 26.7% interest in Loqate Inc., a private company based in the USA which develops international addressing
solutions, geocoding solutions and location based services which are used in the Group's portfolio of products and
services. The associated undertaking was accounted for using the equity method. On 27 April 2015, the Group acquired the
remaining 73.3% of the shares in Loqate Inc. and its performance is included in the consolidated financial statements since
that date.
At the acquisition date of the remaining 73.3% of shares in Loqate, the Group revalued its previously held equity stake in
Loqate at its acquisition-date fair value in accordance with IFRS 3. The resulting gain of £247,000 has been recognised in
the Consolidated Statement of Comprehensive Income for the year ended 31 March 2016.
19. Trade and Other Receivables
Trade receivables are non-interest bearing and are generally on 14 to 60 day terms. At 31 March 2017, the value of trade
receivables outstanding in excess of the standard expected credit term but not impaired was £7,468,000 (2016: £6,661,000).
The credit quality of trade receivables that are neither past due nor impaired is assessed using a combination of
historical information relating to counterparty default rates and external credit ratings where available.
Group Company
2017£'000 2016£'000 2017£'000 2016£'000
Trade receivables 26,160 19,768 18,897 15,519
Amounts owed from subsidiary undertakings - - 251 -
Prepayments and accrued income 4,409 4,006 2,698 3,317
30,569 23,774 21,846 18,836
Trade receivables are shown net of an allowance for unrecoverable amounts, movements on which are as follows:
Group Company
2017£'000 2016£'000 2017£'000 2016£'000
Balance at 1 April 855 659 673 561
Acquired on acquisition 8 67 - 70
Additional provisions 261 226 137 139
Write-offs (470) (97) (443) (97)
Foreign exchange 27 - - -
Balance at 31 March 681 855 367 673
As at 31 March, the analysis of Group trade receivables that were past due but not impaired is as follows:
Past due but not impaired
Total£'000 Neither past due nor impaired£'000 < 30 days£'000 30 - 60 days£'000 > 60 days£'000
2017 26,160 18,692 3,355 945 3,168
2016 19,768 13,107 2,720 504 3,437
20. Cash
Group Company
2017£'000 2016£'000 2017£'000 2016£'000
Cash at bank and in hand 17,618 12,415 11,011 9,663
17,618 12,415 11,011 9,663
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates.
21. Equity Share Capital
2017 2016
£'000 £'000
Authorised
147,663,704 (2016: 147,663,704) ordinary shares of 2.5p each 3,692 3,692
Issued
Allotted, called up and fully paid 3,368 3,097
Share premium 48,595 24,111
51,963 27,208
2017 2016
No. No.
Number of shares in issue at 1 April 123,886,390 120,735,364
Issued on placing 9,090,910 -
Issued on exercise of share options 1,725,637 3,151,026
Number of shares in issue at 31 March 134,702,937 123,886,390
During the year 10,816,547 (2016: 3,151,026) ordinary shares with a nominal value of 2.5p were issued for an aggregate cash
consideration of £25,505,000 (2016: £790,000). The cost associated with the issue of shares in the year was £750,000
(2016: £nil).
22. 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'). This term loan was extended during the
year from its original maturity of April 2017 to November 2018. Security on the debt is provided by way of an all asset
debenture.
The Group has a three year revolving credit facility agreement expiring in November 2020 which is subject to a limit of
£50,000,000. 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.
Group Company
2017£'000 2016£'000 2017£'000 2016£'000
Opening bank loan 3,742 4,389 - -
New borrowings 12,000 - 12,000 -
Repayment of borrowings (3,838) (752) (3,000) -
Foreign currency translation adjustment 481 105 - -
Closing bank loan 12,385 3,742 9,000 -
Analysed as:
Amounts falling due within 12 months 886 582 - -
Amounts falling due after one year 11,499 3,160 9,000 -
12,385 3,742 9,000 -
23. Trade and Other Payables
Group Company
2017£'000 2016£'000 2017£'000 2016£'000
Trade payables 2,748 5,572 2,363 5,051
Amounts owed to subsidiary undertakings - - 8,044 10,276
Other taxes and social security costs 3,014 3,019 2,578 2,824
Accruals 11,642 8,200 9,412 6,957
Deferred income 18,997 13,752 11,946 10,395
36,401 30,543 34,343 35,503
24. Provisions Group Company
2017£'000 2016£'000 2017£'000 2016£'000
Opening balance 31 48 31 48
Provided for dilapidation obligations in less than 1 year 10 - 10 -
Utilised (6) (17) (6) (17)
Closing balance 35 31 35 31
Provisions associated with the costs of dilapidation obligations on certain leasehold properties within the Group are
£29,000 (2016: £25,000). The cash flows associated with these provisions are expected to occur in less than one year.
25. Financial Instruments and Risk Management
The Group's activities expose it to a variety of financial risks including: market risk (including foreign currency risk
and cash flow interest rate risk), credit risk, liquidity risk and capital management. The Group's overall risk management
programme considers the unpredictability of financial markets and seeks to reduce potential adverse effects on the Group's
financial performance. The Group does not currently use derivative financial instruments to hedge foreign exchange
exposures.
Credit Risk
Credit risk is managed on a Group basis except for credit risk relating to accounts receivable balances which each entity
is responsible for managing. Credit risk arises from cash and cash equivalents, as well as credit exposures from
outstanding customer receivables. Management assesses the credit quality of the customer, taking into account its
financial position, past experience and other factors. For those sales considered higher risk, the Group operates a policy
of cash in advance of delivery. The Group regularly monitors its exposure to bad debts in order to minimise exposure.
Credit risk from cash and cash equivalents is managed via banking with well-established banks with a strong credit rating.
Foreign Currency Risk
The Group's foreign currency exposure arises from:
· Transactions (sales/purchases) denominated in foreign currencies;
· Monetary items (mainly cash receivables and borrowings) denominated in foreign currencies; and
· Investments in foreign operations, whose net assets are exposed to foreign currency translation.
The Group has currency exposure on its investment in a foreign operation in Australia and partially offsets its exposure to
fluctuations on the translation into Sterling by holding net borrowings in Australian Dollars. In terms of sensitivities,
the effect on equity of a 10% increase in the Australian Dollar and Sterling exchange rate would be an increase of £88,000
(2016: £155,000 increase). The effect on equity of a 10% decrease in the Australian Dollar and Sterling exchange rate net
of the effect of the net investment hedge in the foreign operation would be a decrease of £107,000 (2016: £189,000
decrease).
The Group has currency exposure on its investment in a foreign operation in the United States of America. In terms of
sensitivities, the effect on equity of a 10% increase in the US Dollar and Sterling exchange rate would be an increase of
£109,000 (2016: £38,000 increase). The effect on equity of a 10% decrease in the US Dollar and Sterling exchange rate
would be a decrease of £133,000 (2016: £46,000 decrease).
The exposure to transactional foreign exchange risk within each company is monitored and managed at both an entity and a
Group level.
Cash Flow Interest Rate Risk
The Group has financial assets and liabilities which are exposed to changes in market interest rates. Changes in interest
rates impact primarily on deposits and loans by changing their future cash flows (variable rate). Management does not
currently have a formal policy of determining how much of the Group's exposure should be at fixed or variable rates and the
Group does not use hedging instruments to minimise its exposure. However, at the time of taking new loans or borrowings,
management uses its judgement to determine whether it believes that a fixed or variable rate would be more favourable for
the Group over the expected period until maturity. In terms of sensitivities, the effect on profit before taxation of an
increase/decrease in the basis points on floating rate borrowings of 25 basis points would be £84,000 (2016: £17,000).
Liquidity Risk
Cash flow forecasting is performed on a Group basis by the monitoring of rolling forecasts of the Group's liquidity
requirements to ensure that it has sufficient cash to meet operational needs and surplus funds are placed on deposit and
available at very short notice. The maturity date of the Group's loan is disclosed in note 22.
Capital Management
The Group manages its capital structure in order to safeguard the going concern of the Group and maximise shareholder
value. The capital structure of the Group consists of debt, which includes loans disclosed in note 22, cash and cash
equivalents and equity attributable to equity holders of the Company, comprising issued capital, reserves and retained
earnings.
The Group may maintain or adjust its capital structure by adjusting the amount of dividend paid to shareholders, returning
capital to shareholders, issuing new shares or selling assets to reduce debt.
In order to achieve this overall objective, the Group's capital management, amongst other things, aims to ensure that it
meets financial covenants attached to borrowings. Breaches in meeting the financial covenants would permit the bank to
immediately call loans and borrowings. There have been no breaches in the financial covenants of any borrowings in the
current period.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2017 and
2016.
The table below summarises the maturity profile of the Group's financial liabilities based on contractual undiscounted
payments and includes contractual interest payments:
Year ended 31 March 2017 Ondemand Less than12 months 1 to 5years Total
£'000 £'000 £'000 £'000
Loans - - 13,589 13,589
Contingent consideration - 7,575 - 7,575
Trade and other payables 2,748 14,656 - 17,404
2,748 22,231 13,589 38,568
Year ended 31 March 2016 Ondemand Less than12 months 1 to 5years Total
£'000 £'000 £'000 £'000
Loans - - 3,895 3,895
Contingent consideration - 1,068 - 1,068
Trade and other payables 5,572 11,219 - 16,791
5,572 12,287 3,895 21,754
A summary of the Group's use of financial instruments is set out in the Finance Review.
Set out below is an overview of financial instruments, other than cash and short-term deposits, held by the Group at 31
March:
2017 2016
Loans and receivables Fair value profit or loss Loans and receivables Fair value profit or loss
£'000 £'000 £'000 £'000
Financial assets:
Trade and other receivables 26,160 - 19,768 -
Total current 26,160 - 19,768 -
Total 26,160 - 19,768 -
Financial liabilities:
Loans 11,499 - 3,160 -
Total non-current 11,499 - 3,160 -
Trade and other payables 17,404 - 16,791 -
Loans 886 - 582 -
Contingent consideration - 7,122 - 1,050
Total current 18,290 7,122 17,373 1,050
Total 29,789 7,122 20,533 1,050
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.
Use of Financial Instruments
Contingent Consideration
The fair value of contingent consideration is the present value of expected future cash flows based on the latest forecasts
of future performance.
31 March2017 31 March2016
£'000 £'000
Fair value within current liabilities:
Contingent consideration 7,122 1,050
Fair value within non-current liabilities:
Contingent consideration - -
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).
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 three year revolving credit facility agreement expiring in November 2020 which is subject to a limit of
£50,000,000. The facility 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 31 March 2017 and 31 March 2016, the Group was not in breach of any bank covenants.
26. Obligations Under Leases
Payments made under operating leases are recognised in the income statement on a straight-line basis over the expected term
of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease
expense over the term of the lease.
Group Company
Future minimum rentals payable under non-cancellable operating leases are as follows: 2017£'000 2016£'000 2017£'000 2016£'000
Not later than one year 836 1,066 486 749
After one year but not more than five years 1,284 1,585 778 1,232
After five years - - - -
2,120 2,651 1,264 1,981
1,981
The Group leases various administrative offices and equipment under lease agreements which have varying terms and renewal
rights.
A Group company sublet surplus space in a property during the year and this agreement ended in May 2016.
27. Share-based Payments
Group and Company
The Group operates Executive Share Option Schemes under which Executive Directors, managers and staff of the Company are
granted options over shares.
Executive Share Option Scheme
Options are granted to Executive Directors and employees on the basis of their performance. Options are granted at the
full market value of the Company's shares at the time of grant and are exercisable between three and ten years from the
date of grant. The options vest when the Company's earnings per share ('EPS') growth is greater than the growth of the
Retail Prices Index ('RPI') over a three year period prior to the exercise date. There are no cash settlement
alternatives.
Executive Share Option Scheme (Section C Scheme)
Options are granted to Executive Directors and employees on the basis of their performance. Options are granted at the
full market value of the Company's shares at the time of grant and are exercisable between three and ten years from the
date of grant. The percentage of an option that will vest and be capable of exercise will depend on the performance of the
Company. A minimum of 50% of the options will vest when the Total Shareholder Return ('TSR') performance of the Company,
as compared to the TSR of the FTSE Computer Services Sub-Sector over a three-year period, matches or exceeds the median
company. The percentage of shares subject to an option in respect of which that option becomes capable of exercise will
then increase on a sliding scale so that the option will become exercisable in full if top quartile performance is
achieved.
Executive Share Option Scheme (Section D Scheme)
Options are granted to Executive Directors and employees on the basis of their performance. Options are granted at the
full market value of the Company's shares at the time of grant and are exercisable between three and ten years from the
date of grant. The vesting of awards under the Section D Scheme is subject to the achievement of a normalised EPS growth
at an annual compound rate of 20% over the performance period. The base year for the purposes of the EPS target will be
the financial year of the Company ended immediately prior to the grant of the award. The performance period will be the
three financial years following the base year. Section D Scheme options will only become exercisable to the extent they
have vested in accordance with the EPS target.
Share Matching Plan
In the year ended 31 March 2012, the Remuneration Committee introduced the Share Matching Plan. Participants who invest a
proportion of their annual cash bonus in GBG shares can receive up to a multiple of their original investment in GBG
shares, calculated on a pre-tax basis. Any matching is conditional upon achieving pre-determined Adjusted EPS growth
targets set by the Remuneration Committee for the following three years. Share Matching Plan options will only become
exercisable to the extent they have vested in accordance with the Adjusted EPS target.
GBG Sharesave Scheme
The Group has a savings-related share option plan, under which employees save on a monthly basis, over a three or five year
period, towards the purchase of shares at a fixed price determined when the option is granted. This price is usually set
at a 20% discount to the market price at the time of grant. The option must be exercised within six months of maturity of
the savings contract, otherwise it lapses.
The charge recognised from equity-settled share-based payments in respect of employee services received during the year is
£994,000 (2016: £1,245,000).
The following table illustrates the number and weighted average exercise prices ('WAEP') of, and movements in, share
options during the year.
2017No. 2017WAEP 2016No. 2016WAEP
Outstanding as at 1 April 5,018,024 46.28p 6,724,777 26.93p
Granted during the year 522,880 38.98p 1,561,245 87.73p
Forfeited during the year (451,004) 32.78p (13,298) 114.73p
Cancelled during the year (22,793) 163.0p (15,674) 127.43p
Exercised during the year (1,725,637) 29.19p1 (3,151,026) 25.07p2
Expired during the year - - (88,000) 35.68p
Outstanding at 31 March 3,341,470 54.93p 5,018,024 46.28p
Exercisable at 31 March 1,471,685 24.58p 1,318,453 38.96p
1 The weighted average share price at the date of exercise for the options exercised is 301.38p
2 The weighted average share price at the date of exercise for the options exercised is 217.51p
For the shares outstanding as at 31 March 2017, the weighted average remaining contractual life is 6.5 years (2016: 5.9
years).
The weighted average fair value of options granted during the year was 266.35p (2016: 133.46p). The range of exercise
prices for options outstanding at the end of the year was 2.5p - 275.0p (2016: 2.50p - 272.25p).
The fair value of equity-settled share options granted is estimated as at the date of grant using a binomial model, taking
into account the terms and conditions upon which the options were granted. The following table lists the inputs to the
model for the years ended 31 March 2017 and 31 March 2016.
2017 2016
Dividend yield (%) 0.7 0.7 - 0.9
Expected share price volatility (%) 30 20 - 25
Risk-free interest rate (%) 0.2 - 0.6 0.9 - 1.3
Lapse rate (%) 5.0 5.0
Expected exercise behaviour See below See below
Market-based condition adjustment (%) 48.00 48.00
Expected life of option (years) 2.3 - 4.6 3.0 - 5.0
Exercise price (p) 2.50 - 275.0 2.50 - 272.25
Weighted average share price (p) 301.38 217.51
Other than for Matching Scheme options, it is assumed that 50% of options will be exercised by participants as soon as they
are 20% or more 'in-the-money' (i.e. 120% of the exercise price) and the remaining 50% of options will be exercised
gradually at the rate of 20% per annum for each year they remain at or above 20% 'in-the-money'.
For Matching Scheme options, it is assumed that participants will choose to exercise at the earliest opportunity (i.e.
vesting date) since the exercise price is a nominal amount and is therefore not expected to influence the timing of a
participant's decision to exercise the options.
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may
not necessarily be the actual outcome.
The market-based condition adjustment takes into account the likelihood of achieving market conditions, and allows for the
fact that, if a Section C option vests, it does not always vest at 100%.
No other features of options granted were incorporated into the measurement of fair value.
28. Profit Attributable to Members of the Parent Company
The profit dealt with in the financial statements of the Parent Company is £10,717,000 (2016: £8,317,000). There are no
OCI items in either financial year.
29. Description of Reserves
Equity Share Capital
The balance classified as share capital includes the total net proceeds (both nominal value and share premium) on issue of
the Company's equity share capital, comprising 2.5p ordinary shares.
Merger Reserve
The balance on the merger reserve represents the fair value of the consideration given in excess of the nominal value of
the ordinary shares issued in the acquisition of GB Mailing Systems by the issue of shares.
Capital Redemption Reserve
The balance classified as capital redemption reserve includes the nominal value of own shares purchased back by the Company
and subsequently cancelled.
30. Related Party Transactions
During the year, the Group entered into transactions, in the ordinary course of business, with other related parties.
Transactions entered into and trading balances outstanding at 31 March are as follows:
Group Sales to related parties Purchases from related parties Net amounts owed to/(by) related parties
£'000 £'000 £'000
Directors (see below):
2017 - 3 -
2016 - 1 -
Other related parties (see below):
2017 55 - 7
2016 33 - (5)
Company Sales to related parties Purchases from related parties Net amounts owed to/(by) related parties
£'000 £'000 £'000
Subsidiaries:
2017 1,938 853 7,793
2016 915 714 10,276
Directors (see below):
2017 - 3 -
2016 - 1 -
Other related parties (see below):
2017 55 - 7
2016 33 - (5)
The Chairman of the Company incurred some expenses via his consultancy business Rasche Consulting Limited.
Richard Law, the Chief Executive of the Company during the year, is a Director of Zuto Limited which is a client of the
Group. Transactions with them have been reported under the heading of 'other related parties' in the table above.
For part of the year, 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
for transactions with subsidiaries are the same, with the exception that balances are placed on intercompany accounts with
no specified credit period. During the year ended 31 March 2017, the Group has not made any provision for doubtful debts
relating to amounts owed by related parties (2016: £nil).
Compensation of Key Management Personnel (including Directors)
Group and Company
2017 2016
£'000 £'000
Short-term employee benefits 1,731 1,520
Post-employment benefits 31 24
Fair value of share options awarded 393 929
2,155 2,473
31. Business Combinations
Acquisitions in the Year Ended 31 March 2017
Group
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. The Consolidated Statement of Comprehensive Income includes the results of IDscan
for the nine 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£'000
Assets
Technology intellectual property 5,405
Customer relationships 3,917
Non-compete agreements 467
Plant and equipment 222
Purchased software 7
Acquired goodwill 19
Inventory 155
Trade and other receivables 2,551
Cash 1,186
Trade and other payables (2,896)
Corporation tax liabilities (427)
Deferred tax liabilities (1,818)
Total identifiable net assets at fair value 8,788
Goodwill arising on acquisition 34,880
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
- More to follow, for following part double click ID:nRSF1989HeRecent news on GB
See all newsRCS - GB Group PLC - Equifax and GBG Expand Global Partnership
AnnouncementREG - GB Group PLC - Holding(s) in Company
AnnouncementREG - GB Group PLC - Transaction in Own Shares
AnnouncementREG - GB Group PLC - Transaction in Own Shares
AnnouncementREG - GB Group PLC Bank of America Corp - Holding(s) in Company
Announcement