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GB GROUP PLC — Earnings Release 2014
Jul 2, 2014
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Earnings Release
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RNS Number : 1623L
GB Group PLC
02 July 2014
| Embargoed until 7.00 a.m. | 2 July 2014 |
GB GROUP PLC
("GBGroup", "GBG", the "Group" or the "Company")
Annual Results Announcement for the Year Ended 31 March 2014
GBGroup, the identity intelligence specialist, is pleased to announce its annual results for the year ended 31 March 2014.
Highlights
· Strong revenue growth and margin improvements resulted in profits ahead of market expectations
o 15% adjusted†† revenue growth to £41.8 million (2013 adjusted††: £36.3 million), with underlying organic adjusted††revenue growth of 10% (2013: 7%)
o 30% increase in adjusted† operating profits to £7.2 million (2013: £5.5 million)
o 30% increase in adjusted basic earnings per share to 6.5p (2013: 5.0p)
o 14% increase in profit before tax (after exceptional costs) to £4.0 million (2013: £3.5 million)
· Solid balance sheet and strong cash generation, resulting in cash balances of £11.8 million (2013: £6.3 million) after dividend payment (£1.6 million) and cost of investing activities (£2.6 million)
· A 10% increase to the proposed dividend for 2014 to 1.65 pence (2013: 1.5 pence)
· Successful acquisition and integration of CRD (UK) Ltd into the Group and the post year-end strategic acquisition of DecTech Solutions Pty Ltd in Australia, extending GBG's suite of solutions and geographic reach.
Commenting, Richard Law, Chief Executive, said:
"The Group has had a very successful year. Our team of talented people, working to a clear vision of the future, delivered significantly higher revenue, adjusted operating profits and margins through a combination of organic growth and acquisition.
The new year has started well with the acquisition of DecTech in April giving us greater scale, technical capability and geographic reach. Our priorities for the year will be the continued internationalisation of our product portfolio and leveraging the opportunities that global online trading brings, whilst making sure that we continue to invest wisely and continue to improve margins."
Notes:
† Adjusted operating profit means profits before amortisation of acquired intangibles, share based payment charges, exceptional items, share of results from associates, net finance costs and tax.
†† Adjusted Results Analysis
During the previous financial year, GBG restructured its commercial relationship with BT which meant that ID Verification margins under the revised agreement are higher in absolute terms but revenues are reduced in the current financial year. For ease of comparison, the revenue for the comparative period has been adjusted to show the true underlying growth.
Statutory results
| 2014 £'000 |
2013 £'000 |
Growth | |
| Revenue | 41,835 | 39,424 | 6% |
| Cost of sales | (14,473) | (16,663) | (13%) |
| Gross margin | 27,362 | 22,761 | 20% |
Adjusted††results
| 2014 £'000 |
2013 £'000 |
Growth | Organic growth* |
|
| Adjusted revenue | 41,835 | 36,344 | 15% | 10% |
| Cost of sales | (14,473) | (13,583) | 7% | 3% |
| Gross margin | 27,362 | 22,761 | 20% | 14% |
For further information, please contact:
| GB Group plc Richard Law, Chief Executive Dave Wilson, Group Finance Director & Operations Director |
01244 657333 |
| Peel Hunt LLP (Nominated Adviser and Broker) Richard Kauffer Daniel Harris |
020 7418 8900 |
| Newgate Threadneedle Caroline Forde Josh Royston Heather Armstrong |
020 7653 9850 |
| Website | www.gbgplc.com |
About GBGroup
The most profitable and successful organisations recognise the value of understanding the individual identity of their customers and employees. GBG combines this concept of identity with technology to create an environment of trust, so that organisations can employ people and connect, communicate and transact with consumers, safely and responsibly.
We call this Identity Intelligence.
GBG's solutions include:
Register & Verify - International software and services for quick and accurate customer registration; prevention and detection of fraud and the verification of identities of individuals & businesses remotely.
Cleanse & Engage -Innovative software and services which provide accurate and up-to-date identity information to deliver improved intelligent customer contact strategies.
Employ & Comply -Thorough background checks through online verification and authentication of individuals enabling organisations to safeguard, recruit and engage with confidence.
Trace & Investigate - Leading software and services which provide the most accurate and up-to-date picture of the UK's population, properties and businesses to quickly locate, investigate and contact the right individual, first time.
GB Group is listed on the London Stock Exchange (GBG). For more information, please visit GB Group's website: www.gbgplc.com
CHAIRMAN'S STATEMENT
I am pleased to report on another strong year for GBGroup during which we continued with our growth strategy, creating a platform for the long term success of the Group. Revenues and adjusted operating profits1 have again improved and we successfully completed the acquisitions of CRD (UK) Ltd in July 2013 and DecTech Solutions Pty Ltd just after the year end. DecTech has both extended our suite of solutions and expanded our geographic reach across multiple territories.
Adjusted revenues2 increased by 15 per cent, driving a growth in adjusted operating profit and adjusted earnings per share of 30 per cent. This has been delivered through a strong management team with a focussed strategy and a highly engaged group of employees.
We have again provided a positive return for our investors with total shareholder return in the year being substantially ahead of the FTSE Techmark (All Share) index over the same period.
Dividend
The Board has recommended a 10 per cent increase to the dividend for 2014 to 1.65 pence (2013: 1.5 pence), continuing our track record of dividend growth for shareholders. Subject to approval at the forthcoming Annual General Meeting, the final dividend will be paid on 29 August 2014. In addition, in respect of this year's dividend, the Group will introduce a Dividend Reinvestment Plan allowing eligible shareholders to reinvest their dividends into GBGroup shares.
Outlook
This year we have made substantial progress in securing future revenue and profit growth across the Group. We continue to improve the rates of cross-selling of our products and services to our existing client base while also targeting new sectors and areas of business. The market continues to support our belief in an increasing need for online identity intelligence services with international capabilities and this set of results is further evidence of our progress in our chosen market. Our strong financial position will enable us to continue to invest in our technology and people to take advantage of global opportunities for future growth.
The new financial year started with us welcoming the DecTech management and employees into the Group and collectively we are approaching the challenges and opportunities ahead with real enthusiasm and expectation of continued success. Our leadership team and employees have achieved a great deal in the last 12 months and I would like to record the Board's thanks to them all.
D A Rasche
Chairman
Note 1: Adjusted operating profit means profits before amortisation of acquired intangibles, share based payment charges, exceptional items, share of results from associates, net finance costs and tax.
Note 2: the 2013 comparison figures for revenue have been adjusted and re-presented to make a more meaningful comparison following the restructuring of its commercial relationship with BT in the current year which resulted in a reduction in revenues but higher margins. Further detail on this is contained with the Strategic Report and Finance Review.
CHIEF EXECUTIVE'S REVIEW
Overview
The Group has had a very successful year. Our team of talented people, working to a clear vision of the future, delivered significantly higher revenue, adjusted operating profits and margins through a combination of organic growth and acquisition. The new year has started well with the acquisition of DecTech in April giving us greater scale, technical capability and geographic reach.
Our products and services are enabling some of the biggest businesses in the world to build trusted relationships with their customers, comply with important legislation and avoid fraud. The international application of these products and services with organisations such as HSBC and Salesforce.com provides us with an exceptional opportunity.
I feel positive about the way that GBGroup has performed, and is continuing to perform, and I believe our prospects to be excellent.
Financial Performance
As a result of our positive growth, the Group achieved a 15 per cent increase in adjusted revenues to £41.8 million (2013 adjusted: £36.3 million). Adjusted operating profit increased by 30 per cent to £7.2 million (2013: £5.5 million) resulting in strong cash flow with closing cash balances of £11.8 million (2013: £6.3 million).
We continue to have good visibility of future revenues and contracted sales closed in the year to 31 March 2014 added to the value of deferred revenue in our balance sheet, increasing it by 27 per cent to £6.7 million (2013: £5.3 million). This balance will be released as revenue to the profit and loss account over the course of the current year and future periods.
Identity Proofing (IDP)
The Identity Proofing business, which provides domestic and international electronic ID verification and people checking solutions, saw its revenues increase on an adjusted basis by 22 per cent to £15.1 million (2013 adjusted: £12.4 million). This revenue growth delivered increased profitability with adjusted operating profits rising to £1.6 million (2013: £1.3 million).
The business made good strategic progress in the year with the first phase launch of ID3global, GBGroup's new identity verification solution, which brings our UK and international electronic identity verification offerings together through a single portal or API. We also invested to expand our verification capabilities into a further 10 countries. This brings our capability to provide in-depth verifications up to a KYC ("Know Your Customer") level to 30 countries meaning that GBGroup can now provide this important service in countries that account for over 3.6 billion, (approximately half) of the world's population, compared to 2 billion at the end of last year.
New customers added by IDP during the year included Avis, Skandia and HSBC.
Identity Solutions (IDS)
The Identity Solutions business (IDS), which provides domestic and international identity-based registration, tracing and engagement solutions, made good progress in growing its organic revenues and profitability. Overall revenues grew 11 per cent to £26.7 million (2013: £24.0 million) and adjusted operating profit increased by 30 per cent to £6.1 million (2013: £4.7 million).
IDS enhanced its existing portfolio of products and services during the year, launching new versions of its software products in all business areas. These products, which help our clients access, understand and utilise rich data sources, were well received by our customers across all of our industry sectors, with orders from businesses as diverse as Sainsbury's, Tesco, Barclays, Zurich, Dixons, Salesforce.com, Ford, Home Office, HMRC and UK Borders Agency.
Acquisition of DecTech Solutions
Of particular note, after our year end, was the strategic acquisition of an Australian provider of fraud detection, credit risk management and customer management solutions, DecTech Solutions Pty Ltd, for a total consideration of up to £20.5 million. This is a key acquisition for GBGroup, expanding our international reach in high growth regions and providing us with fraud and risk management solutions that are highly complementary to our own suite of Identity Proofing offerings. DecTech's integration into the Group and the Identity Proofing business, which is now well underway, opens up important new markets for us. It also considerably enhances our competitive position and our ability to address the growing requirements for global electronic identity verification and fraud detection services across our existing and newly acquired customer bases as well as the wider market.
Our View of the Global Identity Intelligence Market
The ability to trade internationally offers huge opportunities to businesses that can show they 'know their customers'. But international trade also creates problems in areas such as payments, risk, fraud and compliance and can pose a real risk to reputation. Organisations have a growing need for solutions that will allow them to interact safely yet efficiently with customers and build trust; but without the comfort of a face-to-face interaction, they must rely on technology that can both verify identity and help them understand their customers on an ongoing basis. This technology is underpinned by robust and up-to-date data - identity intelligence - but most organisations are still not able to validate, organise and analyse this efficiently.
GBGroup's technology and access to extensive data offers us a real opportunity to become the leader in what is currently a fragmented but rapidly expanding market. We are the only provider that can offer extensive end-to-end capability on a cross-border basis and we expect to see much more aggregation and consolidation of the industry over the coming years, driven by clients' need to offer their own customers a more efficient and effective experience.
Current Trading & Outlook
We have enjoyed a good start to the new financial year. Our priorities for the year will be the continued internationalisation of our product portfolio and leveraging the opportunities that global online trading brings, whilst making sure that we continue to invest wisely and continue to improve margins. A key area of activity will be realising the benefits from the additions we have made to our portfolio of products and services through the integration of DecTech into the Group.
Three of our six complementary product groups now offer international services and we have initiatives in place to build on this. Given the size of the market opportunity, we will continue to invest in the development of our international capabilities as well as in our UK team. We remain confident in the long term growth prospects for the whole of GBGroup.
R A Law
Chief Executive
Strategic Report and Finance Review
Principal Activities and Business Review
GB Group PLC ('GBGroup') and subsidiaries' (together 'the Group') principal activity is the provision of identity intelligence services. GBGroup helps organisations recognise and verify all elements of an individual's identity at key interactions in their business processes. Through the application of our proprietary technology, we enable organisations to connect, communicate and transact with people safely, responsibly and profitably.
The performance of the Group is reported by segment, reflecting how we run the business and the economic characteristics of each division. The Group's two operating segments are as follows:
· Identity Proofing Division - which provides electronic ID Verification services for combating ID fraud, money laundering and under-age gambling as well as ID Employ & Comply services for employee authentication and screening.
· Identity Solutions Division - which provides ID Registration, ID Engagement and ID Trace & Investigate software and services that provide accurate and up-to-date customer information and facilitate better understanding, targeting and retention of profitable customers.
Between them, the divisions have five complementary offerings:
· ID Verification, which provides the ability to verify consumers' identities remotely, without the physical presentation of documentation, in order to combat ID fraud, money laundering and restrict access to under age content, purchases and gambling.
· ID Registration, which includes software and services for quick and accurate customer registration and validation of records.
· ID Engagement, which provides database services so our clients can better understand, target and retain their customers and offers accurate and up-to-date identity information for their contact strategies.
· ID Trace & Investigate, which provides the largest and most accurate picture of the UK's population and properties in order to locate and contact the right individual, first time.
· ID Employ & Comply Services, which provides background checks through online verification and authentication of individuals enabling organisations to safeguard, recruit and engage with confidence.
A sixth complementary product group was added post year end with the acquisition of DecTech's fraud and risk management solutions.
The Group results are set out in the Consolidated Statement of Comprehensive Income and are explained in the Strategic Report and Finance Review. A review of the Group's business and future development is contained in the Chairman's Statement, Chief Executive's Review and the Strategic Report and Finance Review.
Group Vision and Strategy
The Group's vision is to be the recognised leader in the field of identity intelligence, a fundamental enabler of online business.
The Group's strategy is to create and maintain unique online products and services which provide additional value for clients and are of sufficient strength to enable the Group to create new markets and consistently win new business against its competition. The Group achieves this through its investment in people, business development opportunities and the application of innovation, quality and excellence in everything it does.
Review of the business
The Group uses adjusted figures as key performance measures in addition to those reported under adopted IFRS as they better reflect the underlying performance of the business. Adjusted figures exclude certain non-operational or exceptional items which is consistent with prior year treatments. Unless otherwise stated, profit and earnings figures referred to below are adjusted measures.
Commercial agreement change with BT
GBGroup restructured its commercial relationship with BT last year in relation to the Technology & Supply and Distribution Agreements established in 2004. The renegotiated commercial terms of these agreements now mean that although GBGroup no longer receives a royalty for the use of its technology we no longer pay BT a proportion of the revenue associated with the transactions for clients served through ID3global. The net effect is that revenue associated with the Technology & Supply Agreement has reduced but at the same time, lower costs under the Distribution Agreement have been negotiated and, accordingly, overall margins have increased.
For ease of comparison, the revenue for the comparative period has been adjusted to illustrate the true underlying growth as follows:
Statutory results
| 2014 £'000 |
2013 £'000 |
Growth | |
| Revenue | 41,835 | 39,424 | 6% |
| Cost of sales | (14,473) | (16,663) | (13%) |
| Gross margin | 27,362 | 22,761 | 20% |
Adjusted results
| 2014 £'000 |
2013 £'000 |
Growth | Organic growth* |
|
| Adjusted revenue | 41,835 | 36,344 | 15% | 10% |
| Cost of sales | (14,473) | (13,583) | 7% | 3% |
| Gross margin | 27,362 | 22,761 | 20% | 14% |
* Non-GAAP measure as defined within the Key Performance Indicators section of this report.
The following description of the Group's performance is complemented by the segmental analysis in note 4 to the accounts which show the contributions from the Identity Solutions and Identity Proofing segments. The overall impact of our acquisition in the year will not be fully evident in our segments until 2015.
| 2014 | 2013 | Increase/ (Decrease) |
Increase/ (Decrease) |
|
| £'000 | £'000 | £'000 | % | |
| Adjusted revenue* | 41,835 | 36,344 | 5,491 | 15% |
| Adjusted operating profit | 7,164 | 5,522 | 1,642 | 30% |
| Share based payments | (747) | (488) | (259) | 53% |
| Amortisation of acquired intangibles | (1,110) | (889) | (221) | 25% |
| Operating profit before exceptional items and associate result | 5,307 | 4,145 | 1,162 | 28% |
| Exceptional items | (1,080) | (409) | (671) | 164% |
| Share of associate investment result | (159) | (146) | (13) | 9% |
| Net finance costs | (79) | (84) | 5 | 6% |
| Group profit before tax | 3,989 | 3,506 | 483 | 14% |
| Total tax (charge)/credit | (474) | 831 | (1,305) | (157%) |
| Group profit for the year attributable to shareholders | 3,515 | 4,337 | (822) | (19%) |
| Adjusted earnings† | 7,085 | 5,438 | 1,647 | 30% |
| Basic weighted average number of shares ('000) | 109,631 | 108,313 | 1,318 | 1% |
| Adjusted basic earnings per share (p) † | 6.5 | 5.0 | 1.5 | 30% |
* the 2013 comparison figures for revenue and gross profit have been adjusted and re-presented to make a more meaningful comparison following the restructuring of its commercial relationship with BT in the current year which resulted in a reduction in revenues but higher margins. Further details on the impact of this are provided in Note 3.
†Adjusted earnings and adjusted EPS are both non-GAAP measures determined with reference to the adjusted operating profit less net finance costs. A reconciliation of these values is reported later in this statement as well as in note 7 to the accounts.
The Group's overall profile has changed through acquisitions concluded during both this year and in the previous year. These businesses have delivered strong performances in the 12-month period ended 31 March 2014 whilst being underpinned by solid organic growth.
Adjusted operating profit for the year increased by 30% to £7.2 million, reflecting:
· Adjusted revenue growth of 15% to £41.8 million. This increase included adjusted organic growth of 10%; and
· an improvement in the adjusted operating profit margin which increased from 15.2% to 17.1%, notwithstanding continued investment for growth over the year.
Adjusted basic earnings per share was up 30% to 6.5p (2013: 5.0p). Basic earnings per share was down 20% to 3.2p (2013: 4.0p). Group cash conversion was strong with net cash generated from operating activities of £9.4 million (2013: £5.9 million) compared to operating profit before depreciation, amortisation, share of associate investment result, share-based payments and exceptional items (Adjusted EBITDA) of £7.8 million (2013: £6.1 million).
The Group's balance sheet and financing ability remain strong, and although unutilised at the year end, the Group has a £7 million revolving credit facility, expiring in 2015.
Adjusted EBITDA
Adjusted EBITDA was £7.8 million (2013: £6.1 million), consisting of adjusted operating profit of £7.2 million (2013: £5.5 million) and depreciation/amortisation of £0.6 million (2013: £0.6 million).
Exceptional Items
Exceptional costs of £1.1 million (2013: £0.4 million) were incurred by the Group in the year and have been detailed in note 5 to the accounts.
Net Finance Costs/Income
The Group has incurred net finance costs for the year of £79,000 (2013: £84,000). The decrease in net finance costs was due to interest received on bank deposits.
Acquired Intangibles Amortisation
The charge for the year of £1.1 million (2013: £0.9 million) represents the non-cash cost of amortising separately identifiable intangible assets including brands, trademarks, technology-based assets and customer relationships that were acquired through business combinations. The increased charge in the year is due to the fact that 2014 has a full year charge for acquisitions which took place part way through the prior year along with the impact of the acquisition during the current year.
Taxation
The Group tax charge of £0.5 million (2013: £0.8 million credit) reflects permanent differences arising in the year, partially offset by the recognition of previously unrecognised deferred tax assets relating to capital allowances. There was £60k of current tax payable on the Group's profits in the year (2013: £negligible) principally as a result of the utilisation of available tax losses.
Dividend
The Board of Directors will propose a final ordinary dividend of 1.65 pence per share (2013: 1.5 pence per share), amounting to £2.0 million (2013: £1.6 million). The final ordinary dividend with respect to the year ended 31 March 2014, if approved, will be paid on 29 August 2014 to ordinary shareholders whose names were on the register on 25 July 2014. In addition, in respect of this year's dividend, the Group will introduce a Dividend Reinvestment Plan allowing eligible shareholders to reinvest their dividends into GBGroup shares. Details of the DRIP Plan will be sent to shareholders by mid-July 2014.
Earnings per Share
The earnings per share analysis in this report and in note 7 cover three measures: adjusted basic earnings per share (adjusted operating profit less interest); basic earnings per share (after all adjustments); and diluted earnings per share (adjusting for dilutive effect of share options). Adjusted earnings (adjusted operating profit less interest) was £7.1 million (2013: £5.4 million) resulting in a 30% increase in adjusted earnings per share from 5.0p to 6.5p. The weighted average number of shares at 31 March 2014 increased to 109.6 million (2013: 108.3 million).
Cash Flows
Group operating activities generated £9.4 million of cash and cash equivalents (2013: £5.9 million) representing an increase of 59% and an Adjusted EBITDA to cash conversion ratio of 120% (2013: 96%). Operating cash flows continue to be healthy and the Group continually monitors its measures of cash generation and collection. Net cash generated by operating activities before working capital movements increased by 22% to £6.8 million (2013: £5.6 million). Group investing activities resulted in net outflows of £2.6 million (2013: £3.0 million) including £1.4 million (2013: £2.1 million) in respect of acquisitions/investments, £0.9 million (2013: £0.6 million) on plant and equipment purchases and £0.2 million on product development (2013: £0.3 million). Financing activities consumed £1.3 million (2013: £1.4 million) of net cash in the year following £1.6 million of dividends paid (2013: £1.5 million). The Group's overall cash and cash equivalents increased by £5.5 million (2013: £1.5 million increase) in the year. Further detailed analysis of this movement is included in the Consolidated Cash flow Statement.
Acquisitions
During the year the Group acquired CRD (UK) Limited an unlisted company based in the United Kingdom providing criminal record checking services to UK organisations. The cash consideration paid, net of cash acquired, was £0.9 million with no further deferred consideration payable. In addition to this payment, a total of £0.6 million of deferred consideration was paid out in the year on acquisitions which took place in previous years. Further information on these acquisitions can be found in note 14 to the accounts.
Deferred Income
Deferred income balances at the end of the year increased by 27% to £6.7 million (2013: £5.3 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 increase has been driven by solid contracted sales growth which will deliver their revenues and profits in forthcoming years.
The deferred income 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. Deferred income is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing and new business linearity within a reporting period.
Net Assets
Group net assets at the end of 2014 were £30.8 million, an increase of £3.2 million on the 2013 level of £27.6 million. This growth is driven by the increase in equity capital of £0.4 million combined with the total comprehensive income for the year of £3.5 million, less dividends paid of £1.6 million and after adjusting for share based payments and deferred tax on share based payments of £0.7 million and £0.2 million respectively.
Key Performance Indicators
The Board monitor the Group's progress against its strategic objectives and the financial performance of the Group's operations on a regular basis. Performance is assessed against the strategy and budgets using financial and non-financial measures.
The following details the principal Key Performance Indicators (KPIs) used by the Group, giving the basis of calculation and the source of the underlying data. A summary of performance against these KPIs is given below.
Financial
The Group uses the following primary measures to assess the performance of the Group and its propositions.
· Revenue
Revenue and revenue growth are used for internal performance analysis to assess the execution of our strategies, and by investors to assess progress against outlook statements in the market. Organic growth is also measured, although the term "organic" is not a defined term under IFRS and may not, therefore, be comparable with similarly titled measures reported by other companies. Organic growth is defined by the Group as year-on-year continuing revenue growth, excluding acquisitions, until the date of their anniversary and will be reported at each reporting interval. Revenue growth has been adjusted and re-presented to make a more meaningful comparison following the restructuring of its commercial relationship with BT in the current year which resulted in a reduction in revenues but higher absolute margins.
· Adjusted Operating Profit
This is used by the Group for internal performance analysis to assess the execution of our strategies, and by investors to assess progress against outlook statements in the market.
· Adjusted EBITDA
This is used by the Group for internal performance analysis to assess the execution of our strategies, and by investors to assess progress against outlook statements in the market and cash generation.
· Earnings per Share
Earnings per share is calculated as basic earnings per share from continuing operations on both an adjusted and unadjusted basis.
· Cash
Cash and cash equivalent balances are used by the Group for internal performance analysis and by investors to assess progress against outlook statements.
· Deferred Income Balance
Deferred income, which is included in our Consolidated Balance Sheet, is the amount of invoiced business in excess of the amount recognised as revenue. This is an important internal measure for the business and represents the amount that we will record as revenue in our Consolidated Statement of Comprehensive Income in future periods. Trends may vary as business conditions change.
Non-Financial
· Underlying Identity Verifications
Management believe that transaction-based measures provide useful information regarding trends in client revenue derived from electronic ID Verification services and the extent to which clients have adopted the service. Underlying identity verifications is the total number of verifications on the Group's URU™ and ID3global systems and excludes one-off batch verifications.
· KYC Countries
Management believe the number of countries in which the Group has the capability to provide in-depth ID Verification for citizens up to a KYC ("Know Your Customer") level is an important measure of our capabilities and movement towards proving verification of 'Anyone, Anywhere in the World, Anytime'.
Performance against KPIs
A summary of the Group's progress in achieving its objectives, as measured against KPIs, is set out below.
| Year ended 31 March | ||||||||
| 2014 | 2013 | |||||||
| Adjusted revenue growth | 15.1% | 23.9% | ||||||
| Organic adjusted revenue growth | 10.3% | 7.2% | ||||||
| Identity Proofing adjusted revenue growth | 22.2% | 20.0% | ||||||
| Identity Solutions revenue growth | 11.4% | 26.5% | ||||||
| Adjusted operating profit (£'000) | 7,164 | 5,522 | ||||||
| Adjusted operating profit % | 17.1% | 15.2% | ||||||
| Adjusted EBITDA (£'000) | 7,848 | 6,125 | ||||||
| Adjusted EBITDA % | 18.8% | 16.8% | ||||||
| Earnings per share - basic | 3.2p | 4.0p | ||||||
| Earnings per share - adjusted basic | 6.5p | 5.0p | ||||||
| Cash (£'000) | 11,846 | 6,308 | ||||||
| Deferred income balances (£'000) | 6,734 | 5,322 | ||||||
| Underlying identity verifications | 17,330,878 | 16,924,138 | ||||||
| KYC countries | 30 | 20 |
Principal Risks and Uncertainties
Management use a model to identify and assess the impact of risks to the business under four key headings - financial, strategic, operational and knowledge. For each risk, the likelihood and consequence are identified, management controls are confirmed and results reported. The corporate governance report in the Annual Report provides further detail more about the Group's risk management process. The significant risks and uncertainties faced by the Group are as set out below:
· Regulatory risk: legislation in all the markets we serve changes on a regular basis. Interpretation of existing laws can also change to create ever tightening standards, often requiring additional human and financial resources and the provision of new assets and systems. Whilst the Group is committed to respond positively to new regulation and legislation, changes could affect the pricing for, or adversely affect the revenue from, the services the Group offers.
· Competitive position:the Group operates in competitive markets and intensified competition could lead to pricing pressures, a reduction in the rate at which the Group adds new customers and to a decrease in the size of the Group's market share if clients choose to receive services from other providers.
· Non-supply by major supplier: the Group sources some of its data and infrastructure from third party suppliers and partners. The removal from the market by one or more of these third party suppliers or interruption in supply could quickly affect the Group's operations adversely and result in the loss of revenue or additional expenditure for the Group.
· Disaster recovery and business continuity: the Group has an understandable reliance on its place of business, IT systems and people. The loss of key components could affect the Group's operations and result in additional expenditure, whilst the established business continuity plan is effected following an incident.
· New product development: in order to maintain competitive advantage, the Group invests significant amounts of resources into product development. The development of all new technologies and products involves risk, including the product being more expensive, or taking longer to develop than originally planned, the market for the product is smaller than originally envisaged; or that the product fails to reach the production stage.
· Intellectual property risk: we generally protect our proprietary application software products and services by licensing rights to use the applications, rather than selling or licensing the computer source code. We rely on trademark, copyright, patent and other intellectual property laws to establish and protect our proprietary rights in these products and services. However, there is a risk that our proprietary rights could be challenged, limited, invalidated or circumvented.
In each case, there is an on-going process for identifying, evaluating and managing the principal risks of the Group.
Relationships
Other than our shareholders, the Group's performance and value are influenced by other stakeholders, principally our clients, suppliers, employees and our strategic partners. Relationships are managed both on an individual basis and via representative groups. The Group participates in industry groups which give a genuine access to clients, suppliers and decision makers in government and other regulatory bodies.
Treasury Policy and Financial Risk
The Group's treasury operation is managed within formally defined policies and reviewed by the Board. The Group finances its activities principally with cash and short-term deposits, but has the ability to draw down up to £7 million of further funding from a revolving credit facility that is in place. Other financial assets and liabilities, such as trade receivables and trade payables, arise directly from the Group's operating activities. Surplus funds of the Group are invested through the use of short-term deposits, with the objective of maximising fixed interest rate returns whilst still providing the flexibility to fund on-going operations when required. It is not the Group's policy to engage in speculative activity or to use complex financial instruments.
Use of non-GAAP Measures in the Group Financial Statements
The Group has identified certain measures that it believes will assist in understanding the performance of the business. The measures are not defined under IFRS and therefore may not be directly comparable with other companies' adjusted measures. The non-GAAP measures are not intended to be a substitute for, or superior to, any IFRS measures of performance, however management considers them to be important comparatives and key measures used within the business for assessing performance.
The following are the key non-GAAP measures identified by the Group and used in the Group financial statements:
Organic growth
Organic growth is defined by the Group as year-on-year continuing revenue growth, excluding acquisitions, until the date of their anniversary.
Adjusted operating profit
Adjusted operating profit means profits before amortisation of acquired intangibles, share based payment charges, exceptional items, share of results from associates, net finance costs and tax.
Adjusted earnings
Adjusted earnings represents adjusted operating profit less net finance costs.
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.
Approved by the Board on 2 July 2014
R A Law- Director
D J Wilson- Director
| Consolidated Statement of Comprehensive Income |
| Year ended 31 March 2014 |
| 2014 | 2013 | |||||
| £'000 | £'000 | |||||
| Note | ||||||
| ### Revenue | 3 | 41,835 | 39,424 | |||
| Cost of sales | (14,473) | (16,663) | ||||
| ### Gross profit | 27,362 | 22,761 | ||||
| Operating expenses before amortisation of acquired intangibles, share-based payments and exceptional items | (20,243) | (17,258) | ||||
| Other operating income | 45 | 19 | ||||
| Operating profit before amortisation of acquired intangibles, share-based payments, exceptional items and share of associate investment result (adjusted operating profit) | 7,164 | 5,522 | ||||
| Amortisation of acquired intangibles | 9 | (1,110) | (889) | |||
| Share-based payments charge | (747) | (488) | ||||
| Exceptional items | 5 | (1,080) | (409) | |||
| Share of associate investment result | 10 | (159) | (146) | |||
| ### Group operating profit | 4,068 | 3,590 | ||||
| Finance revenue | 6 | 1 | ||||
| Finance costs | (85) | (85) | ||||
| ### Profit before tax | 3,989 | 3,506 | ||||
| Income tax (charge)/credit | (474) | 831 | ||||
| Total comprehensive income for the year attributable to equity holders of the parent | 3,515 | 4,337 | ||||
| ### Earnings per share | 7 | |||||
| - adjusted basic earnings per share for the year | 6.5p | 5.0p | ||||
| - basic earnings per share for the year | 3.2p | 4.0p | ||||
| - diluted earnings per share for the year | 3.0p | 3.8p | ||||
| Consolidated Statement of Changes in Equity Year ended 31 March 2014 |
||||||
| Equity share capital |
Merger reserve | Capital redemption reserve | Retained earnings | Total equity |
|||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | |||||||
| ### Balance at 1 April 2012 | 14,345 | 6,575 | 3 | 2,950 | 23,873 | ||||||
| Profit for the period | - | - | - | 4,337 | 4,337 | ||||||
| Total comprehensive income for the period | - | - | - | 4,337 | 4,337 | ||||||
| Issue of share capital | 203 | - | - | - | 203 | ||||||
| Share-based payments charge | - | - | - | 488 | 488 | ||||||
| Deferred tax on share options | - | - | - | 203 | 203 | ||||||
| Equity dividend | - | - | - | (1,487) | (1,487) | ||||||
| ### Balance at 31 March 2013 | 14,548 | 6,575 | 3 | 6,491 | 27,617 | ||||||
| Profit for the period | - | - | - | 3,515 | 3,515 | ||||||
| Total comprehensive income for the period | - | - | - | 3,515 | 3,515 | ||||||
| Issue of share capital | 416 | - | - | - | 416 | ||||||
| Share-based payments charge | - | - | - | 747 | 747 | ||||||
| Deferred tax on share options | - | - | - | 170 | 170 | ||||||
| Equity dividend | - | - | - | (1,632) | (1,632) | ||||||
| ### Balance at 31 March 2014 | 14,964 | 6,575 | 3 | 9,291 | 30,833 |
Company Statement of Changes in Equity
Year ended 31 March 2014
| Equity share capital |
Merger reserve | Capital redemption reserve | Retained earnings | Total Equity |
|||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | |||||||
| ### Balance at 1 April 2012 | 14,345 | 6,575 | 3 | 5,401 | 26,324 | ||||||
| Profit for the period | - | - | - | 5,104 | 5,104 | ||||||
| Total comprehensive income for the period | - | - | - | 5,104 | 5,104 | ||||||
| Issue of share capital | 203 | - | - | - | 203 | ||||||
| Share-based payments charge | - | - | - | 488 | 488 | ||||||
| Deferred tax on share options | - | - | - | 203 | 203 | ||||||
| Equity dividend | - | - | - | (1,487) | (1,487) | ||||||
| ### Balance at 31 March 2013 | 14,548 | 6,575 | 3 | 9,709 | 30,835 | ||||||
| Profit for the period | - | - | - | 3,931 | 3,931 | ||||||
| Total comprehensive income for the period | - | - | - | 3,931 | 3,931 | ||||||
| Issue of share capital | 416 | - | - | - | 416 | ||||||
| Share-based payments charge | - | - | - | 747 | 747 | ||||||
| Deferred tax on share options | - | - | - | 170 | 170 | ||||||
| Equity dividend | - | - | - | (1,632) | (1,632) | ||||||
| ### Balance at 31 March 2014 | 14,964 | 6,575 | 3 | 12,925 | 34,467 |
| Consolidated Balance Sheet | ||||||||
| As at 31 March 2014 | ||||||||
| Note | 2014 | 2013 | ||||||
| £'000 | £'000 | |||||||
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Plant and equipment | 8 | 1,519 | 1,188 | |||||
| Intangible assets | 9 | 23,329 | 22,706 | |||||
| Investments accounted for using the equity method | 10 | 10 | 154 | |||||
| Deferred tax asset | 2,127 | 2,803 | ||||||
| 26,985 | 26,851 | |||||||
| ### Current assets | ||||||||
| Trade and other receivables | 11,929 | 10,749 | ||||||
| Current tax | - | 82 | ||||||
| Cash and short-term deposits | 11,846 | 6,308 | ||||||
| 23,775 | 17,139 | |||||||
| ### TOTAL ASSETS | 50,760 | 43,990 | ||||||
| ### EQUITY AND LIABILITIES | ||||||||
| ### Capital and reserves | ||||||||
| Equity share capital | 11 | 14,964 | 14,548 | |||||
| ### Merger reserve | 6,575 | 6,575 | ||||||
| Capital redemption reserve | 3 | 3 | ||||||
| Retained earnings | 9,291 | 6,491 | ||||||
| ### Total equity attributable to equity holders of the parent | 30,833 | 27,617 | ||||||
| ### Non-current liabilities | ||||||||
| ### Provisions | 65 | 25 | ||||||
| ### Deferred/contingent consideration | 15 | 750 | 1,307 | |||||
| ### Deferred tax liability | 1,251 | 1,466 | ||||||
| 2,066 | 2,798 | |||||||
| ### Current liabilities | ||||||||
| Trade and other payables | 17,551 | 13,575 | ||||||
| Provisions | 250 | - | ||||||
| Current tax | 60 | - | ||||||
| 17,861 | 13,575 | |||||||
| ### TOTAL LIABILITIES | 19,927 | 16,373 | ||||||
| ### TOTAL EQUITY AND LIABILITIES | 50,760 | 43,990 | ||||||
Approved by the Board on 2 July 2014
R A Law- Director
D J Wilson- Director
Registered in England number 2415211
| Company Balance Sheet | ||||||||
| As at 31 March 2014 | ||||||||
| Note | 2014 | 2013 | ||||||
| £'000 | £'000 | |||||||
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Plant and equipment | 8 | 1,517 | 985 | |||||
| Intangible assets | 9 | 558 | 417 | |||||
| Investments | 32,452 | 31,116 | ||||||
| Deferred tax asset | 2,127 | 2,803 | ||||||
| 36,654 | 35,321 | |||||||
| ### Current assets | ||||||||
| Trade and other receivables | 12,328 | 10,439 | ||||||
| Current tax | - | 167 | ||||||
| Cash and short-term deposits | 11,423 | 4,773 | ||||||
| 23,751 | 15,379 | |||||||
| ### TOTAL ASSETS | 60,405 | 50,700 | ||||||
| ### EQUITY AND LIABILITIES | ||||||||
| ### Capital and reserves | ||||||||
| Equity share capital | 11 | 14,964 | 14,548 | |||||
| ### Merger reserve | 6,575 | 6,575 | ||||||
| Capital redemption reserve | 3 | 3 | ||||||
| Retained earnings | 12,925 | 9,709 | ||||||
| ### Total equity attributable to equity holders of the parent | 34,467 | 30,835 | ||||||
| ### Non-current liabilities | ||||||||
| ### Provisions | 65 | - | ||||||
| ### Deferred/contingent consideration | 15 | 750 | 1,307 | |||||
| 815 | 1,307 | |||||||
| ### Current liabilities | ||||||||
| Trade and other payables | 24,813 | 18,558 | ||||||
| Provisions | 250 | - | ||||||
| Current tax | 60 | - | ||||||
| 25,123 | 18,558 | |||||||
| ### TOTAL LIABILITIES | 25,938 | 19,865 | ||||||
| ### TOTAL EQUITY AND LIABILITIES | 60,405 | 50,700 | ||||||
Approved by the Board on 2 July 2014
R A Law- Director
D J Wilson- Director
Registered in England number 2415211
Consolidated Cash Flow Statement
Year ended 31 March 2014
| Note | 2014 | 2013 | |||
| £'000 | £'000 | ||||
| Group profit before tax | 3,989 | 3,506 | |||
| Adjustments to reconcile Group profit before tax to net cash flows | |||||
| Share of associate investment result | 10 | 159 | 146 | ||
| Finance revenue | (6) | (1) | |||
| Finance costs | 85 | 85 | |||
| Depreciation of plant and equipment | 8 | 594 | 511 | ||
| Amortisation/impairment of intangible fixed assets | 9 | 1,200 | 981 | ||
| Profit on disposal of fixed assets | (3) | (1) | |||
| Share-based payments | 12 | 747 | 488 | ||
| Increase in provisions | 290 | - | |||
| (Increase)/decrease in trade and other receivables | (1,103) | 528 | |||
| Increase/(decrease) in trade and other payables | 3,403 | (223) | |||
| ### Cash generated from operations | 9,355 | 6,020 | |||
| ### Income tax received/(paid) | 65 | (101) | |||
| ### Net cash generated from operating activities | 9,420 | 5,919 | |||
| ### Cash flows from investing activities | |||||
| Acquisition of subsidiaries, net of cash acquired | 14 | (1,428) | (1,855) | ||
| Investment in associates | 10 | (15) | (242) | ||
| Purchase of plant and equipment | 8 | (916) | (571) | ||
| Proceeds from disposal of plant and equipment | 8 | 11 | 6 | ||
| Expenditure on product development | 9 | (239) | (338) | ||
| Interest received | 6 | 1 | |||
| ### Net cash flows used in investing activities | (2,581) | (2,999) | |||
| ### Cash flows from financing activities | |||||
| Finance costs paid | (85) | (85) | |||
| Proceeds from issue of shares | 416 | 203 | |||
| Dividends paid to equity shareholders | (1,632) | (1,487) | |||
| ### Net cash flows used in financing activities | (1,301) | (1,369) | |||
| Net increase in cash and cash equivalents | 5,538 | 1,551 | |||
| Cash and cash equivalents at the beginning of the period | 6,308 | 4,757 | |||
| ### Cash and cash equivalents at the end of the period | 11,846 | 6,308 | |||
Company Cash Flow Statement
Year ended 31 March 2014
| Note | 2014 | 2013 | ||||
| £'000 | £'000 | |||||
| Company profit before tax | 4,753 | 4,537 | ||||
| Adjustments to reconcile Company profit before tax to net cash flows | ||||||
| Finance revenue | (6) | (1) | ||||
| Finance costs | 85 | 85 | ||||
| Depreciation of plant and equipment | 8 | 514 | 453 | |||
| Amortisation/impairment of intangible fixed assets | 9 | 85 | 91 | |||
| Profit on disposal of fixed assets | (3) | (1) | ||||
| Share-based payments | 12 | 747 | 488 | |||
| Increase in provisions | 315 | - | ||||
| Increase in trade and other receivables | (1,889) | (2,281) | ||||
| Increase in trade and other payables | 6,050 | 4,409 | ||||
| ### Cash generated from operations | 10,651 | 7,780 | ||||
| ### Income tax received/(paid) | 150 | (101) | ||||
| ### Net cash generated from operating activities | 10,801 | 7,679 | ||||
| ### Cash flows from investing activities | ||||||
| Acquisition of subsidiary undertakings | 14 | (1,877) | (3,019) | |||
| Investment in associates | 10 | (15) | (152) | |||
| Purchase of plant and equipment | 8 | (749) | (437) | |||
| Proceeds from disposal of plant and equipment | 8 | 11 | 6 | |||
| Expenditure on product development | 9 | (226) | (307) | |||
| Interest received | 6 | 1 | ||||
| ### Net cash flows used in investing activities | (2,850) | (3,908) | ||||
| ### Cash flows from financing activities | ||||||
| Finance costs paid | (85) | (85) | ||||
| Proceeds from issue of shares | 416 | 203 | ||||
| Dividends paid to equity shareholders | (1,632) | (1,487) | ||||
| ### Net cash flows used in financing activities | (1,301) | (1,369) | ||||
| Net increase in cash and cash equivalents | 6,650 | 2,402 | ||||
| Cash and cash equivalents at the beginning of the period | 4,773 | 2,371 | ||||
| ### Cash and cash equivalents at the end of the period | 11,423 | 4,773 | ||||
Notes to the Accounts
1. CORPORATE INFORMATION
GB Group plc is a public limited company incorporated and domiciled in England & Wales. The Company's ordinary shares are traded on the Alternative Investment Market of the London Stock Exchange.
The financial information set out herein does not constitute the Company's statutory accounts for the years ended 31 March 2014 or 2013 but is derived from those accounts. The financial information has been prepared using accounting policies consistent with those set out in the annual report and accounts for the year ended 31 March 2013. Statutory accounts for 2013 have been delivered to the Registrar of Companies, and those for 2014 will be delivered in due course. The auditors have reported on those accounts; their report was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain any statements under Section 498(2) or (3) of the Companies Act 2006.
The Group and Company's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union as they apply to the financial statements of the Group and Company for the year ended 31 March 2014.
The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual Statement of Comprehensive Income and related notes.
2. ACCOUNTING POLICIES
Basis of Preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. A summary of the significant accounting policies is set out below.
The accounting policies that follow set out those policies that apply in preparing the financial statements for the year ended 31 March 2014 and the Group and Company have applied the same policies throughout the year.
The Group and Company financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.
Basis of Consolidation
The Group financial statements consolidate the financial statements of GB Group plc and its subsidiary undertakings drawn up to 31 March each year.
Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights; currently exercisable or convertible potential voting rights; or by way of contractual agreement. The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All intragroup balances and transactions, including unrealised profits arising from them, are eliminated.
Plant and Equipment
Plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated to write off cost less estimated residual value based on prices prevailing at the balance sheet date on a straight-line basis over the estimated useful life of each asset as follows:
Plant and equipment - over 3 to 10 years
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount.
An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the Statement of Comprehensive Income in the year the item is derecognised.
Residual values and estimated remaining lives are reviewed annually.
Business Combinations
GBGroup has applied the business combinations exemption in IFRS 1. It has not restated business combinations that took place prior to the 1 April 2004 transition date.
Business combinations from 1 January 2010
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it is not remeasured until it is finally settled within equity.
Goodwill is initially measured at cost being the excess of the aggregate of the acquisition-date fair value of the consideration transferred and the amount recognised for the non-controlling interest (and where the business combination is achieved in stages, the acquisition-date fair value of the acquirer's previously held equity interest in the acquiree) over the net identifiable amounts of the assets acquired and the liabilities assumed in exchange for the business combination. Assets acquired and liabilities assumed in transactions separate to the business combinations, such as the settlement of pre-existing relationships or post-acquisition remuneration arrangements are accounted for separately from the business combination in accordance with their nature and applicable IFRSs. Identifiable intangible assets, meeting either the contractual-legal or separability criterion are recognised separately from goodwill. Contingent liabilities representing a present obligation are recognised if the acquisition-date fair value can be measured reliably.
If the aggregate of the acquisition-date fair value of the consideration transferred and the amount recognised for the non-controlling interest (and where the business combination is achieved in stages, the acquisition-date fair value of the acquirer's previously held equity interest in the acquiree) is lower than the fair value of the assets, liabilities and contingent liabilities and the fair value of any pre-existing interest held in the business acquired, the difference is recognised in profit and loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units (or groups of cash generating units) that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or group of units to which goodwill is allocated shall represent the lowest level within the entity at which the goodwill is monitored for internal management purposes and not be larger than an operating segment before aggregation.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.
Impairment of Assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are recognised in the Statement of Comprehensive Income in those expense categories consistent with the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only on assets other than goodwill if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
Intangible Assets
Goodwill
Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill already carried in the balance sheet at 1 April 2004 or relating to acquisitions after that date is not amortised. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.
For the purpose of impairment testing, goodwill is allocated to the cash-generating unit expected to benefit from the synergies. Impairment is determined by assessing the recoverable amount of the cash-generating unit, including the related goodwill. Where the recoverable amount of the cash-generating unit is less than the carrying amount, including goodwill, an impairment loss is recognised in the Statement of Comprehensive Income. The carrying amount of goodwill allocated to a cash-generating unit is taken into account when determining the gain or loss on disposal of the unit, or an operation within it. Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.
Research and development costs
Research costs are expensed as incurred. An intangible asset arising from development expenditure on an individual project is recognised only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete and the availability to measure reliably the expenditure during the development. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Any expenditure capitalised is amortised on a straight line basis over 2 to 4 years.
Acquired intangibles
Separately identifiable intangible assets such as patent fees, licence fees, trademarks and customer lists and relationships are capitalised on the balance sheet only when the value can be measured reliably, or the intangible asset is purchased as part of the acquisition of a business. Such intangible assets are amortised over their useful economic lives on a straight line basis.
Separately identified intangible assets acquired in a business combination are initially recognised at their fair value. Intangible assets are subsequently stated at fair value or cost less accumulated amortisation and any accumulated impairment losses. Amortisation is recognised in the Consolidated Statement of Comprehensive Income on a straight-line basis over the estimated useful life of the asset. The carrying value of intangible assets is reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable.
Estimated useful lives typically applied are as follows:
· Technology based assets 2-3 years
· Brands and trademarks 2-3 years
· Customer relationships 10 years
The Company's Investments in Subsidiaries
In its separate financial statements the Company recognises its investments in subsidiaries at cost less any provision for impairment.
Interests in Associates
Associates are undertakings that are not subsidiaries or joint ventures over which the Group has significant influence and can participate in financial and operating policy decisions. Investments in associated undertakings are accounted for using the equity method. The Consolidated Statement of Comprehensive Income includes the Group's share of the profit or loss after tax of the associated undertakings. Investments in associates include goodwill identified on acquisition and are carried in the Consolidated balance sheet at cost plus post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in value.
Trade and Other Receivables
Trade receivables, which generally have 30-60 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectable amounts. A provision is made against a trade receivable only when there is objective evidence that the Group may not be able to recover the entire amount due under the original terms of the invoice. The carrying amount of the receivable is reduced through the use of a provision for doubtful debts account. Impaired debts are derecognised when they are assessed as uncollectible.
Cash and Short-Term Deposits
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity date of three months or less.
For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of any outstanding bank overdrafts.
Trade and other payables
Trade and other payables are initially recognised at their fair value and subsequently recorded using the effective interest method.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the Statement of Comprehensive Income net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Pensions
The Group does not have a contributory pension scheme. Payments are made to individual private defined contribution pension arrangements. Contributions are charged in the Statement of Comprehensive Income as they become payable.
Revenue Recognition
Revenue is measured at the fair value of the consideration received from the sale of software and rendering of services, net of value-added tax, rebates and discounts and after the elimination of inter-company transactions within the Group. Revenue is recognised as follows:
(a) Sale of software licences
Revenue in respect of software licences where the Group has no further obligations and the contract is non-cancellable is recognised at the time of sale. Revenue in respect of software licences where there are further contractual obligations, in the form of additional services provided by the Group, such as software delivered online is recognised over the duration of the licence in line with when the costs are incurred and delivery obligations fulfilled.
(b) Rendering of services
Revenue from the rendering of services is recognised by reference to the stage of completion. Stage of completion of the specific transaction is assessed on the basis of the actual services provided as a proportion of the total services to be provided. Where the Group is acting as an agent in a transaction and is not the primary obligor then revenue is reported net of amounts payable to the supplier.
(c) Interest income
Revenue is recognised as interest accrues using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to its net carrying amount.
(d) Rental income
Net rental income arising from the sub-let of properties under operating leases is reported as other operating income in the Statement of Comprehensive Income.
Exceptional Items
The Group presents as exceptional items on the face of the Statement of Comprehensive Income, those material items of income and expense which, because of the nature and expected infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better the elements of financial performance in the year, so as to facilitate comparison with prior periods and to assess better trends in financial performance.
Dividends
Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders.
Share-Based Payment Transactions
Employees (including directors) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares ('equity-settled transactions').
The Group has taken advantage of the exemption in IFRS 1 in respect of equity settled awards so as to apply IFRS 2 only to those equity settled awards granted after 7 November 2002 that had not vested on or before 1 January 2005.
Equity-Settled Transactions
The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted. The fair value is determined by an external valuation specialist using a binomial model. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of GB Group plc ('market conditions') and non-vesting conditions, if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ('the vesting date'). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The Statement of Comprehensive Income charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting conditions were satisfied, provided that all other vesting conditions are satisfied.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised over the remainder of the new vesting period for any modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it was granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.
The dilutive effect of outstanding options is reflected in the computation of earnings per share (see note 7).
Operating Leases
Payments made under operating leases (net of any incentives received from the lessor) are charged to the Statement of Comprehensive Income on a straight-line basis over the period of the lease.
Taxes
Current Tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, by the reporting date, in the countries where the Group operates and generates taxable income.
Deferred Income Tax
Deferred tax is recognised in respect of all temporary differences between the carrying amounts of assets and liabilities included in the financial statements and the amounts used for tax purposes that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exceptions:
No provision is made where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction which is not a business combination that at the time of the transaction affect neither accounting nor taxable profit.
No provision is made for deferred tax that would arise on all taxable temporary differences associated with investments in subsidiaries and interests in joint ventures, where the timing of the reversal of temporary differences can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised only to the extent that the directors consider that it is probable that there will be suitable taxable profits from which the future reversal of the underlying temporary differences and unused tax losses and credits can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which the asset is realised or liability settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
Foreign Currencies
The Company's functional currency and presentation currency is pounds sterling. Transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the Consolidated Statement of Comprehensive Income.
Finance Costs
Finance costs consist of interest and other costs that are incurred in connection with the borrowing of funds. Finance costs are expensed in the period in which they are incurred.
New Accounting Standards and Interpretations Applied
The accounting policies adopted in the preparation of these financial statements are consistent with those followed in the preparation of the financial statements for the year ended 31 March 2013, except for the adoption of relevant new Standards and Interpretations noted below. Adoption of these Standards and Interpretations did not have any effect on the financial position or performance of the Group and the Company.
| International Accounting Standards (IAS / IFRS) | Adoption date | |
| IAS 1 | Presentation of Items of Other Comprehensive Income - Amendments to IAS 1 | 1 July 2012 |
| IFRS 1 | Government Loans - Amendments to IFRS 1 | 1 January 2013 |
| IFRS 7 | Disclosures - Offsetting Financial Assets and Financial Liabilities - Amendments to IFRS 7 | 1 January 2013 |
| IFRS 13 | Fair Value Measurement | 1 January 2013 |
| IAS 19 | IAS 19 Employee Benefits (Revised) | 1 January 2013 |
| IFRS 1 | First-time Adoption of International Financial Reporting Standards - Repeated application of IFRS 1 | 1 January 2013 |
| IFRS 1 | First-time Adoption of International Financial Reporting Standards - Borrowing costs | 1 January 2013 |
| IAS 1 | Presentation of Financial Statements - Clarification of requirements for comparative information | 1 January 2013 |
| IAS 16 | Property, Plant and Equipment - Classification of servicing equipment | 1 January 2013 |
| IAS 32 | Financial Instruments: Presentation - Tax effects of distributions to holders of equity instruments | 1 January 2013 |
| IAS 34 | Interim Financial Reporting - Interim financial reporting and segment information for total assets and liabilities | 1 January 2013 |
| International Financial Reporting Interpretation Committee (IFRIC) | Adoption date | |
| IFRIC 20 | Stripping costs in the production of a surface mine | 1 January 2013 |
New Accounting Standards and Interpretations not Applied
During the year, the IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of these financial statements:
| International Accounting Standards (IAS / IFRS) | Effective date | |
| IFRS 10 | Consolidated Financial Statements | 1 January 2014 |
| IFRS 10 | Investment Entities (Amendments) | 1 January 2014 |
| IFRS 11 | Joint Arrangements | 1 January 2014 |
| IFRS 12 | Investment Entities (Amendments) | 1 January 2014 |
| IFRS 12 | Disclosure of Interests in Other Entities | 1 January 2014 |
| IAS 27 | Investment Entities (Amendments) | 1 January 2014 |
| IAS 27 | Separate Financial Statements | 1 January 2014 |
| IAS 28 | Investments in Associates and Joint Ventures | 1 January 2014 |
| IAS 32 | Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32 | 1 January 2014 |
| IAS 36 | Recoverable Amount Disclosures for Non-Financial Assets - Amendments to IAS 36 | 1 January 2014 |
| IAS 39 | Novation of Derivatives and Continuation of Hedge Accounting - Amendments to IAS 39 | 1 January 2014 |
| IAS 19 | Defined Benefit Plans: Employee Contributions - Amendments to IAS 19 | 1 July 2014 |
| IFRS 2 | Share-based Payment - Definitions of vesting conditions | 1 July 2014 |
| IFRS 3 | Business Combinations - Accounting for contingent consideration in a business combination | 1 July 2014 |
| IFRS 8 | Operating Segments - Aggregation of operating segments | 1 July 2014 |
| IFRS 8 | Operating Segments - Reconciliation of the total of the reportable segments' assets to the entity's assets | 1 July 2014 |
| IFRS 13 | Fair Value Measurement - Short-term receivables and payables | 1 July 2014 |
| IAS 16 | Property, Plant and Equipment - Revaluation method - proportionate restatement of accumulated depreciation/amortisation | 1 July 2014 |
| IAS 38 | Intangible Assets - Revaluation method - proportionate restatement of accumulated depreciation/amortisation | 1 July 2014 |
| IAS 24 | Related Party Disclosures - Key management personnel | 1 July 2014 |
| IFRS 1 | First-time Adoption of International Financial Reporting Standards - Meaning of 'effective IFRSs' | 1 July 2014 |
| IFRS 3 | Business Combinations - Scope exceptions for joint ventures | 1 July 2014 |
| IFRS 13 | Fair Value Measurement - Scope of paragraph 52 (portfolio exception) | 1 July 2014 |
| IAS 40 | Investment Property - Interrelationship between IFRS 3 and IAS 40 (ancillary services) | 1 July 2014 |
| IFRS 14 | Regulatory Deferral Accounts | 1 July 2016 |
| International Financial Reporting Interpretation Committee (IFRIC) | Effective date | |
| IFRIC 21 | Levies | 1 January 2014 |
The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group's or the Company's financial statements in the period of initial application.
Judgements and Key Sources of Estimation Uncertainty
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates.
In the process of applying the Group's accounting policies, management has made the following judgements and estimates, which have the most significant effect on the amounts recognised in the financial statements:
Impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy. Determining whether goodwill is impaired requires an estimation of the value in use and/or the estimated recoverable amount of the asset derived from the business, or part of the business, cash generating unit, to which the goodwill has been allocated. The value in use calculation requires an estimate of the present value of future cash flows expected to arise from the cash generating unit, by applying an appropriate discount rate to the timing and amount of future cash flows.
Management are required to make judgements regarding the timing and amount of future cash flows applicable to the cash generating unit, based on current budgets and forecasts, and extrapolated for an appropriate period taking into account growth rates and expected changes to sales and operating costs. Management estimate the appropriate discount rate using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the business or the individual cash generating unit.
Deferred tax assets
The amount of the deferred tax asset included in the balance sheet of the Group is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. In estimating the amount of the deferred tax asset that may be recognised, management make judgements, based on current budgets and forecasts, about the amount of future taxable profits and the timing of when these will be realised. The carrying value of the recognised deferred tax asset at 31 March 2014 was £2,127,000 (2013: £2,803,000) and the unrecognised deferred tax asset at 31 March 2014 was £1,449,000 (2013: £1,727,000).
Share-based payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Judgement is required in determining the most appropriate valuation model for a grant of equity instruments, depending on the terms and conditions of the grant. Management are also required to use judgement in determining the most appropriate inputs to the valuation model including expected life of the option, volatility and dividend yield. The assumptions and models used are disclosed in Note 12.
Valuation and asset lives of separately identifiable intangible assets
In determining the fair value of intangible assets arising on acquisition, management are required to make judgements regarding the timing and amount of future cash flows applicable to the businesses being acquired, discounted using an appropriate discount rate.
Such judgements are based on current budgets and forecasts, extrapolated for an appropriate period taking into account growth rates and expected changes to selling prices and operating costs. Management estimate the appropriate discount rate using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the businesses being acquired.
Review of impairment indicators on intangible assets
Management are required to make judgements in their assessment of any year end impairment indicators on individual intangible assets.
Contingent/deferred consideration
Contingent consideration relating to acquisitions is included based on management estimates of the most likely outcome (Note 15). Those judgements include the forecasting of a number of different outcomes against the performance targets and estimating a probability and risk of each outcome before arriving at a risk weighted value of contingent consideration.
3. REVENUE
Revenue disclosed in the Consolidated Statement of Comprehensive Income is analysed as follows:
| 2014 | 2013 | ||
| £'000 | £'000 | ||
| Sale of goods | 19,017 | 17,790 | |
| Rendering of services | # 22,818 | # 21,634 | |
| Revenue | 41,835 | 39,424 | |
| Finance revenue | 6 | 1 | |
| Total revenue | 41,841 | 39,425 |
GBGroup restructured its commercial relationship with BT last year in relation to the Technology & Supply and Distribution Agreements established in 2004. The renegotiated commercial terms of these agreements now mean that although GBGroup no longer receives a royalty for the use of its technology we no longer pay BT a proportion of the revenue associated with the transactions for clients served through ID3global. The net effect is that revenue associated with the Technology & Supply Agreement has reduced but at the same time, lower costs under the Distribution Agreement have been negotiated and, accordingly, overall margins have increased.
For ease of comparison, the revenue for the comparative period has been adjusted to illustrate the true underlying growth as follows:
Statutory results
| 2014 £'000 |
2013 £'000 |
Growth | |
| Revenue | 41,835 | 39,424 | 6% |
| Cost of sales | (14,473) | (16,663) | (13%) |
| Gross margin | 27,362 | 22,761 | 20% |
Adjusted results
| 2014 £'000 |
2013 £'000 |
Growth | Organic growth |
|
| Adjusted revenue | 41,835 | 36,344 | 15% | 10% |
| Cost of sales | (14,473) | (13,583) | 7% | 3% |
| Gross margin | 27,362 | 22,761 | 20% | 14% |
4. SEGMENTAL INFORMATION
The Group's operating segments are internally reported to the Group's Chief Executive Officer as two operating segments: Identity Proofing Division- which provides ID Verification and ID Employ & Comply services and Identity Solutions Division - which provides ID Registration, ID Engagement and ID Trace & Investigate services. The measure of performance of those segments that is reported to the Group's Chief Executive Officer is adjusted operating profit before amortisation of acquired intangibles as shown below.
All revenues and all non-current assets are derived from UK operations. Segment results include items directly attributable to either Identity Proofing or Identity Solutions. Unallocated items for 2014 represent Group head office costs £564,000, share of associate investment result £159,000, exceptional costs £1,080,000, Group finance income £6,000, Group finance costs £85,000, Group income tax charge £474,000 and share-based payments charge £747,000. Unallocated items for 2013 represent Group head office costs £504,000, share of associate investment result £146,000, exceptional costs £409,000, Group finance income £1,000, Group finance costs £85,000, Group income tax credit £831,000 and share-based payments charge £488,000.
Information on segment assets and liabilities is not regularly provided to the Group's Chief Executive Officer and is therefore not disclosed below.
| Identity Proofing |
Identity Solutions |
Unallocated | 2014 | ||||
| Year ended 31 March 2014 | £'000 | £'000 | £'000 | £'000 | |||
| Total revenue | 15,118 | 26,717 | - | 41,835 | |||
| Adjusted operating profit | 1,594 | 6,134 | (564) | 7,164 | |||
| Amortisation of acquired intangibles | (378) | (732) | - | (1,110) | |||
| Share-based payments charge | - | - | (747) | (747) | |||
| Exceptional items | - | - | (1,080) | (1,080) | |||
| Share of associate investment result | - | - | (159) | (159) | |||
| Operating profit | 1,216 | 5,402 | (2,550) | 4,068 | |||
| Finance revenue | 6 | 6 | |||||
| Finance costs | (85) | (85) | |||||
| Income tax charge | (474) | (474) | |||||
| Profit for the year | 3,515 | ||||||
CRD (UK) Limited which was acquired during the year has been absorbed and is managed in the Group's Identity Proofing operating segment.
| Identity Proofing |
Identity Solutions |
Unallocated | 2013 | ||||
| Year ended 31 March 2013 | £'000 | £'000 | £'000 | £'000 | |||
| Total revenue | 15,448 | 23,976 | - | 39,424 | |||
| Adjusted operating profit | 1,320 | 4,706 | (504) | 5,522 | |||
| Amortisation of acquired intangibles | (39) | (850) | - | (889) | |||
| Share-based payments charge | - | - | (488) | (488) | |||
| Exceptional items | - | - | (409) | (409) | |||
| Share of associate investment result | - | - | (146) | (146) | |||
| Operating profit | 1,281 | 3,856 | (1,547) | 3,590 | |||
| Finance revenue | 1 | 1 | |||||
| Finance costs | (85) | (85) | |||||
| Income tax credit | 831 | 831 | |||||
| Profit for the year | 4,337 | ||||||
TMG.tv Limited which was acquired during the prior year has been absorbed and was managed in the Group's Identity Proofing operating segment.
5. EXCEPTIONAL ITEMS
| 2014 | ||||
| £'000 | ||||
| Adjustments to deferred consideration provisions (see note 15) | (37) | |||
| Acquisition related costs (see note 15) | 752 | |||
| Costs associated with staff reorganisations | 115 | |||
| Provision for dilapidation obligations on leasehold property | 250 | |||
| Other | - | |||
| 1,080 |
| 6. DIVIDENDS PAID AND PROPOSED |
| 2014 £'000 |
2013 £'000 |
|||||||
| Declared and paid during the year | ||||||||
| Final dividend for 2013: 1.5p (2012: 1.375p) | 1,632 | 1,487 | ||||||
| Proposed for approval at AGM (not recognised as a liability at 31 March) | ||||||||
| Final dividend for 2014: 1.65p (2013: 1.5p) | 1,954 | 1,630 | ||||||
In addition, this year the Group will introduce a Dividend Reinvestment Plan (DRIP Plan) to shareholders. Details of the DRIP Plan will be sent to shareholders by mid-July 2014.
| 7. EARNINGS PER ORDINARY SHARE |
Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the basic weighted average number of ordinary shares in issue during the year.
| 2014 pence per share |
2014 £'000 |
2013 pence per share |
2013 £'000 |
|||||
| Profit attributable to equity holders of the parent | 3.2 | 3,515 | 4.0 | 4,337 | ||||
Diluted
Diluted earnings per share amounts are calculated by dividing the profit for the year attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
| 2014 | 2013 | |||
| No. | No. | |||
| Basic weighted average number of shares in issue | 109,631,288 | 108,313,878 | ||
| Dilutive effect of share options | 6,115,575 | 5,694,226 | ||
| Diluted weighted average number of shares in issue | 115,746,863 | 114,008,104 |
| 2014 pence per share |
2014 £'000 |
2013 pence per share |
2013 £'000 |
|||||
| Profit attributable to equity holders of the Company | 3.0 | 3,515 | 3.8 | 4,337 | ||||
Adjusted
Adjusted earnings per share is defined as adjusted operating profit less net finance costs divided by the basic weighted average number of ordinary shares of the Company.
| 2014 pence per share |
2014 £'000 |
2013 pence per share |
2013 £'000 |
|||||
| Adjusted operating profit | 6.5 | 7,164 | 5.1 | 5,522 | ||||
| Less net finance costs | (0.0) | (79) | (0.1) | (84) | ||||
| Adjusted earnings | 6.5 | 7,085 | 5.0 | 5,438 | ||||
8. PLANT AND EQUIPMENT
| Group | |||||||
| Plant and equipment | |||||||
| £'000 | |||||||
| Cost | |||||||
| At 1 April 2012 | 3,616 | ||||||
| Acquired on acquisition | 200 | ||||||
| Additions | 571 | ||||||
| Disposals | (19) | ||||||
| At 31 March 2013 | 4,368 | ||||||
| Acquired on acquisition | 17 | ||||||
| Additions | 916 | ||||||
| Disposals | (31) | ||||||
| At 31 March 2014 | 5,270 | ||||||
| Depreciation and impairment | |||||||
| At 1 April 2012 | 2,683 | ||||||
| Disposals | (14) | ||||||
| Provided during the year | 511 | ||||||
| At 31 March 2013 | 3,180 | ||||||
| Disposals | (23) | ||||||
| Provided during the year | 594 | ||||||
| At 31 March 2014 | 3,751 | ||||||
| Net book value | |||||||
| At 31 March 2014 | 1,519 | ||||||
| At 31 March 2013 | 1,188 | ||||||
| At 1 April 2012 | 933 |
The net book value in respect of assets held under finance leases and hire purchase agreements is £nil (2013: £nil).
| Company | |||||||
| £'000 | |||||||
| Cost | |||||||
| At 1 April 2012 | 3,506 | ||||||
| Acquired on acquisition* | 166 | ||||||
| Additions | 437 | ||||||
| Disposals | (19) | ||||||
| At 31 March 2013 | 4,090 | ||||||
| Acquired on acquisition** | 305 | ||||||
| Additions | 749 | ||||||
| Disposals | (31) | ||||||
| At 31 March 2014 | 5,113 | ||||||
| Depreciation and impairment | |||||||
| At 1 April 2012 | 2,666 | ||||||
| Disposals | (14) | ||||||
| Provided during the year | 453 | ||||||
| At 31 March 2013 | 3,105 | ||||||
| Disposals | (23) | ||||||
| Provided during the year | 514 | ||||||
| At 31 March 2014 | 3,596 | ||||||
| Net book value | |||||||
| At 31 March 2014 | 1,517 | ||||||
| At 31 March 2013 | 985 | ||||||
| At 1 April 2012 | 840 |
The net book value in respect of assets held under finance leases and hire purchase agreements is £nil (2013: £nil).
**On 1 January 2014, the trade, assets and liabilities of TMG.tv Limited and CRD (UK) Limited respectively were transferred to the Company.
*On 1 August 2012 and 1 September 2012, the trade, assets and liabilities of Data Discoveries Limited and Capscan Limited respectively were transferred to the Company.
9. INTANGIBLE ASSETS
| Group | Customer relationships £'000 |
Other acquisition intangibles £'000 |
Total acquisition intangibles £'000 |
Goodwill £'000 |
Internally developed software £'000 |
Total £'000 |
|||||
| Cost | |||||||||||
| At 1 April 2012 | 5,290 | 734 | 6,024 | 14,178 | 464 | 20,666 | |||||
| Additions - business combinations | 1,068 | 407 | 1,475 | 1,829 | - | 3,304 | |||||
| Additions - product development | - | - | - | - | 338 | 338 | |||||
| At 31 March 2013 | 6,358 | 1,141 | 7,499 | 16,007 | 802 | 24,308 | |||||
| Additions - business combinations | 879 | 170 | 1,049 | 535 | - | 1,584 | |||||
| Additions - product development | - | - | - | - | 239 | 239 | |||||
| At 31 March 2014 | 7,237 | 1,311 | 8,548 | 16,542 | 1,041 | 26,131 | |||||
| Amortisation and impairment | |||||||||||
| At 1 April 2012 | 238 | 120 | 358 | - | 263 | 621 | |||||
| Impairment charge | - | - | - | - | 69 | 69 | |||||
| Amortisation during the year | 574 | 315 | 889 | - | 23 | 912 | |||||
| At 31 March 2013 | 812 | 435 | 1,247 | - | 355 | 1,602 | |||||
| Amortisation during the year | 702 | 408 | 1,110 | - | 90 | 1,200 | |||||
| At 31 March 2014 | 1,514 | 843 | 2,357 | - | 445 | 2,802 | |||||
| Net book value | |||||||||||
| At 31 March 2014 | 5,723 | 468 | 6,191 | 16,542 | 596 | 23,329 | |||||
| At 31 March 2013 | 5,546 | 706 | 6,252 | 16,007 | 447 | 22,706 | |||||
| At 1 April 2012 | 5,052 | 614 | 5,666 | 14,178 | 201 | 20,045 | |||||
The customer relationships intangible asset acquired through the acquisition of Capscan Parent Limited has a carrying value of £3,575,000 and a remaining amortisation period of 7.6 years. The customer relationships intangible asset acquired through the acquisition of TMG.tv Limited has a carrying value of £917,000 and a remaining amortisation period of 8.6 years. The customer relationships intangible asset acquired through the acquisition of CRD (UK) Limited has a carrying value of £813,000 and a remaining amortisation period of 9.25 years.
Goodwill arose on the acquisition of GB Mailing Systems Limited, e-Ware Interactive Limited, Data Discoveries Holdings Limited, Advanced Checking Services Limited, Capscan Parent Limited, TMG.tv Limited and CRD (UK) Limited. Under IFRS, goodwill is no longer amortised and is annually tested for impairment.
An impairment charge of £69,000 in 2013 represented a partial write-down on a piece of internally developed software where the expected value in use was lower than the carrying value of the asset.
| Company | Development costs £'000 |
|
| Cost | ||
| At 1 April 2012 | 464 | |
| Additions - product development | 307 | |
| At 31 March 2013 | 771 | |
| Additions - product development | 226 | |
| At 31 March 2014 | 997 | |
| Amortisation and impairment | ||
| At 1 April 2012 | 263 | |
| Impairment charge | 69 | |
| Amortisation during the year | 22 | |
| At 31 March 2013 | 354 | |
| Amortisation during the year | 85 | |
| At 31 March 2014 | 439 | |
| Net book value | ||
| At 31 March 2014 | 558 | |
| At 31 March 2013 | 417 | |
| At 1 April 2012 | 201 |
An impairment charge of £69,000 in 2013 represented a partial write-down on a piece of internally developed software where the expected value in use was lower than the carrying value of the asset.
10. INVESTMENTS IN ASSOCIATES
The Group has a 26.85% (2013: 27.15%) interest in Loqate Inc., a private company which develops international addressing solutions, based in the USA. The associated undertaking is accounted for in the consolidated accounts using the equity method. The relative holding in Loqate decreased overall in the year as a result of the overall shares in issue increasing as a consequence of the issue of additional shares upon the exercise of executive share options.
The following table illustrates summarised financial information of the Group's investment in Loqate Inc:
| 2014 | 2013 | |||||
| £'000 | £'000 | |||||
| At 1 April | 154 | 58 | ||||
| Additional investment | 15 | 242 | ||||
| Share of loss for the period | (159) | (146) | ||||
| At 31 March | 10 | 154 | ||||
The Group's share of the results of its associate, which is unlisted, and its aggregate assets and liabilities, are as follows:
| 2014 | 2013 | |||||
| £'000 | £'000 | |||||
| Share of balance sheet: | ||||||
| Total assets | 351 | 180 | ||||
| Total liabilities | (430) | (116) | ||||
| (79) | 64 | |||||
| Share of results: | ||||||
| Revenue | 509 | 296 | ||||
| Loss after tax | (159) | (146) | ||||
| Share of associate investment result | (159) | (146) |
On 12 April 2013, the Group made an additional investment of £15,000 for 73,533 new shares in Loqate Inc.
| 11. | EQUITY SHARE CAPITAL | ||||||
| 2014 | 2013 | ||||||
| £'000 | £'000 | ||||||
| Authorised | |||||||
| 147,663,704 (2013: 147,663,704) ordinary shares of 2.5p each | 3,692 | 3,692 | |||||
| Issued | |||||||
| Allotted, called up and fully paid | 2,754 | 2,713 | |||||
| Allotted, called up and awaiting payment | - | 4 | |||||
| Share premium | 12,210 | 11,831 | |||||
| 14,964 | 14,548 | ||||||
| 2014 | 2013 | ||||||
| No. | No. | ||||||
| Number of shares in issue at 1 April | 108,690,929 | 107,956,494 | |||||
| Issued on exercise of share options | 1,458,537 | 734,435 | |||||
| Number of shares in issue at 31 March | 110,149,466 | 108,690,929 |
During the year, the Company received or was due to receive £416,000 (2013: £203,000) on the issue of shares. The nominal value of these shares was £37,000 (2013: £18,000).
12. 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 growth is greater than the growth of the Retail Prices Index (RPI) over a 3 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 per cent. 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 per cent. 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 GBGroup shares can receive up to a multiple of their original investment in GBGroup 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 3 years. Share Matching Plan options will only become exercisable to the extent they have vested in accordance with the Adjusted EPS target.
GB 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 £747,000 (2013: £488,000).
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year.
| 2014 No. |
2014 WAEP |
2013 No. |
2013 WAEP |
||||
| Outstanding as at 1 April | 8,481,133 | 24.55p | 7,385,225 | 23.76p | |||
| Granted during the year | 1,299,869 | 31.08p | 1,832,343 | 12.96p | |||
| Forfeited during the year | (4,342) | 76.80p | (2,000) | 32.50p | |||
| Cancelled during the year | - | - | - | - | |||
| Exercised during the year | (1,458,537) | 28.41p1 | (734,435) | 27.66p2 | |||
| Expired during the year | (190,000) | 21.50p | - | - | |||
| Outstanding at 31 March | 8,128,123 | 24.91p | 8,481,133 | 24.55p | |||
| Exercisable at 31 March | 3,290,998 | 27.72p | 3,302,498 | 28.64p |
1 The weighted average share price at the date of exercise for the options exercised is 102.45p
2 The weighted average share price at the date of exercise for the options exercised is 84.95p
For the shares outstanding as at 31 March 2014, the weighted average remaining contractual life is 6.4 years (2013: 6.7 years).
The weighted average fair value of options granted during the year was 63.50p (2013: 54.46p). The range of exercise prices for options outstanding at the end of the year was 2.50p - 94.00p (2013: 2.50p - 94.00p).
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 2014 and 31 March 2013.
| 2014 | 2013 | |||
| Dividend yield (%) | 1.6 | 1.6 - 2.0 | ||
| Expected share price volatility (%) | 30 | 35 | ||
| Risk-free interest rate (%) | 0.5 -1.3 | 0.2 - 0.9 | ||
| 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) | 3.0 | 3.0 | ||
| Exercise price (p) | 2.50 - 76.80 | 2.50 - 94.00 | ||
| Weighted average share price (p) | 94.85 | 77.95 |
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 chose 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.
13. 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 | |||||
| Associates: | |||||||
| 2014 | - | 60 | - | ||||
| 2013 | - | 107 | 54 | ||||
| Directors (see below): | |||||||
| 2014 | - | 30 | - | ||||
| 2013 | - | 18 | - | ||||
| Other related parties (see below): | |||||||
| 2014 | 26 | - | (4) | ||||
| 2013 | - | - | - | ||||
| Company | Sales to related parties | Purchases from related parties | Net amounts owed to/(by) related parties | ||||
| £'000 | £'000 | £'000 | |||||
| Subsidiaries: | |||||||
| 2014 | 634 | 28 | 6,760 | ||||
| 2013 | 566 | 32 | 5,358 | ||||
| Associates: | |||||||
| 2014 | - | 60 | - | ||||
| 2013 | - | 95 | 54 | ||||
| Directors (see below): | |||||||
| 2014 | - | 30 | - | ||||
| 2013 | - | 18 | - | ||||
| Other related parties (see below): | |||||||
| 2014 | 26 | - | (4) | ||||
| 2013 | - | - | - |
The Chairman of the Company undertakes some general and operational consultancy for the business outside of his directorship remit through his consultancy business Rasche Consulting Limited.
During the 2014 year, the Chief Executive of the Company became a director of Car Loan 4U Limited which is a client of the Group. Transactions with them have been reported under the heading of 'other related parties' in the table above.
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 2014, the Group has not made any provision for doubtful debts relating to amounts owed by related parties (2013: nil).
Compensation of key management personnel (including directors)
| Group & Company |
| 2014 | 2013 | ||||
| £'000 | £'000 | ||||
| Short-term employee benefits | 1,092 | 828 | |||
| Post-employment benefits | 72 | 60 | |||
| Fair value of share options awarded | 336 | 530 | |||
| 1,500 | 1,418 |
14. BUSINESS COMBINATIONS
Group
Acquisition of CRD (UK) Limited
On 2 July 2013, the Company acquired 100% of the voting shares of CRD (UK) Limited ("CRD"), an unlisted company based in the United Kingdom providing criminal record checking services to UK organisations. The Company acquired CRD to broaden its client portfolio in the employment screening market. The Consolidated Statement of Comprehensive Income includes the results of CRD for the nine month period from the acquisition date.
The fair value of the identifiable assets and liabilities of CRD as at the date of acquisition was:
| Fair value recognised on acquisition £'000 |
||
| Assets | ||
| Brand and technology intellectual property | 160 | |
| Customer relationships | 879 | |
| Non-compete agreements | 10 | |
| Plant and equipment | 17 | |
| Trade and other receivables | 76 | |
| Cash | 449 | |
| Trade and other payables | (592) | |
| Deferred tax liabilities | (214) | |
| Total identifiable net assets at fair value | 785 | |
| Goodwill arising on acquisition | 535 | |
| Total purchase consideration transferred | 1,320 | |
| Purchase consideration: | ||
| Cash | 1,320 | |
| Total purchase consideration | 1,320 | |
| Analysis of cash flows on acquisition: | ||
| Transaction costs of the acquisition (included in cash flows from operating activities) | (65) | |
| Net cash acquired with the subsidiary (included in cash flows from investing activities) | 449 | |
| Cash paid | (1,320) | |
| Net cash outflow | (936) |
The fair value of the acquired receivables amounts to £76,000. The gross amount of receivables is £77,000. None of the receivables have been impaired and it is expected that the full contractual amounts can be collected.
The goodwill recognised above is attributed to intangible assets that cannot be individually separated and reliably measured due to their nature. These items include the expected value of synergies and an assembled workforce. None of the goodwill is expected to be deductible for income tax purposes. Goodwill recognised differs by £94,000 to the value initially determined at 30 September 2013 due to a revision to the value of accruals on acquisition.
The transaction costs of £65,000 associated with this acquisition have been expensed and are included in exceptional items in the Consolidated Statement of Comprehensive Income and are part of operating cash flows in the Cash Flow Statement.
From the date of acquisition until the trade was transferred to the Company on 1 January 2014, CRD contributed £239,000 of revenue and operating profits before exceptionals of £106,000 to the Group. If the combination had taken place at the beginning of the year, the Group profit before taxation for the period would have been £4,036,000 and revenue would have been £41,958,000.
Other business combination adjustments
During the six months ended 30 September 2013, settlements of £447,000 and £110,000 were made relating to the acquisitions of Capscan Parent Limited and TMG.tv Limited respectively, resulting in reduction in the deferred consideration liability on the balance sheet.
Exceptional items
The exceptional items associated with the costs of acquisitions within note 5 also include additional costs related to other acquisition related activities during the year. The exceptional costs incurred in the year related to acquisitions include costs associated with the acquisition of DecTech Solutions Pty Ltd which took place on 9 May 2014 and is disclosed in Note 16.
Company
Acquisition of TMG.tv Limited
On 1 January 2014, the Company acquired the trade, assets and liabilities of TMG.tv Limited at book value. Details of the assets and liabilities that were transferred to the Company were as follows:
| Fair value £'000 |
||
| Assets | ||
| Plant and equipment | 292 | |
| Trade and other receivables | 1,053 | |
| Cash | 954 | |
| Trade and other payables | (977) | |
| Total net assets at fair value | 1,322 | |
The Directors believe that the fair values of the assets and liabilities were equal to the book values.
Consideration for the transfer was equal to the book value of total net assets and was settled through intercompany accounts.
The fair value of the acquired receivables amounts to £1,053,000. The gross amount of receivables is £1,053,000. None of the receivables have been impaired and it is expected that the full contractual amounts can be collected.
Acquisition of CRD (UK) Limited
On 1 January 2014, the Company acquired the trade, assets and liabilities of CRD (UK) Limited at book value. Details of the assets and liabilities that were transferred to the Company were as follows:
| Fair value £'000 |
||
| Assets | ||
| Plant and equipment | 13 | |
| Trade and other receivables | 63 | |
| Cash | 590 | |
| Trade and other payables | (618) | |
| Total net assets at fair value | 48 | |
The Directors believe that the fair values of the assets and liabilities were equal to the book values.
Consideration for the transfer was equal to the book value of total net assets and was settled through intercompany accounts.
The fair value of the acquired receivables amounts to £63,000. The gross amount of receivables is £63,000. None of the receivables have been impaired and it is expected that the full contractual amounts can be collected.
15. DEFERRED/CONTINGENT CONSIDERATION
| Group & Company | ||||||
| 2014 | 2013 | |||||
| £'000 | £'000 | |||||
| At 1 April | 1,307 | 571 | ||||
| Recognition on the acquisition of subsidiary undertakings | - | 860 | ||||
| Reversal of contingent consideration to the Income Statement | - | (124) | ||||
| Settlement of consideration | (557) | - | ||||
| At 31 March | 750 | 1,307 | ||||
The opening balance at 1 April 2013 represented deferred consideration amounts relating to the acquisition of Capscan Parent Limited and both deferred and contingent consideration amounts relating to the acquisition of TMG.tv Limited. During the year a final payment of £447,000 was made to settle the outstanding deferred consideration obligation on the acquisition of Capscan Parent Limited and a payment of £110,000 was made relating to the deferred consideration on the acquisition of TMG.tv Limited. The closing balance at 31 March 2014 relates to a provision for contingent consideration to the previous owners of TMG subject to certain revenue targets being met for the period to 30 June 2014.
16. POST BALANCE SHEET EVENTS
Acquisition of DecTech
On 9 May 2014, the Group acquired the entire share capital of DecTech Solutions Pty Limited. This acquisition is for an initial consideration of A$26.5 million (approximately £14.6 million).
As part of the share sale and purchase agreement, a further amount of up to a maximum of A$11.5 million (approximately £6.4 million) has been agreed which is payable in two tranches at 12 and 24 months from the acquisition date, subject to DecTech achieving revenue and margin targets.
As the completion accounts are yet to be finalised, no information has been disclosed at this time on the fair value of assets and liabilities acquired and goodwill arising.
Part of the consideration was funded through a separate placing of 8,000,000 new ordinary shares in the capital of GB Group plc which were admitted to trading on 28 April 2014. This placing raised £10.7 million.
Part of the consideration was also funded through an Australian dollar term three year loan for A$10 million (approximately £5.5 million). The debt bears an interest rate of +1.90% above the Australian Dollar bank bill interest swap rate ('BBSW'). Security on the debt is provided by way of an all asset debenture.
Further details of the acquisition are set out in a separate regulatory announcement released on 24 April 2014.
OTHER INFORMATION
i. The financial information set out herein does not constitute the Company's statutory accounts for the years ended 31 March 2014 or 2013 but is derived from those accounts. The financial information has been prepared using accounting policies consistent with those set out in the annual report and accounts for the year ended 31 March 2013. Statutory accounts for 2013 have been delivered to the Registrar of Companies, and those for 2014 will be delivered in due course. The auditors have reported on those accounts; their report was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain any statements under Section 498(2) or (3) of the Companies Act 2006.
ii. The annual results announcement was approved by the Board of Directors of GB Group plc on 2 July 2014.
iii. The ex-dividend date is 23 July 2014; the record date is 25 July 2014; the payment date is 29 August 2014.
iv. In addition, in respect of this year's dividend, the Group will introduce a Dividend Reinvestment Plan allowing eligible shareholders to reinvest their dividends into GBGroup shares. Details of the DRIP Plan will be sent to shareholders by mid-July 2014.
v. The AGM will take place on 12 August 2014.
vi. The 2014 interim results announcement is expected week commencing 24 November 2014.
vii. This report will also be available on the GB Group web site: www.gbgplc.com from 2 July 2014.
viii. The Company intends to dispatch to shareholders copies of the full annual report and accounts for the year to 31 March 2014 and to make it available on the Group's website (www.gbgplc.com) by 18 July 2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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