REG - GB Group PLC - Half-year Report
19/11/2024 07:00
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RNS Number : 6994M GB Group PLC 19 November 2024
Embargoed until 7.00 a.m. 19 November 2024
GB GROUP PLC
("GBG", the "Group" or the "Company")
Half year results for the six months ended 30 September 2024
A good first half: FY25 outlook reiterated
GB Group plc, (AIM: GBG), the experts in global identity fraud and location
software, today announces its unaudited results for the six months ended 30
September 2024.
Financials 1H25 1H24 Growth %
Revenue £136.9m £132.4m 3.4%
Constant currency revenue £136.9m £131.0m 4.5%
Gross margin 69.6% 69.2% 40bps
Adjusted operating profit(1) £29.0m £23.9m 21.3%
Adjusted operating margin 21.2% 18.1% 310bps
Operating profit / (loss)(2) £9.4m (£52.6m)
Profit / (loss) before tax(2) £5.6m (£57.3m)
Diluted earnings / (loss) per share 0.6p (21.8)p
Adjusted diluted earnings per share(1) 7.3p 5.1p 42.4%
Net debt(1) £(71.9)m (£104.8)m
(1)Defined within note 21 to the results. (2)Prior year included a £54.7
million non-cash goodwill impairment charge. Growth percentages are calculated
with reference to the actual unrounded figures in the primary financial
statements and so might not tie directly to the rounded figures found in this
release if recalculated.
Financial highlights
· Good half-year results, in line with the trading update released
on 17 October 2024
· Growth of 4.5% on a constant currency basis (CCY); and 3.4% on a
reported basis
‒ Revenue growth acceleration driven by Identity, up 6.0% and
Location, up 8.6% on a CCY basis
‒ As anticipated, our smallest segment Fraud was down 9.2% on a CCY
basis given timing of licence renewals
‒ Net revenue retention (NRR) on a rolling 12-month basis improved to
100.2% at 30 September 2024 compared with 94.9% at 30 September 2023
‒ Revenue from new wins in the last 12 months continued to be strong
at 3.8%
· First half adjusted operating profit¹ grew by 21.3% to £29.0
million, representing a margin of 21.2% driven by our revenue growth and the
enduring benefit of the cost initiatives executed in FY24
· Net debt decreased by £9.0 million since 31 March 2024 to £71.9
million, representing a net debt to EBITDA leverage of 1.05x (FY24: 1.27x).
Cash conversion on a 12-month rolling basis was 83.7% (FY24: 90.6%)
Executing well against our four initial focus areas
· Removing complexity: Continued benefit from the FY24 cost and
simplification initiatives, while actions to streamline our commercial
processes are helping to accelerate our sales cycle
· Being globally aligned: We are harmonising our brands, delivering
increased cross-sell through Identity Fraud and Location Go-To-Market (GTM)
collaboration, and begun moving to a unified online presence for our Identity
Fraud business
· Differentiation through innovation: Enhancing the user experience
for our document and biometric capabilities, expanded international data
coverage and ramping up of activity on GBG Trust and GO to drive customer
value
· Driving a performance culture: Increased team engagement as our
teams embrace a performance culture, driving progress on execution, new
customer acquisition and existing customer retention
FY25 outlook reiterated
· Trading since the half year end has been in line with
expectations and the Board reiterates its FY25 outlook underpinned by the
strong progress achieved in the year to date
· We continue to expect mid-single-digit revenue growth on a constant
currency basis for FY25, which will drive high single-digit growth in adjusted
operating profit, given the operational efficiency gains achieved in FY24
Dev Dhiman, Chief Executive Officer (CEO), commented:
"I'm pleased to report on a first half where we have made positive progress
against my initial focus areas; removing complexity, being globally aligned,
driving a performance culture and differentiating through innovation. We are
retaining customers and doing more with them, and our new customer acquisition
continues to be strong. Combined with the continued benefit of our group-wide
cost and simplification initiatives executed in the prior year, we have
delivered a good first half outcome.
There is more to be done to drive our reacceleration in organic growth, but I
am highly encouraged with our progress to date, and I thank the entire team
who have responded with energy and positivity to this challenge. This
performance underpins our confidence in reiterating our full year outlook and
in GBG over the longer term."
Analyst and investor presentation
Management will host a virtual presentation this morning at 0930hrs GMT for
sell-side analysts and institutional investors.
To register to view the event live online, please use the following link:
https://www.investis-live.com/gb-group/66fd06fb4132f400154edff1/mqpet
(https://url.uk.m.mimecastprotect.com/s/nnnXCwp4ATpMJxOiVfgFJU4nD?domain=investis-live.com)
This will be available on-demand via our investor website along with the
materials shortly after the event.
For further information, please contact:
GBG
Dev Dhiman, CEO & David Ward, CFO +44 (0)1244 657 333
Richard Foster, Investor Relations +44 (0)7816 124 164
Numis (Nominated Adviser and Corporate Broker) +44 (0)207 260 1000
Simon Willis & Joshua Hughes
Barclays (Corporate Broker) +44 (0)207 623 2323
Robert Mayhew & Nicola Tennent
Teneo (Financial PR) +44 (0)207 260 2700
James Macey White & Matt Low GBG@teneo.com
Website www.gbgplc.com/investors
About GBG
GBG is the leading expert in global identity and location. In an increasingly
digital world, GBG helps businesses grow by giving them intelligence to make
the best decisions about their customers, when it matters most.
Every second, our global data, agile technology, and expert teams, power over
20,000 of the world's best-known organisations to reach and trust their
customers.
To find out more about how we help our customers establish trust with their
customers visit www.gbgplc.com (http://www.gbgplc.com) and follow us on
LinkedIn and X @gbgplc.
About GBG
GBG is the leading expert in global identity and location. In an increasingly
digital world, GBG helps businesses grow by giving them intelligence to make
the best decisions about their customers, when it matters most.
Every second, our global data, agile technology, and expert teams, power over
20,000 of the world's best-known organisations to reach and trust their
customers.
To find out more about how we help our customers establish trust with their
customers visit www.gbgplc.com (http://www.gbgplc.com) and follow us on
LinkedIn and X @gbgplc.
CEO review
Introduction
I am pleased to report a good set of results for GBG's first half of the
financial year. I believe this reflects the progress we have made on the four
areas of focus I outlined when I became GBG's CEO. This is making a
difference, and our work to date has taken GBG another step forward in
reaccelerating our organic growth. It is also translating into our performance
today, not only in terms of the financial benefit, but in the way we interact
with our customers and engage our people. I am particularly pleased that we
have achieved increases in both customer satisfaction and team engagement
during the last six months.
The positive operating momentum we carry into the second half underpins the
Board's ongoing confidence in delivering the FY25 outlook which we have today
reiterated, and I would like to thank our team for their hard work and
commitment to deliver this performance. I am looking forward to our continued
progress in the second half of FY25. As a team, we are aligned and motivated
to compete and deliver our key initiatives that will strengthen GBG's industry
position as a leader in delivering critical onboarding intelligence to our
customers, when it matters most.
As a Board, we remain confident that the strategic progress being achieved,
the reacceleration of our growth trajectory, sustainable profitability and
strong cash generation, means that GBG will continue to be well-placed to
capitalise on the significant market opportunity ahead.
Financial overview
A good first half, with revenue and adjusted operating profit in line with the
trading update released on 17 October 2024. First half group revenue of
£136.9 million was up 4.5% on a constant currency basis. This primarily
reflects an encouraging improvement in the level of NRR within our Identity
segment alongside another period of resilient performance from our Location
segment, despite a subdued consumer backdrop.
Reflecting a continued focus on pricing and disciplined management of our data
and cloud hosting costs, gross margin improved to 69.6% (1H24: 69.2%).
Meanwhile, the continued benefit of our group-wide cost and simplification
initiatives executed in the prior year contributed to adjusted operating
expenses being £0.9 million or 1.4% lower than the prior year despite the
effect of cost inflation. As a result, adjusted operating profit was strong,
up 21.3% to £29.0 million, representing an adjusted operating profit margin
of 21.2%, up 310bps.
We continue to prioritise deleveraging our balance sheet and reduced our net
debt by £9.0 million to £71.9 million as of 30 September 2024, achieving a
net debt to EBITDA leverage of 1.05x. This improvement in leverage was helped
by a £5.0 million currency retranslation benefit but after the £10.6 million
payment of the FY24 dividend.
Our segmental performance
Identity (59% of the Group's revenues) - First half revenue of £80.3 million
was up 6.0% on a constant currency basis, building successfully on the
momentum achieved in the Identity business during the fourth quarter of the
prior year. Growth was driven by the year-on-year improvement in our EMEA and
Americas regions as a result of improving levels of NRR, this has been
particularly driven by cross-sell and up-sell to existing customers of
capabilities such as international data and our multi-bureau solution. We have
captured strong demand for our documents and biometrics capability, as we
ramped up on important customer projects such as supporting a new onboarding
journey for Santander's UK consumer online banking applications.
In our EMEA region, our strong GTM execution continues to build a healthy
pipeline across the diverse sectors we serve, demonstrating customer
confidence and competitiveness of our solutions. In retail and e-commerce,
age-verification cross-sell opportunities from Location resulted in our
Identity team securing some of Asia's largest online marketplaces to support
their growing cross-border activity. Across the breadth of financial services,
we secured new wins and expanded our relationship with the likes of Remitly
and Capital.com alongside the win-back of Moneygram. Similarly, in gaming, we
continue to build on the breadth and depth of our offering in this sector to
support customer's safe expansion into emerging markets within LATAM such as
Brazil and Peru with customers such as Rush Street Interactive and SuperBet.
In Americas, our investment to build-out our account management team has
helped to improve customer retention, notably we renewed our relationship with
Square, and deepened our penetration within customers such as Boost Mobile and
MoneyLion.
Location (29% of the Group's revenues) - Our Location segment had another good
period of trading, consistent with the strong growth trajectory delivered over
the last three years despite macroeconomic pressures impacting consumer
volumes. While these pressures remain, Location delivered growth of 8.6% on a
constant currency basis to £39.5 million in the first six months of the year.
New customer acquisition of brands such as SharkNinja and Warner Music have
added to the strength and depth of its existing diverse customer base, which
now includes a number of South-East Asia's leading e-commerce players. We have
expanded existing relationships with leading brands such as Primark and
FootLocker, demonstrating strong retention across our diverse customer base,
and we continue to drive increased channel activity with partners such as
Smartystreets and Oracle.
Fraud (12% of the Group's revenues) - As previously anticipated, revenue for
our fraud prevention, detection and investigation solutions was down by 9.2%
on a constant currency basis to £17.1 million. This primarily relates to
year-on-year timing differences in our customer software licence renewals
across this segment's core Southeast Asia and EMEA markets. The ongoing
opportunity pipeline for our fraud prevention platforms remains attractive and
we expect the segment will return to growth in the second half. Over the last
6 months we signed new, or extended existing, relationships with financial
services customers such as J.P.Morgan Mobility Payments, and Bank BTPN.
Update on our current areas of focus
As the leading expert in global identity fraud and location software, GBG
exists within the increasingly digital economy to power our customers to reach
and trust their customers. We have built strong positions within the growing
markets in which we operate. We provide critical services that make a
meaningful difference to the customers we support, helping them to grow safely
by giving them onboarding intelligence to make the best decisions about their
customers, when it matters most. Capitalising on this opportunity is our key
priority, we leveraged the momentum generated in the final quarter of FY24 and
continue to drive the performance improvements across our Identity business.
This has built upon the acceleration in the Group's organic growth rate
through the first half, alongside good execution against our initial focus
areas.
Removing complexity - Focusing on simplicity and efficiency as a business is
key to underpinning our long-term success. Our operating expenses reflect the
benefits of the group-wide cost and simplification initiatives executed in
FY24 despite ongoing inflationary pressures. Alongside this, our action to
make GBG a more agile organisation is making good progress. We made
significant improvements to our commercial processes; we are now enabling
customers to receive single legal, data protection, billing, and service
agreements. This streamlined experience through an accelerated sales cycle
gives them the ability to consume all of GBG's current capabilities across all
of the jurisdictions in which we operate.
Being globally aligned - Our progress in the last six months reflects an
ongoing journey to harmonise our regional brands and solutions to leverage our
size and scale more effectively as the market leader. This is translating into
increased collaboration between our Identity and Location GTM teams, resulting
in more cross-sell and up-sell activity. Having completed the acquisition of
the GBG.com domain during the period, we are working on the transition to a
single online GTM presence that harnesses the power of the GBG brand for our
Identity Fraud business to ensure we effectively communicate the value of our
onboarding intelligence propositions to customers globally.
Differentiation through innovation - We continue to explore opportunities to
help our customers drive more value from the onboarding intelligence they
receive from across our solutions. This includes enhancements to the
performance of our documents and biometric capability as well as harnessing
the expansion of our international datasets to help meet increasing demand for
cross-border use cases. We have made further progress to strengthen our
reputation for innovation, extending coverage of GBG Trust, our proprietary
identity network across more geographies and sectors, pursuing increased
customer adoption. We are also pleased more than ten customers have committed
to participate in our early adopter programme for an enterprise-grade level
version of GBG GO. This creates a single consumption experience accessing the
breadth of our capabilities, including recent innovation such as GBG Trust,
while benefiting from the improved commercial processes outlined above as we
become simpler to do business with.
Driving a performance culture - Increasing team engagement during the last six
months has been a key contributor to our improved first half execution. In the
Americas, we have stabilised performance through a focus on leadership and
culture. Our teams are embracing a performance culture, with a focus on our
competitiveness and differentiation. We achieved increased momentum around new
customer acquisition, which includes notable success attracting customers back
to our Identity platform driven by the breadth of our offering and increased
match-rate performance. Building a customer-centric experience remains a
priority, our work here has focused on retention, pricing and expansion to
enrich our relationships, driving a pleasing year-on-year increase in our
customer NPS score from 46 to 54.
Current trading and outlook
GBG delivered a good first half performance, demonstrating an acceleration in
organic growth, strong growth in adjusted operating profit and continued
deleveraging of our balance sheet. The second half has begun as expected,
trends that drove our first half performance continued and the Board maintains
its FY25 outlook that GBG will deliver mid-single-digit revenue growth, on a
constant currency basis, which will drive high single-digit growth in adjusted
operating profit. As a Board, we remain confident that the strategic progress
being delivered by the business will position GBG to fulfil its significant
potential over the longer-term.
Dev Dhiman
Chief Executive Officer
On behalf of the Board
18 November 2024
Finance review
We are pleased with our first half financial results which demonstrate further
progress in rebuilding organic growth momentum together with the lasting
benefits of the cost reduction initiatives completed in the prior year.
Revenue and gross margin
Revenue increased to £136.9 million, or by 3.4%, compared to the first half
period of the prior year (1H24). On a constant currency basis, revenue
increased by 4.5%. More detail on revenue performance in each of our operating
segments is included in the Chief Executive Officer's Review.
As expected, net revenue retention (NRR), which we report on a rolling
12-month basis, continued to improve and was 100.2% at 30 September 2024. This
compares to 98.0% at 31 March 2024 and 94.9% at 30 September 2023.
The timing of revenue recognition in the Fraud segment can impact NRR, so we
also report NRR excluding the Fraud segment. For the same three periods we
have seen momentum improve, with NRR sequentially increasing from 94.0% to
99.0% and then 102.6% when excluding Fraud.
Growth derived from new customers won in the last 12 months continued to be
strong at 3.8%, benefiting from initiatives to drive new customer acquisition
and our strong GTM execution, particularly in our EMEA Identity business.
In the first half, 94.7% (1H24: 94.3%) of our revenue came from the
combination of subscription and consumption revenue models which demonstrates
GBG's attractive, repeatable and cash-generative business model. Of this,
software subscription(1) revenue contributed £73.8 million, representing a
decline of 0.8% due to the timing of renewals of Fraud licences (Identity and
Location software subscription grew 2.2%). Consumption revenue added a further
£55.8 million, representing growth of 10.6%. Non-repeatable revenue streams,
typically services, hardware and implementation fees, amounted to £7.3
million in the period (1H24: £7.5m).
Gross margin increased to 69.6% compared to 69.2% in 1H24, reflecting
continued focus on pricing and close management of our data and cloud hosting
costs. Gross margin in the second half is historically higher due to the
timing of higher margin licence renewals, and we would expect this trend to
continue in FY25.
Operating profitability and cost management
On a reported basis, there was an operating profit of £9.4 million (1H24:
loss of £52.6 million), with the improvement principally due to the goodwill
impairment charge of £54.7 million recognised in the prior year.
Adjusted operating profit for the first half increased by 21.3% to £29.0
million (1H24: £23.9 million), which represents a margin of 21.2% (1H24:
18.1%). This improvement reflects the continued benefit of our group-wide cost
and simplification initiatives executed in the prior year. Despite continued
inflationary pressures, our adjusted operating expenses were £0.9 million or
1.4% lower than the prior year.
1H25 1H24
Adjusted operating profit £29.0m £23.9m
Amortisation of acquired intangibles (£17.4m) (£20.1m)
Equity-settled share-based payments (£2.2m) £0.1m
Exceptional items
Impairment of goodwill - (£54.7m)
Other exceptional items - (£1.8m)
Operating profit/(loss) £9.4m (£52.6m)
Net finance costs (£3.8m) (£4.7m)
Income tax (charge)/credit (£4.1m) £2.1m
Profit/(loss) after tax £1.6m (£55.2m)
Normalised and exceptional items
There were no exceptional items to report in the first half of the year. In
the prior year, total exceptional items were £56.5 million, with the largest
component being an impairment charge against goodwill. Amortisation of
acquired intangibles at £17.4 million was slightly lower than the prior year
due to some intangibles becoming full amortised and the impact of FX rate
differences.
A share-based payment charge of £2.2 million was also recorded in the first
half period. This was higher than the prior year
(1H24: Credit of £0.1 million) due to the prior year being lower than
expected due to some catch-up credits related to previously issued share
awards that were no longer expected to vest.
Net finance costs
The net finance charge of £3.8 million was £0.9 million lower than the prior
year, due mostly by lower interest on the variable rate Revolving Credit
Facility. This decrease was driven by a lower average level of debt drawdown,
which was a consequence of us focusing on strong cash generation and utilising
this to make facility repayments. Interest rates on the facility remained
quite consistent through the period, but we do expect some benefit in the
second half of the year as central bank base rates in the US and UK begin to
lower.
Taxation
The tax charge for the six-month period was £4.1 million (1H24: £2.1 million
credit). The tax charge on adjusted earnings before tax was £6.7 million
(1H24: £6.0 million), representing an effective tax rate of 26.5% (1H24:
31.2%). The main reasons for the decrease in the adjusted effective tax rate
is that the prior year was higher due to a deferred tax charge in the US,
which was recognised as a discrete item, following the revaluation of deferred
tax assets for rate changes. Our guidance for the full year effective tax rate
remains unchanged at approximately 25%. This is lower than the half-year
effective tax rate as tax charges relating to prior year adjustments and the
revaluation of US deferred tax assets are recognised fully as discrete items
in H1.
Earnings per share
Diluted EPS improved to 0.6 pence per share (1H24: loss of 21.8 pence per
share), with the increase primarily due to the non-cash impairment of goodwill
charge in the prior period.
Adjusted diluted EPS of 7.3 pence per share (1H24: 5.1 pence per share)
improved 42.4% year on year due to the increase in the reported adjusted
operating profit as well as the reduction in the interest expense costs and
effective tax rate explained above.
Group cash flow and net debt
GBG remains focused on maintaining a strong balance sheet to support
sustainable growth. During the first six months of the year, the Group's
operating activities before tax payments generated £24.5 million of cash and
cash equivalents (1H24: £22.9 million) with rolling 12-month EBITDA to cash
conversion of 83.7% at 30 September 2024 compared to 90.6% at 31 March 2024.
Cash conversion in the first half of any financial year is impacted by the
payment of bonuses related to the prior year and this does cause some
variability. We expect cash conversion to normalise by the year end to revert
closer to our expected longer-term average of 90-95%.
In the period to 30 September 2024, net repayments against the revolving
credit facility were £9.1 million, resulting in outstanding balances of $111
million (31 March 2024: $129 million) and £5 million (31 March 2024:
£nil).
Overall, our net debt at 30 September 2024 decreased by £9.0 million since 31
March 2024 to £71.9 million. This was despite the £10.6 million full year
dividend payment, purchase of £1.6m of GBG shares for the Employee Benefit
Trust, and exceptional cash costs of £0.9 million (for costs incurred in the
prior year). Offsetting these costs was a positive £5.2 million translation
impact from the conversion of the US denominated debt into pound sterling.
Deferred and accrued revenue
Deferred revenue decreased by 8.9% to £50.4 million since the year-end (FY24:
£55.3 million). This balance principally consists of contracted licence
revenues and profits that are payable up front but recognised over time as the
Group's revenue recognition criteria are met. The deferred revenue balance
does not represent the total contract value of any future unbilled annual or
multi-year, non-cancellable agreements as the Group more typically invoices
customers in annual or quarterly instalments. The deferred revenue balance at
any point in time is determined by several factors, including seasonality, the
compounding effects of renewals, invoice duration, invoice timing, FX rates
and new business linearity within a reporting period.
Accrued revenue has remained relatively flat compared to the year end at
£14.7 million (FY24: £14.4 million) and relates to several larger contracts,
mostly in the Fraud and Location segments, where the revenue recognition
profile is different to the invoicing profile.
Summary
GBG delivered a good first half performance with an acceleration in organic
growth, a strong year-on-year increase in operating profit and a reduction in
net debt. We have taken this momentum into the second half, and this underpins
the Board's confidence that GBG will deliver its outlook for both revenue
growth and growth in operating profit in FY25.
David Ward
Chief Financial Officer
On behalf of the Board
18 November 2024
Notes: (1)Software subscriptions can be term-based where the agreement
entitles the customer to use a GBG solution for a fixed period of time (a fair
use volume limit applies) or consumption-based, whereby a customer buys usage
credits in advance which entitle them to use of GBG's solutions up to a fixed
quantity (and within a fixed time period).
Condensed Consolidated Statement of Profit or Loss
For the six months ended 30 September 2024
Note Unaudited 2024 Unaudited 2023
Adjusted Normalised and exceptional items(1) Adjusted Normalised and exceptional
Total items(1) Total
£000 £000 £000 £000 £000 £000
Revenue 5 136,897 - 136,897 132,360 - 132,360
Cost of sales (41,562) - (41,562) (40,773) - (40,773)
Gross profit 95,335 - 95,335 91,587 - 91,587
Operating expenses (66,314) (19,572) (85,886) (67,254) (76,539) (143,793)
Increase in expected credit losses of trade receivables (19) - (19) (430) - (430)
Operating profit/(loss) 5, 6 29,002 (19,572) 9,430 23,903 (76,539) (52,636)
Finance income 7 122 - 122 106 - 106
Finance costs 8 (3,919) - (3,919) (4,752) - (4,752)
Profit/(loss) before tax 25,205 (19,572) 5,633 19,257 (76,539) (57,282)
Income tax (charge)/credit 9 (6,669) 2,612 (4,057) (6,003) 8,135 2,132
Profit/(loss) after tax for the period attributable to equity holders of the 13,254 (68,404)
parent
18,536 (16,960) 1,576 (55,150)
Earnings per share 10
- basic earnings/(loss) per share for the period 7.3p 0.6p 5.2p (21.8p)
- diluted earnings/(loss) per share for the period 7.3p 0.6p 5.1p (21.8p)
(1) Normalised items include: amortisation of acquired intangibles
£17,400,000 (2023: £20,117,000) and share-based payment charges £2,172,000
(2023: £138,000 credit). Exceptional items total £nil (2023: £56,560,000)
(see note 4).
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2024
Unaudited Unaudited
6 months to 6 months to
30 September 30 September
2024 2023
£'000 £'000
Profit/(loss) after tax for the period attributable to equity holders of the 1,576 (55,150)
parent
Other comprehensive (expense)/ income:
Items that may be reclassified to profit or loss in subsequent periods:
Exchange differences on retranslation of foreign operations (net of tax) (27,322) 5,465
Total items that may be reclassified to profit or loss in subsequent periods (27,322) 5,465
Items that will not be reclassified to profit or loss in subsequent periods:
Fair value movement on investments - (1,600)
Total items that will not be reclassified to profit or loss in subsequent - (1,600)
periods
Total other comprehensive (expense)/income (27,322) 3,865
Total comprehensive expense for the period attributable to equity holders of (25,746) (51,285)
the parent
Condensed Consolidated Statement of Changes in
Equity
For the six months ended 30 September 2024
Other reserves
Foreign currency translation reserve
Equity Share premium Capital redemption reserve
share Merger reserve Treasury shares Total other reserves (Accumulated losses)/retained earnings Total
capital equity
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 April 2023 6,311 567,581 99,999 3 36,483 (1,074) 135,411 (15,159) 694,144
Loss for the period - - - - - - - (55,150) (55,150)
Other comprehensive income/(expense) - - - - 5,465 - 5,465 (1,600) 3,865
Total comprehensive income/(expense) for the period - - - - 5,465 - 5,465 (56,750) (51,285)
Issue of share capital 3 - - - - - - - 3
Cost of employee benefit trust shares issued to employees - - - - - 458 458 (451) 7
Share-based payments - - - - - - - (138) (138)
Tax on share options - - - - - - - 16 16
Net share forfeiture refund - - - - - - - (36) (36)
Equity dividend 11 - - - - - - - (10,093) (10,093)
Balance at 30 September 2023 6,314 567,581 99,999 3 41,948 (616) 141,334 (82,611) 632,618
Profit for the period - - - - - - - 6,567 6,567
Other comprehensive expense - - - - (17,771) - (17,771) - (17,771)
Total comprehensive (expense)/income for the period - - - - (17,771) - (17,771) 6,567 (11,204)
1 - - - - - - - 1
Issue of share capital
Cost of employee benefit trust shares issued to employees - - - - - 489 489 (488) 1
Share-based payments - - - - - - - 3,626 3,626
Tax on share options - - - - - - - 88 88
Net share forfeiture refund - - - - - - - (1) (1)
Equity dividend - - - - - - - - -
Balance at 1 April 2024 6,315 567,581 99,999 3 24,177 (127) 124,052 (72,819) 625,129
Profit for the period - - - - - - - 1,576 1,576
Other comprehensive income - - - - (27,322) - (27,322) - (27,322)
Total comprehensive (expense)/income for the period - - - - (27,322) - (27,322) 1,576 (25,746)
Issue of share capital 1 4 - - - - - - 5
Capital reduction 16 - (567,581) - - - - - 567,581 -
Investment in own shares - - - - - (1,633) (1,633) - (1,633)
Cost of employee benefit trust shares issued to employees - - - - - 605 605 (596) 9
Share-based payments - - - - - - - 2,172 2,172
Tax on share options - - - - - - - 104 104
Net share forfeiture refund - - - - - - - (1) (1)
Equity dividend 11 - - - - - - - (10,599) (10,599)
Balance at 30 September 2024 6,316 4 99,999 3 (3,145) (1,155) 95,702 487,418 589,440
Condensed Consolidated Balance Sheet
As at 30 September 2024
Note Unaudited Audited Unaudited
As at As at As at
30 September 31 March 30 September
2024 2024 2023
£'000 £'000 £'000
ASSETS
Non-current assets
Goodwill 12 536,902 561,622 577,433
Other intangible assets 12 154,923 181,064 206,728
Property, plant and equipment 12 1,475 1,650 3,405
Right-of-use assets 12 1,536 1,565 1,788
Investments 1,426 1,426 1,426
Deferred tax asset 674 937 699
Trade and other receivables 13 7,168 6,223 5,990
704,104 754,487 797,469
Current assets
Inventories 1,150 1,316 1,977
Trade and other receivables 13 63,974 72,841 60,698
Current tax 967 2,939 1,671
Cash and cash equivalents 15,976 21,321 19,189
82,067 98,417 83,535
TOTAL ASSETS 786,171 852,904 881,004
EQUITY AND LIABILITIES
Capital and reserves
Equity share capital 6,316 6,315 6,314
Share premium 16 4 567,581 567,581
Other reserves 95,702 124,052 141,334
Retained earnings/(accumulated losses) 487,418 (72,819) (82,611)
Total equity attributable to equity holders of the parent 589,440 625,129 632,618
Non-current liabilities
Loans and borrowings 15 86,972 101,115 123,031
Lease liabilities 775 875 650
Provisions 829 741 775
Deferred revenue 1,397 2,337 2,088
Deferred tax liability 21,114 23,819 30,085
111,087 128,887 156,629
Current liabilities
Lease liabilities 912 836 1,266
Trade and other payables 14 34,592 43,669 35,691
Deferred revenue 49,052 52,961 52,976
Current tax 1,088 1,422 1,824
98,888
85,644 91,757
TOTAL LIABILITIES 196,731 227,775 248,386
TOTAL EQUITY AND LIABILITIES 786,171 852,904 881,004
Condensed Consolidated Cash Flow Statement
For the six months ended 30 September 2024
Note
Unaudited Unaudited
6 months to 6 months to
30 September 30 September
2024 2023
£'000 £'000
Group profit/(loss) before tax 5,633 (57,282)
Adjustments to reconcile Group profit/(loss) before tax to net cash flows
Finance income (122) (106)
Finance costs 3,919 4,752
Depreciation of property, plant and equipment 12 487 681
Depreciation of right-of-use assets 12 513 601
Amortisation of intangible assets 12 17,440 20,131
Impairment of goodwill & intangible assets 4 - 54,707
Loss on disposal of plant and equipment & intangible assets 4 -
Unrealised gain on foreign exchange (16) (292)
Share-based payments charge/(credit) 2,172 (138)
Decrease in inventories 115 631
Increase in provisions 92 598
Decrease in trade and other receivables 6,322 2,474
Decrease in trade and other payables (12,078) (3,815)
Cash generated from operations 24,481 22,942
Income tax paid (3,029) (3,392)
Net cash generated from operating activities 21,452 19,550
Cash flows (used in)/from investing activities
Acquisition of subsidiaries, net of cash acquired - (1,200)
Purchase of plant and equipment 12 (357) (227)
Purchase of software 12 (97) (7)
Proceeds from disposal of plant and equipment - 1
Interest received 26 42
Net cash flows used in investing activities (428) (1,391)
Cash flows (used in)/from financing activities
Finance costs paid (4,325) (4,443)
Proceeds from issue of shares 5 3
Purchase of shares by Employee Benefit Trust (1,633) -
Proceeds/(refund) from share forfeiture 1 (36)
Proceeds from borrowings, net of arrangement fee 15 10,000 10,000
Repayment of borrowings 15 (19,067) (14,960)
Repayment of lease liabilities (551) (821)
Dividends paid to equity shareholders 11 (10,599) (10,093)
Net cash flows used in financing activities (26,169) (20,350)
Net decrease in cash and cash equivalents (5,145) (2,191)
Effect of exchange rates on cash and cash equivalents (200) (172)
Cash and cash equivalents at the beginning of the period 21,321 21,552
Cash and cash equivalents at the end of the period 15,976 19,189
Notes to the Condensed Consolidated Interim Financial Statements
1. CORPORATE INFORMATION
The condensed consolidated interim financial statements of GB Group plc ('the
Group') for the six months ended 30 September 2024 were authorised for issue
in accordance with a resolution of the directors on 18 November 2024 and are
unaudited but have been reviewed by the auditor, PricewaterhouseCoopers LLP,
and their report to the Company is set out at the end of these condensed
consolidated interim financial statements.
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 condensed consolidated interim financial statements for the six months
ended 30 September 2024 have been prepared in accordance with UK-adopted IAS
34 'Interim Financial Reporting'. The annual financial statements of the Group
are prepared in accordance with UK-adopted international accounting standards,
as applied in accordance with the provisions of the Companies Act 2006.
The condensed consolidated interim financial statements are presented in
pounds Sterling and all values are rounded to the nearest thousand (£'000)
except when otherwise indicated.
The condensed consolidated interim 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 2024. The financial
information for the preceding year is based on the statutory financial
statements for the year ended 31 March 2024. 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.
Going Concern
In adopting the going concern basis for preparing these condensed consolidated
interim financial statements, the directors have considered the business
activities, the principal risks and uncertainties and other matters discussed
in connection with the Going Concern statement included in our 31 March 2024
Annual Report.
At 30 September 2024, GBG was in a net debt position of £71.9 million (31
March 2024: £80.9 million), an improvement of £9.0 million since 31 March
2024, and note that in the first half of the year free cashflow is reduced by
the payment of dividends and year-end bonuses. The Group has access to a £175
million RCF until July 2026 reducing to £140 million until July 2027 which
could be drawn down for working capital purposes if required. As at 30
September 2024, the available undrawn facility was £87.1 million compared to
£72.8 million at 31 March 2024.
Following consideration of performance against budget, financial forecasts and
a range of downside scenarios over the period through to 31 March 2026, the
Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future.
Therefore, the Directors consider it appropriate to adopt the going concern
basis of accounting in preparing the interim financial statements.
Accounting Policies
The accounting policies adopted in the preparation of the condensed
consolidated interim financial statements are consistent with those followed
in the preparation of the Group's annual financial statements for the year
ended 31 March 2024 with the exception of taxes. Consistent with previous half
year reports, taxes on income in the interim period are accrued using the tax
rate that would be applicable to expected total annual profits or losses.
The Group has not early adopted any standard, interpretation or amendment that
has been issued but is not yet effective. No newly introduced standard or
amendments to standards had a material impact on the condensed consolidated
interim financial statements.
Judgements and Estimates
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates. Full details of
significant accounting judgements, estimates and assumptions used in the
application of the Group's accounting policies can be found in the Annual
Report and Accounts for the year ended 31 March 2024.
In preparing these condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group's accounting
policies and key sources of estimation uncertainty were the same as those
applied to the statutory accounts for the year ended 31 March 2024.
Significant Estimates
Impairment of Goodwill
The Group's policy is to test goodwill for impairment annually, or if events
or changes in circumstances indicate that the carrying amount of these assets
may not be recoverable. Since the Group's annual impairment review was
performed as at 31 March 2024, the Group has considered whether there have
been any indicators of impairment during the 6 months to 30 September 2024,
which would require an impairment review to be performed. The Group has
considered indicators of impairment with regard to a number of factors,
including those outlined in IAS 36 Impairment of Assets, and no indicators of
impairment have been identified as at 30 September 2024.
3. 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: risk of a reduction in revenue from existing customers caused by
external factors, information security and the threat of cyber-attacks, the
threat of competition, people risks associated with the failure to attract and
retain top talent, financial risks, technology risk and loss, non-compliance
with legal requirements and privacy rules and regulations and the risk of
unplanned interruption on critical operations. These risks and uncertainties
facing our business were reported in detail in the 2024 Annual Report and
Accounts and all of them are monitored closely by the Group.
For more details on the outlook for the Group and the risks and uncertainties
for the next 6 months see the Chief Executive Officer's review.
4. EXCEPTIONAL ITEMS
Unaudited Unaudited
6 months to 6 months to
30 September 30 September
2024 2023
£'000 £'000
(a) Integration costs - 322
(b) Costs associated with team member reorganisations - 1,513
(c) Rationalisation of office locations - 18
(d) Impairment of goodwill - 54,707
- 56,560
(a) In the period to 30 September 2024, the Group expensed £nil (2023:
£322,000) relating to the integration of Acuant and Cloudcheck. Integration
costs were incurred in relation to the integration of the Acuant and
Cloudcheck acquisitions. This principally related to consultancy fees paid to
advisors in running programmes to deliver revenue and cost synergies from the
acquisitions, travel for specific integration meetings, costs relating to the
alignment of global systems and business operations, the costs of additional
other temporary resources required for the integration and claims associated
with the pre-acquisition period.
(b) Costs associated with team member reorganisations relate to exit costs
of personnel leaving the business on an involuntary basis, either as a result
of integrating acquisitions or 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. Exit costs
outside of these circumstances are treated as an operating expense. There were
no reorganisation costs considered to be exceptional during the period to 30
September 2024.
(c) During the year to 31 March 2023, a project was started to rationalise
the Group's office locations. Due to the nature of these costs, management
deemed them to be exceptional in order to better reflect our underlying
performance. Costs continued to be incurred during the year to 31 March 2024
and in the period to 30 September 2023, the Group expensed £18,000 following
the exit of a leased building. This rationalisation project was finalised at
the end of FY24 and no further costs have been incurred.
(d) Due to increases in discount rates during the 6 months to 30 September
2023, it was identified that the goodwill allocated to the Identity - Americas
group of CGUs was impaired and an impairment charge of £54,707,000 was
recognised during this period.
5. SEGMENTAL INFORMATION
The Group's operating segments are aggregated and internally reported to the
Group's Chief Executive Officer as three reportable segments: Location,
Identity and Fraud on the basis that they provide similar products and
services.
'Central overheads' represents group operating costs such as technology,
compliance, finance, legal, people team, information security, premises,
directors' remuneration and PLC costs. Central overheads are not allocated to
segments because these activities are the responsibility of group central
functions and therefore not considered to be a reportable segment.
The measure of performance of those segments that is reported to the Group's
Chief Executive Officer is adjusted operating profit, being profits before
amortisation of acquired intangibles, equity-settled share-based payments,
exceptional items, net finance costs and tax, as shown below.
Information on segment assets and liabilities is not regularly provided to the
Group's Chief Executive Officer and is therefore not disclosed below.
Location Identity Fraud Unaudited
Total
Six months ended 30 September 2024 £'000 £'000 £'000 £'000
Subscription revenues:
Consumption-based 8,457 11,688 730 20,875
Term-based 26,615 12,451 13,857 52,923
Total subscription revenues 35,072 24,139 14,587 73,798
Consumption 3,932 50,784 1,131 55,847
Hardware - 3,723 - 3,723
Other 460 1,659 1,410 3,529
Total revenue 39,464 80,305 17,128 136,897
Adjusted operating profit before central overheads 15,176 22,773 5,404 43,353
Central overheads (14,332)
Expected credit losses of trade receivables (19)
Adjusted operating profit 29,002
Amortisation of acquired intangibles (17,400)
Share-based payments charge (2,172)
Operating profit 9,430
Finance revenue 122
Finance costs (3,919)
Profit before tax 5,633
Income tax charge (4,057)
Profit for the period 1,576
Location Identity Fraud Unaudited
Total
Six months ended 30 September 2023 £'000 £'000 £'000 £'000
Subscription revenues:
Consumption-based 8,081 13,582 793 22,456
Term-based 24,663 11,637 15,621 51,921
Total subscription revenues 32,744 25,219 16,414 74,377
Consumption 3,359 46,185 957 50,501
Hardware - 4,239 - 4,239
Other 482 941 1,820 3,243
Total revenue 36,585 76,584 19,191 132,360
Adjusted operating profit before central overheads 12,950 18,694 5,927 37,571
Central overheads (13,238)
Expected credit losses of trade receivables (430)
Adjusted operating profit 23,903
Amortisation of acquired intangibles (20,117)
Share-based payments charge 138
Exceptional items (56,560)
Operating loss (52,636)
Finance revenue 106
Finance costs (4,752)
Loss before tax (57,282)
Income tax charge 2,132
Loss for the period (55,150)
6. OPERATING PROFIT/LOSS
Unaudited Unaudited
6 months to 6 months to
30 September 30 September
This is stated after charging/(crediting): 2024 2023
£'000 £'000
Research and development costs recognised as an operating expense 6,224 8,291
Other technology related costs recognised as an operating expense 16,967 16,769
Total technology related costs recognised as an operating expense 23,191 25,060
Amortisation of intangible assets (note 12) 17,440 20,131
Depreciation of property, plant and equipment (note 12) 487 681
Depreciation of right-of-use assets (note 12) 513 601
Expense relating to short term leases 228 274
Expense relating to low value leases 4 5
Loss on disposal of plant and equipment and intangible assets 4 1
Foreign exchange loss/(gain) 586 (348)
The above expenses are recognised in the operating expenses line in the
consolidated statement of profit or loss.
7. FINANCE INCOME
Unaudited Unaudited
6 months to 6 months to
30 September 30 September
2024 2023
£'000 £'000
Bank interest receivable 26 33
Interest income on non-current accrued revenue 96 64
Tax interest receivable - 9
122 106
8. FINANCE COSTS
Unaudited Unaudited
6 months to 6 months to
30 September 30 September
2024 2023
£'000 £'000
Bank interest payable 3,703 4,442
Amortisation of bank loan fees 170 170
Other interest payable - 107
Lease liability interest 46 33
3,919 4,752
9. 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 2025.
The table below shows the adjusted effective tax rate as well as the impact on
the effective rate of tax of non-recurring tax items:
Unaudited Unaudited
6 months to 6 months to
30 September 2024 30 September 2023
Income tax charge Effective tax rate Income tax (credit)/ Effective tax rate
Profit before Tax Profit before Tax charge
£'000 £'000 % £'000 £'000 %
Income statement 5,633 4,057 72.0% (57,282) (2,132) 3.7%
Amortisation of acquired intangibles 17,400 2,197 (44.8)% 20,117 7,775 (18.9)%
Equity-settled share-based payments 2,172 415 (0.7)% (138) (245) 0.7%
Exceptional items - - - 56,560 605 45.7%
25,205 6,669 26.5% 19,257 6,003 31.2%
One of the main reasons for the decrease in the adjusted effective tax rate is
due to changes in the mix of the countries in which profits have arisen; the
prior year period had a higher weighting of profit in Australia which has a
standard tax rate of 30%, but this weighting has decreased in the current year
following the decrease in Fraud revenue. Also, the prior year adjusted
effective tax rate was higher due to a deferred tax charge in the US, which
was recognised as a discrete item, following the revaluation of deferred tax
assets.
10. EARNINGS PER ORDINARY SHARE
Diluted pence per share Adjusted basic pence per share Adjusted diluted pence per share
Basic pence per
share
Unaudited 6 months to 30 September 2024 0.6 0.6 7.3 7.3
Unaudited 6 months to 30 September 2023 (21.8) (21.8) 5.2 5.1
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.
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.
Unaudited Unaudited
30 September 30 September
2024 2023
No. No.
Basic weighted average number of shares in issue 252,858,907 252,521,638
Basic weighted average number of shares held by EBT (306,398) (234,754)
Dilutive effect of share options 2,040,403 6,259,016
Diluted weighted average number of shares in issue 254,592,912 258,545,900
For the period ended 30 September 2023, potential ordinary shares are
anti-dilutive, as their inclusion in the diluted loss per share calculation
would reduce the loss per share, and have therefore been excluded.
Adjusted
Adjusted earnings per share is defined as adjusted operating profit less net
finance costs and adjusted tax divided by the basic weighted average number of
ordinary shares of the Company.
Unaudited
Unaudited
6 months to 6 months to
30 September 2024 30 September 2023
Basic Diluted Basic Diluted
pence per pence per pence per pence per
share share share share
£'000 £'000
29,002 11.5 11.4 23,903 9.5 9.2
Adjusted operating profit
Less net finance costs (3,797) (1.5) (1.5) (4,646) (1.8) (1.8)
Less adjusted tax (6,669) (2.7) (2.6) (6,003) (2.5) (2.3)
Adjusted earnings 18,536 7.3 7.3 13,254 5.2 5.1
11. DIVIDENDS PAID AND PROPOSED
Unaudited Audited Unaudited
6 months to Year to 6 months to
30 September 31 March 30 September
2024 2024 2023
£'000 £'000 £'000
Declared and paid during the period
Final dividend for 2024: 4.20p (2023: 4.00p) 10,599 10,093 10,093
Proposed for approval at AGM (not recognised as a liability at 31 March)
Final dividend for 2024: 4.20p (2023: 4.00p) - 10,609 -
12. NON-CURRENT ASSETS
Property, plant & equipment Right-of-use assets
Goodwill Other intangible assets £'000 £'000
£'000 £'000
Cost
As at 1 April 2024 734,356 350,671 6,076 3,928
Additions - 97 354 518
Disposals - (4,458) (85) (449)
Foreign exchange adjustment (34,646) (15,593) (86) 37
At 30 September 2024 699,710 330,717 6,259 4,034
Amortisation/depreciation
At 1 April 2024 172,734 169,607 4,426 2,363
Charge for the period - 17,440 487 513
Disposals - (4,458) (81) (449)
Foreign exchange adjustment (9,926) (6,795) (48) 71
At 30 September 2024 162,808 175,794 4,784 2,498
Net book value
At 30 September 2024 536,902 154,923 1,475 1,536
At 31 March 2024 561,622 181,064 1,650 1,565
13. TRADE AND OTHER RECEIVABLES
( )
Unaudited Audited Unaudited
30 September 31 March 30 September
2024 2024 2023
£'000 £'000 £'000
Current
Trade receivables 49,121 57,157 49,439
Allowance for unrecoverable amounts (1,837) (2,416) (2,305)
Net trade receivables 47,284 54,741 47,134
Prepayments 8,823 9,441 7,408
Accrued income 7,867 8,659 6,156
63,974 72,841 60,698
Non-current
Prepayments 380 493 602
Accrued income 6,788 5,730 5,388
7,168 6,223 5,990
14. TRADE AND OTHER PAYABLES
( )
Unaudited Audited Unaudited
30 September 31 March 30 September
2024 2024 2023
£'000 £'000 £'000
Trade payables 10,947 13,568 10,794
Other taxes and social security costs 3,133 4,983 3,268
Accruals 20,512 25,118 21,629
34,592 43,669 35,691
15. LOANS AND BORROWINGS
Bank Loans
During the current period the Group drew down an additional £10,000,000 and
made repayments of $18,000,000 (£14,067,000) and £5,000,000. The outstanding
balance on the loan facility at 30 September 2024 was £87,862,000 (2023:
£123,940,000) representing £5,000,000 in GBP (2023: £10,000,000) and
$111,000,000 in USD (2023: $139,000,000).
The Group has access to a £175 million facility until July 2026 which reduces
to £140 million until July 2027.
The debt bears an interest rate of Sterling Overnight Index Average (SONIA)
for British Pound Sterling drawdowns or Secured Overnight Financing Rate
(SOFR) for US Dollar drawdowns plus a margin of between 1.6% and 2.4%
depending on the Group's current leverage position.
The loan is secured by a fixed and floating charge over the assets of the
Group.
Unaudited Audited Unaudited
30 September 31 March 30 September
2024 2024 2023
£'000 £'000 £'000
Opening bank loan 101,115 126,411 126,411
New borrowings 10,000 10,000 10,000
Agency fee paid - (56) -
Loan fees paid for extension - (286) -
Repayment of borrowings (19,067) (32,967) (14,960)
Amortisation of loan fees 170 341 150
Foreign currency translation adjustment (5,246) (2,328) 1,430
Closing bank loan 86,972 101,115 123,031
Analysed as:
Amounts falling due within 12 months - - -
Amounts falling due after one year 86,972 101,115 123,031
86,972 101,115 123,031
Unaudited Audited Unaudited
30 September 31 March 30 September
2024 2024 2023
£'000 £'000 £'000
Analysed as:
Bank loans 87,862 102,175 123,940
Unamortised loan fees (890) (1,060) (909)
86,972 101,115 123,031
16. CAPITAL REDUCTION
On 22 August 2024, the Company completed a capital reduction exercise under
section 641 of the Companies Act 2006. As a result, the entire share premium
balance at that date of £567,581,000 was cancelled and created an accumulated
profit within the Company's profit and loss account and now constitutes a
distributable reserve.
17. FINANCIAL INSTRUMENTS - FAIR VALUE MEASUREMENT
The objectives, policies and strategies pursued by the Group in relation to
financial instruments are described within the 2024 Annual Report.
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.
Financial instruments that are recognised at fair value subsequent to initial
recognition are classified 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. At 30 September 2024, the Group had a non-listed equity
investment which was measured at Level 3 fair value subsequent to initial
recognition.
The fair value of the non-listed equity investment was £1,389,000 (30
September 2023: £1,389,000) with the fair value gain/loss of £nil (30
September 2023: loss of £1,600,000) being recognised within other
comprehensive income. Fair value of non-listed equity investments is
determined using the market-based approach. Factors considered include
movement in exchange rates, similar share transactions and revenue performance
as well as valuation multiples for similar non-listed equity investments.
18. SHARE-BASED PAYMENTS
The Group operates Executive Share Option Schemes under which Executive
Directors, managers and staff of the Group are granted options over shares.
During the six months ended 30 September 2024, the following share options
were granted to Executive Directors and team members.
Scheme Date No. of options Exercise price Fair value
Performance Share Plan 19 July 2024 1,585,596 2.5p 195p-326p
Restricted Share Plan 19 July 2024 782,522 2.5p 326p
SAYE (3 Year) 27 August 2024 515,357 270p-336p 107p-129p
SAYE (5 Year) 27 August 2024 184,580 270p-336p 125p-144p
The charge recognised from equity-settled share-based payments in respect of
employee services received during the period was £2,172,000 (2023: £138,000
credit). The movement in the share-based payment charge is due to a change in
the assumption of LTIP awards expected to vest based on the lower EPS and TSR
performance in the prior year which resulted in an overall share-based payment
credit.
19. RELATED PARTY TRANSACTIONS
During the period, the Group has not entered into transactions, in the
ordinary course of business, with other related parties (2023: £nil).
Compensation of key management personnel (including directors)
Unaudited Unaudited
6 months to 6 months to
30 September 2024 30 September 2023
£'000 £'000
Short-term employee benefits 1,239 1,105
Post-employment benefits 52 -
Fair value of share options awarded 1,254 1,024
2,545 2,129
20. POST BALANCE SHEET EVENTS
There are not considered to be any events after the balance sheet date which
require disclosure under IAS 10.
21. 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. These non-GAAP measures are not
considered to be a substitute for or superior to IFRS measures and should not
be viewed in isolation or as an alternative to the equivalent GAAP measure.
The Group's consolidated 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.
In respect of revenue performance measures, the primary measure is revenue
growth at constant currency.
The following are the key non-GAAP measures used by the Group:
Constant Currency
Constant currency means that non-Pound Sterling revenue in the comparative
period is translated at the same exchange rate applied to the current year
non-Pound Sterling revenue. This therefore eliminates the impact of
fluctuations in exchange rates on underlying performance and enables
measurement of performance on a comparable year-on-year basis without the
impact of foreign exchange movements.
Unaudited Unaudited Growth
30 September 2024 30 September 2023
Location Identity Fraud Total Location Identity Fraud Total Location Identity Fraud Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 % % % %
Revenue 39,464 80,305 17,128 136,897 36,585 76,584 19,191 132,360 7.9% 4.9% (10.8)% 3.4%
Constant currency adjustment - - - - (232) (832) (318) (1,382) 0.7% 1.1% 1.6% 1.1%
Revenue at constant currency 39,464 80,305 17,128 136,897 36,353 75,752 18,873 130,978 8.6% 6.0% (9.2)% 4.5%
Normalised items
These are recurring items which management considers could affect the
underlying results of the Group.
These include:
· amortisation of acquired intangibles; and
· share-based payment charges
Normalised items are excluded from statutory measures to determine adjusted
results.
Adjusted Operating Profit
Adjusted operating profit means operating profit before exceptional items and
normalised items. Adjusted results allow for the comparison of results
year-on-year without the potential impact of significant one-off items or
items which do not relate to the underlying performance of the Group. Adjusted
operating profit is a measure of the underlying profitability of the Group.
Unaudited Unaudited
30 September 2024 30 September 2023
£'000 £'000
Operating profit/(loss) 9,430 (52,636)
Amortisation of acquired intangibles 17,400 20,117
Share-based payment charge/(credit) 2,172 (138)
Exceptional items - 56,560
Adjusted Operating Profit 29,002 23,903
Adjusted Operating Profit Margin
Adjusted Operating Profit as a percentage of revenue.
Adjusted Operating Expenses
Adjusted operating expenses means reported operating expenses before
exceptional items and normalised items. Adjusted operating expenses allow for
the comparison of results year-on-year without the potential impact of
significant one-off items or items which do not relate to the underlying
operating expenses of the Group. Adjusted operating expenses is a measure of
the underlying operating expenses of the Group.
Unaudited Unaudited
30 September 2024 30 September 2023
£'000 £'000
Reported operating expenses 85,886 143,793
Amortisation of acquired intangibles (17,400) (20,117)
Share-based payment (charge)/credit (2,172) 138
Impairment of goodwill - (54,707)
Other exceptional items - (1,853)
Adjusted Operating Expenses 66,314 67,254
Adjusted EBITDA
Adjusted EBITDA means Adjusted Operating Profit before depreciation and
amortisation of non-acquired intangibles. Adjusted EBITDA is a measure of the
underlying cash generation and the profit measure used in our covenant
compliance calculations under the RCF agreement.
Unaudited Unaudited
30 September 2024 30 September 2023
£'000 £'000
Adjusted Operating Profit 29,002 23,903
Depreciation of property, plant and equipment 487 681
Depreciation of right-of-use assets 513 601
Amortisation of non-acquired intangibles 40 14
Adjusted EBITDA 30,042 25,199
Adjusted Tax
Adjusted Tax means income tax charge before the tax impact of amortisation of
acquired intangibles, share-based payment charges and exceptional items.
Adjusted Effective Tax Rate
The Adjusted Effective Tax Rate means Adjusted Tax divided by Adjusted
Earnings. This provides an indication of the ongoing tax rate across the
Group. Refer to note 9 for calculation.
Adjusted Earnings Per Share ('Adjusted EPS')
Adjusted EPS represents adjusted earnings divided by a weighted average number
of shares in issue and is disclosed to indicate the underlying profitability
of the Group. Adjusted EPS is a measure of underlying earnings per share for
the Group. Adjusted earnings represents Adjusted Operating Profit less net
finance costs and income tax charges. Refer to note 10 for calculation.
Net Cash/Debt
This is calculated as cash and cash equivalent balances less outstanding
external loans. Unamortised loan arrangement fees are netted against the loan
balance in the financial statements but are excluded from the calculation of
net cash/debt. Lease liabilities following the implementation of IFRS 16 are
also excluded from the calculation of net cash/debt since they are not
considered to be indicative of how the Group finances the business. This is a
measure of the strength of the Group's balance sheet.
Unaudited Audited
30 September 2024 31 March 2024
£'000 £'000
Cash and cash equivalents 15,976 21,321
Loans on balance sheet 86,972 101,115
Unamortised loan arrangement fees 889 1,060
External Loans 87,861 102,175
Net Debt (71,885) (80,854)
Debt Leverage
This is calculated as the ratio of net (debt)/cash to adjusted EBITDA. This
demonstrates the Group's liquidity and its ability to pay off its incurred
debt.
Unaudited Audited
30 September 2024 31 March 2024
£'000 £'000
Net Debt (71,885) (80,854)
Rolling 12 month Adjusted EBITDA 68,704 63,823
Debt Leverage 1.05 1.27
Cash Conversion YTD %
This is calculated as cash generated from operations, adjusted to exclude cash
payments in the year for exceptional items, as a percentage of Adjusted
EBITDA. This measures how efficiently the Group's operating profit is
converted into cash.
Unaudited Unaudited
30 September 2024 30 September 2023
£'000 £'000
Cash generated from operations before tax payments 24,481 22,942
Total exceptional items - 56,560
Accrued cash exceptional items at the start of the period 904 1,251
paid in the current period
Accrued cash exceptional items at the end of the period - (333)
Non-cash exceptional items - (54,707)
Cash generated from operations before tax payments 25,385 25,713
and exceptional items paid
Adjusted EBITDA 30,042 25,199
Cash Conversion % 84.5% 102.0%
Rolling 12 Month Cash Conversion %
This is cash conversion on a rolling 12-month basis and measures how
efficiently the Group's operating profit is converted into cash.
Unaudited Unaudited
30 September 2024 30 September 2023
£'000 £'000
Cash generated from operations before tax payments 55,212 46,174
Total exceptional items 3,053 182,222
Accrued cash exceptional items at the start of the period 333 411
paid in the current period
Accrued cash exceptional items at the end of the period - (333)
Non-cash exceptional items (1,129) (177,349)
Cash generated from operations before tax payments 57,469 51,125
and exceptional items paid
Adjusted EBITDA 68,666 58,637
Rolling Cash Conversion % 83.7% 87.2%
Independent review report to GB Group plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed GB Group plc's condensed consolidated interim financial
statements (the "interim financial statements") in the Half year results of GB
Group plc for the 6 month period ended 30 September 2024 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the AIM Rules for Companies.
The interim financial statements comprise:
· the Condensed Consolidated Balance Sheet as at 30 September 2024;
· the Condensed Consolidated Statement of Profit or Loss and
Condensed Consolidated Statement of Comprehensive Income for the period then
ended;
· the Condensed Consolidated Cash Flow Statement for the period
then ended;
· the Condensed Consolidated Statement of Changes in Equity for the
period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Half year results of GB Group
plc have been prepared in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the AIM Rules for Companies.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). 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, 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.
We have read the other information contained in the Half year results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half year results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Half year results in accordance with the AIM
Rules for Companies which require that the financial information must be
presented and prepared in a form consistent with that which will be adopted in
the company's annual financial statements. In preparing the Half year results,
including the interim financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Half year results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the AIM Rules for Companies and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Manchester
18 November 2024
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