GB GROUP PLC — Earnings Release 2015

Jun 1, 2015

National Storage Mechanism | Additional information You don't have Javascript enabled. For full functionality this page requires javascript to be enabled. RNS Number : 7317O GB Group PLC 01 June 2015 Embargoed until 7.00 a.m. 1 June 2015 GB GROUP PLC ("GBGroup", "GBG", the "Group" or the "Company") Annual Results for the Year Ended 31 March 2015 GB Group plc (AIM: GBG), the identity data intelligence specialist, is pleased to announce its annual results for the year ended 31 March 2015. Financial Highlights · Strong revenue growth and margin improvements resulted in profits ahead of market expectations o 37% revenue growth to £57.3 million (2014: £41.8 million), with organic revenue growth of 15% (2014: 10%) o 51% increase in adjusted† operating profits to £10.8 million (2014: £7.2 million) o 35% increase in adjusted basic earnings per share to 8.8p (2014: 6.5p) o 49% increase in profit before tax (after exceptional costs) to £5.9 million (2014: £4.0 million) · Solid balance sheet and strong cash generation, resulting in cash balances of £15.8 million (2014: £11.8 million) after dividend payment (£2.0 million) and acquisition investing spend (£18.7 million) · A progressive 12% increase to the proposed dividend for 2015 to 1.85 pence (2014: 1.65 pence). Operational Highlights · Successful acquisition and integration of DecTech and CDMS Limited (t/a Transactis) into the Group during the year. · GBG selected by the UK Government as an identity assurance provider on the new GOV.UK Verify service. · Notable client wins for the year include disruptive banking and payments providers Stripe and Holvi; retailers Waitrose and John Lewis; and the UK's Serious Fraud Office. Commenting, Richard Law, Chief Executive, said: "The Group has had a successful year and I expect this positive trend to continue. I am very pleased with the strong performance to the start of the new financial year which has included the important acquisition of Loqate Inc. in April 2015, extending GBG's suite of solutions and geographic reach. As we look to 2016 and beyond, I am confident that we have the right vision, and strategy and most importantly the right team in place to deliver our key objective of continued profitable growth." 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. 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 020 7418 8900 Newgate (Financial PR Adviser) Andrew Jones 020 7680 6550 Website www.gbgplc.com Chairman's Statement The financial year ending 31 March 2015 was another successful one for GBG. We have continued the upward trajectory of both our revenue and profit and the successful integration of the DecTech and CDMS (Transactis) businesses further enhance our growth potential. The extension of our capabilities and territorial reach has been well received and will help us to increase sales to existing and potential clients. GBG's financial performance continues to impress the market. Revenues increased by 37%, of which 15% was delivered organically. Even more pleasing is the translation of this top line performance to the Group's adjusted operating profitᶧ, which increased by 51% year-on-year resulting in increased adjusted earnings per share of 35%. Shareholder return is important to us and I am pleased to report that this year, our total shareholder return has again outperformed the FTSE Techmark (All Share) index. Since the year end, we completed the acquisition of Loqate Inc. which strengthens our leading position in global identity data intelligence, as well as our ability to address target markets. This year's results are testament to the commitment and expertise of GBG's team and, on behalf of the Board and shareholders, I would like to thank all our employees for their very considerable efforts. Dividend The Board has recommended a 12% increase to the dividend to 1.85 pence (2014: 1.65 pence), continuing our progressive dividend growth - this is reflective of the exceptional prospects of our business. This is subject to approval at the Annual General Meeting and, should it receive approval, the dividend will be paid on 28 August 2015 to those shareholders whose names were on the Register of Members on 24 July 2015. The Group, once again, will offer eligible shareholders the choice to reinvest their dividends back into GBG shares by way of the Dividend Reinvestment Plan. Rebranding In April, the Group launched the new, progressive "GBG" brand. The rebranding follows a period of expansion and has been developed to assist the enlarged business in its planned future growth, both in the UK and internationally. We are also increasing our marketing focus across key sectors and international territories. Outlook This year has been one of significant progress. The market continues to show an increased demand for identity data intelligence solutions and GBG's leadership in this area continues to drive growth. This is especially true of the increasing number of clients that we serve with multiple products across multiple geographies. We will remain alert to any strategic acquisition opportunities which enable us to add momentum and capture growth in dynamic markets. Our people and solutions are our key differentiators and we will maintain investment in our talent and technology in order to take advantage of the opportunities that lie ahead. The Group has strong recurring revenue and a robust pipeline which gives the Board considerable confidence in future sustained growth. D A Rasche Chairman ᶧAdjusted 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. Chief Executive's Review Overview GBG has had a very successful year delivering on our strategy and achieving a strong financial performance which I expect to see continue in the year ahead. The commitment and hard work of our expanding team has enabled us to deliver growth in every area of our business. We have also increased our capabilities and geographical reach through a series of acquisitions during the year. Our enhanced offering has proven to be invaluable to our clients and has extended our leading position in the global identity data intelligence market. As a result, revenues from international clients now account for 19% (2014: 9%) of GBG's business. We have attracted new clients during the year, including high profile, global businesses such as Microsoft. Our clients are relying on GBG's services to understand and engage with their customers, comply with increasing regulation and identify potential fraudulent behaviour. We are helping to address our clients' need for varied, accurate and up-to-date intelligence to support mission critical applications, making us an integral part of their operations. Our Vision GBG's services provide organisations with the intelligence they need to make informed decisions about people, whether they are customers, potential employees or volunteers working with children or vulnerable adults. GBG is expertly placed as a trusted partner of many of the world's largest data owners and aggregators giving us a unique insight into how the world works. We have already helped to innovate and improve processes across a diverse range of sectors from financial services to online retail. We believe that the demand for intelligence to inform better decisions is growing rapidly. As data continues to fuel the digital economy and geographic boundaries are becoming less restrictive, GBG aims to internationalise its products and services, providing some of the world's leading private and public organisations with the intelligence they need to make good business decisions, regardless of their location. Financial Performance The Group's strong performance has continued, with revenues increasing by 37% to £57.3 million (2014: £41.8 million). Organic revenue growth was 15% with the balance coming from the acquisitions of DecTech and CDMS (Transactis) made during the year. These acquisitions have further strengthened our identity data intelligence portfolio and both businesses have been successfully integrated, performing very well in the period. As a result of this combined organic and acquisitive growth, we have seen a 51% increase in adjusted operating profit to £10.8 million (2014: £7.2 million), which was ahead of market expectations. Over the course of the year, deferred revenue in the balance sheet (in respect of amounts invoiced under annual contracts, which will be recognised in future periods) also increased by £3.2 million to £9.9 million, representing significant future value for the Group. We continue to be highly cash generative and our cash balance at 31 March 2015 was £15.8 million (2014: £11.8 million), with net cash balance of £11.4 million (2014: £11.8 million). Cash expenditure on acquisitions during the year was £18.7 million. Identity Proofing (IDP) The IDP business, which provides domestic and international electronic ID verification and employee screening solutions, saw revenues increase by 66% to £25.2 million (2014: £15.1 million). Adjusted operating profit was up by 170% to £4.3 million. We successfully launched the second phase of GBG-ID3global, our international identity verification solution, and have also expanded our verification capabilities into five new countries. This enables us to provide ID verification for over 4 billion citizens globally representing 55% of the world's population. Following the acquisition of DecTech,our existing client, Skybet, added to its portfolio of GBG services by including DecTech's ID monitoring software, to aid fraud protection. This supports our belief that there are significant cross-selling opportunities from the integration of DecTech's services into GBG's global offering. Dectech's revenues have seen strong momentum since the acquisition. IDP added a number of new clients during the year, including Taskrabbit and Skrill, as well as disruptive banking and payments providers such as Stripe and Holvi. In March 2015, GBG was selected by the UK Government as an identity assurance provider for the new GOV.UK Verify service. GBG will be offering the service to citizens directly through the GOV.UK Verify portal under our own brand, CitizenSafe®. We have also been chosen by Royal Mail to be its ID verification partner on this project. This means that GBG's technology is behind two of the nine verification options available. The project is in its early stages but we are encouraged by the potential of this Government initiative. Identity Solutions (IDS) The IDS business, which provides domestic and international identity-based registration, tracing and engagement solutions, made good progress in increasing its organic revenues by 20% to £32.1 million (2014: £26.7 million) and extending adjusted operating profit by 15% to £7.1 million. This year, IDS launched a new and improved version of its trace and investigate product, GBG Connexus (formerly known as e-Trace). In October, GBG Connexus was voted 'Best Newcomer' at the 2014 Retail Fraud awards. We also completed the first phase of our plan to synchronise offline and online identity data, such as social media profiles, giving a more complete view of a customer's identity characteristics. This is now available as part of GBG Matchcode, GBG DataCare and GBG Connexus products. New clients added by IDS during the year included Waitrose, John Lewis, CRIF, Worldpay and the UK's Serious Fraud Office. Acquisitions During the financial year, Dectech and Transactis have been successfully integrated into the Group. Furthermore, in April 2015 we announced the acquisition of US-based Loqate Inc., a provider of specialist international location-based software and data. GBG was an early investor in Loqate and we have seen this business grow strongly, building impressive, strategic relationships with partners such as IBM, Oracle, Pitney Bowes and Software AG. This acquisition is a good strategic fit for GBG, adding products and services that are highly complementary to those we already offer and provides us with an established presence on the West Coast of the US. Current Trading & Outlook We have delivered an impressive year and we have seen a strong performance in the start of the new financial year. As we look to 2016 and beyond, I am confident that we have the right vision, strategy and, most importantly, the right team in place to deliver our key objective of continued profitable growth. The skills, knowhow and dedication of our people are what drives our innovation, differentiates us from our competitors and fuels our success. By supporting and engaging with our employees, developing and acquiring the best products and services and adopting a market-leading customer-centric stance, we are on course to develop GBG into a globally recognised brand, delivering value for our people, our clients and our shareholders. R A Law Chief Executive Strategic Report and Finance Review Principal Activities and Business Review GB Group PLC ('GBG') and subsidiaries' (together 'the Group') principal activity is the provision of identity data intelligence services. GBG 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, our vision is to inform business decisions between people and organisations globally. 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, ID Employ & Comply services for employee authentication and screening and ID Fraud & Risk Management services. · 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 six 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. · ID Fraud & Risk Management Solutions, which provides fraud detection, risk management and customer on-boarding 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 leader in identity data intelligence, informing business decisions between people and organisations globally. 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 and product 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. The following description of the Group's performance is complemented by the segmental analysis in note 4 which show the contributions from the Identity Solutions and Identity Proofing segments. The overall impact of our acquisitions in the year will not be fully evident in our segments until 2016. 2015 2014 Increase/ (Decrease) Increase/ (Decrease) £'000 £'000 £'000 % Revenue 57,283 41,835 15,448 37% Adjusted operating profit 10,790 7,164 3,636 51% Share based payments (971) (747) (224) 30% Amortisation of acquired intangibles (1,986) (1,110) (876) 79% Operating profit before exceptional items and associate result 7,833 5,307 2,526 48% Exceptional items (1,629) (1,080) (549) 51% Share of associate investment result (10) (159) 149 94% Net finance costs (266) (79) (187) 237% Group profit before tax 5,928 3,989 1,939 49% Total tax charge (1,127) (474) (653) 138% Group profit for the year attributable to shareholders 4,801 3,515 1,286 37% Adjusted earnings† 10,524 7,085 3,439 49% Basic weighted average number of shares ('000) 119,114 109,631 9,483 9% Adjusted basic earnings per share (p) † 8.8 6.5 2.3 35% † 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. 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 2015 whilst being underpinned by solid organic revenue growth of 15%. Adjusted operating profit for the year increased by 51% to £10.8 million, reflecting: · Revenue growth of 37% to £57.3 million. This increase included adjusted organic growth of 15%; and · an improvement in the adjusted operating profit margin which increased from 17.1% to 18.8%, notwithstanding continued investment for growth over the year. Adjusted basic earnings per share improved 35% to 8.8p (2014: 6.5p). Basic earnings per share increased 25% to 4.0p (2014: 3.2p). Group cash conversion was strong with net cash generated from operating activities of £11.3 million (2014: £9.4 million) compared to operating profit before depreciation, amortisation, fair value adjustments, share of associate investment result, share-based payments and exceptional items (Adjusted EBITDA) of £11.8 million (2014: £7.8 million). The Group's balance sheet and financing ability remain strong. Adjusted EBITDA Adjusted EBITDA was £11.8 million (2014: £7.8 million), consisting of adjusted operating profit of £10.8 million (2014: £7.2 million) and depreciation/amortisation of £1.0 million (2014: £0.6 million). Exceptional Items Exceptional costs of £1.6 million (2014: £1.1 million) were incurred by the Group in the year and have been detailed in note 5. Net Finance Costs/Income The Group has incurred net finance costs for the year of £266,000 (2014: £79,000). The increase in net finance costs was due to interest payable on new borrowings made during the year as detailed in note 12. Acquired Intangibles Amortisation The charge for the year of £2.0 million (2013: £1.1 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 2015 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 £1.1 million (2014: £0.5 million) reflects permanent differences arising in the year, partially offset by the recognition of previously unrecognised deferred tax assets relating to share options. There was £532,000 of current tax payable on the Group's profits in the year (2014: £60,000) principally as a result of foreign tax on overseas operations. Dividend The Board of Directors will propose a final ordinary dividend of 1.85 pence per share (2014: 1.65 pence per share), amounting to £2.2 million (2014: £2.0 million). The final ordinary dividend with respect to the year ended 31 March 2015, if approved, will be paid on 28 August 2015 to ordinary shareholders whose names were on the register on 24 July 2015. The Group continue to operate a Dividend Reinvestment Plan allowing eligible shareholders to reinvest their dividends into GBG shares. 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 £10.5 million (2014: £7.1 million) resulting in a 35% increase in adjusted earnings per share from 6.5p to 8.8p. The weighted average number of shares at 31 March 2015 increased to 119.1 million (2014: 109.6 million). Cash Flows Group operating activities generated £11.3 million of cash and cash equivalents (2014: £9.4 million) representing an increase of 20% and an Adjusted EBITDA to cash conversion ratio of 96% (2014: 120%). 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 51% to £10.3 million (2014: £6.8 million). Group investing activities resulted in net outflows of £20.7 million (2014: £2.6 million) including £18.7 million (2014: £1.4 million) in respect of acquisitions/investments, £2.0 million (2014: £0.9 million) on plant and equipment purchases and £0.1 million on product development (2014: £0.2 million). Financing activities generated £13.4 million (2014: £1.3 million consumption) of net cash in the year and included £11.0 million raised from share issues, £4.7m of net new borrowings and £2.0 million of dividends paid (2014: £1.6 million). The Group's overall cash and cash equivalents increased by £3.9 million (2014: £5.5 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 DecTech Solutions Pty Ltd, an unlisted company based in Australia and CDMS Limited, an unlisted company based in the UK. The total cash consideration paid for these business, net of cash acquired, was £18.2 million with further contingent consideration payable in future years. In addition to this payment, a total of £0.5 million of contingent consideration was paid out in the year relating to an acquisition which took place in a previous year. Further information on these acquisitions and the contingent consideration can be found in notes 16 and 17. Deferred Income Deferred income balances at the end of the year increased by 47% to £9.9 million (2014: £6.7 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 continued strong contracted sales growth which will deliver their revenues and profits in future 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 2015 were £46.1 million, an increase of £15.3 million on the 2014 level of £30.8 million. This growth is driven by the increase in equity capital of £11.5 million combined with the total comprehensive income for the year of £4.1 million, less dividends paid of £2.0 million and after adjusting for share based payments and deferred tax on share based payments of £1.0 million and £0.7 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. · 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™, ID3global, and criminal records checking 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 2015 2014 Revenue growth 36.9% 15.1% Organic revenue growth 15.0% 10.3% Identity Proofing revenue growth 66.5% 22.2% Identity Solutions revenue growth 20.2% 11.4% Adjusted operating profit (£'000) 10,790 7,164 Adjusted operating profit % 18.8% 17.1% Adjusted EBITDA (£'000) 11,844 7,848 Adjusted EBITDA % 20.7% 18.8% Earnings per share - basic 4.0p 3.2p Earnings per share - adjusted basic 8.8p 6.5p Cash (£'000) 15,778 11,846 Deferred income balances (£'000) 9,906 6,734 Underlying identity verifications (million) 20.8 17.6 KYC countries 35 30 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, short-term deposits and borrowings 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 reasonable 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. The Group is exposed to a variety of financial risks including: market risk (including foreign currency risk and cash flow interest rate risk), credit risk and liquidity risk which are described in note 13. 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 1 June 2015 R A Law - Director D J Wilson - Director Consolidated Statement of Comprehensive Income Year ended 31 March 2015 2015 2014 £'000 £'000 Note Revenue 3 57,283 41,835 Cost of sales (16,448) (14,473) Gross profit 40,835 27,362 Operating expenses before amortisation of acquired intangibles, share-based payments and exceptional items (30,079) (20,243) Other operating income 34 45 Operating profit before amortisation of acquired intangibles, share-based payments, exceptional items and share of associate investment result (adjusted operating profit) 10,790 7,164 Amortisation of acquired intangibles 9 (1,986) (1,110) Share-based payments charge 14 (971) (747) Exceptional items 5 (1,629) (1,080) Share of associate investment result 10 (10) (159) Group operating profit 6,194 4,068 Finance revenue 25 6 Finance costs (291) (85) Profit before tax 5,928 3,989 Income tax expense 6 (1,127) (474) Profit for the year attributable to equity holders of the parent 4,801 3,515 Other comprehensive income: Exchange differences on retranslation of foreign operations (net of tax) (684) - Total comprehensive income for the year attributable to equity holders of the parent 4,117 3,515 Earnings per share 7 - adjusted basic earnings per share for the year 8.8p 6.5p - basic earnings per share for the year 4.0p 3.2p - diluted earnings per share for the year 3.9p 3.0p * Upon a disposal of a foreign operation, this would be recycled to the Income Statement Consolidated Statement of Changes in Equity Year ended 31 March 2015 Note Equity share capital Merger reserve Capital redemption reserve Foreign currency translation reserve Retained earnings Total equity £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 April 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 11 416 - - - - 416 Share-based payments charge 14 - - - - 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 Profit for the period - - - - 4,801 4,801 Other comprehensive income - - - (684) - (684) Total comprehensive income for the period - - - (684) 4,801 4,117 Issue of share capital 11 11,784 - - - - 11,784 Share issue costs 11 (330) - - - - (330) Share-based payments charge 14 - - - - 971 971 Deferred tax on share options - - - - 714 714 Equity dividend - - - - (1,955) (1,955) Balance at 31 March 2015 26,418 6,575 3 (684) 13,822 46,134 Company Statement of Changes in Equity Year ended 31 March 2015 Note Equity share capital Merger reserve Capital redemption reserve Retained earnings Total Equity £'000 £'000 £'000 £'000 £'000 Balance at 1 April 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 11 416 - - - 416 Share-based payments charge 14 - - - 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 Profit for the period - - - 5,676 5,676 Total comprehensive income for the period - - - 5,676 5,676 Issue of share capital 11 11,784 - - - 11,784 Share issue costs 11 (330) - - - (330) Share-based payments charge 14 - - - 971 971 Deferred tax on share options - - - 714 714 Equity dividend - - - (1,955) (1,955) Balance at 31 March 2015 26,418 6,575 3 18,331 51,327 Consolidated Balance Sheet As at 31 March 2015 Note 2015 2014 £'000 £'000 ASSETS Non-current assets Plant and equipment 8 2,829 1,519 Intangible assets 9 45,296 23,329 Investments accounted for using the equity method 10 - 10 Deferred tax asset 6 3,113 2,127 51,238 26,985 Current assets Trade and other receivables 17,408 11,929 Cash and short-term deposits 15,778 11,846 33,186 23,775 TOTAL ASSETS 84,424 50,760 EQUITY AND LIABILITIES Capital and reserves Equity share capital 11 26,418 14,964 Merger reserve 6,575 6,575 Capital redemption reserve 3 3 Foreign currency translation reserve (684) - Retained earnings 13,822 9,291 Total equity attributable to equity holders of the parent 46,134 30,833 Non-current liabilities Loans 12 3,643 - Provisions - 65 Contingent consideration 17 895 750 Deferred tax liability 6 2,968 1,251 7,506 2,066 Current liabilities Loans 12 746 - Trade and other payables 23,984 17,551 Contingent consideration 17 5,733 - Provisions 48 250 Current tax 273 60 30,784 17,861 TOTAL LIABILITIES 38,290 19,927 TOTAL EQUITY AND LIABILITIES 84,424 50,760 Approved by the Board on 1 June 2015 R A Law - Director D J Wilson - Director Registered in England number 2415211 Company Balance Sheet As at 31 March 2015 Note 2015 2014 £'000 £'000 ASSETS Non-current assets Plant and equipment 8 2,588 1,517 Intangible assets 9 478 558 Investments 48,321 32,452 Deferred tax asset 6 1,585 2,127 52,972 36,654 Current assets Trade and other receivables 13,577 12,328 Cash and short-term deposits 13,845 11,423 27,422 23,751 TOTAL ASSETS 80,394 60,405 EQUITY AND LIABILITIES Capital and reserves Equity share capital 11 26,418 14,964 Merger reserve 6,575 6,575 Capital redemption reserve 3 3 Retained earnings 18,331 12,925 Total equity attributable to equity holders of the parent 51,327 34,467 Non-current liabilities Provisions - 65 Contingent consideration 17 - 750 - 815 Current liabilities Trade and other payables 28,075 24,813 Contingent consideration 17 934 - Provisions 48 250 Current tax 10 60 29,067 25,123 TOTAL LIABILITIES 29,067 25,938 TOTAL EQUITY AND LIABILITIES 80,394 60,405 Approved by the Board on 1 June 2015 R A Law - Director D J Wilson - Director Registered in England number 2415211 Consolidated Cash Flow Statement Year ended 31 March 2015 Note 2015 2014 £'000 £'000 Group profit before tax 5,928 3,989 Adjustments to reconcile Group profit before tax to net cash flows Share of associate investment result 10 10 159 Finance revenue (25) (6) Finance costs 291 85 Depreciation of plant and equipment 8 873 594 Amortisation of intangible assets 9 2,167 1,200 Loss/(profit) on disposal of plant and equipment 55 (3) Fair value adjustment on contingent consideration 17 403 - Share-based payments 14 971 747 (Decrease)/increase in provisions (267) 290 Increase in trade and other receivables (2,852) (1,103) Increase in trade and other payables 4,130 3,403 Cash generated from operations 11,684 9,355 Income tax (paid)/received (337) 65 Net cash generated from operating activities 11,347 9,420 Cash flows used in investing activities Acquisition of subsidiaries, net of cash acquired 16 (18,672) (1,428) Investment in associates 10 - (15) Purchase of plant and equipment 8 (1,961) (916) Proceeds from disposal of plant and equipment 8 13 11 Expenditure on product development 9 (63) (239) Interest received 25 6 Net cash flows used in investing activities (20,658) (2,581) Cash flows from/(used in) financing activities Finance costs paid (291) (85) Proceeds from issue of shares 11 11,284 416 Share issue costs 11 (330) Proceeds from new borrowings 12 5,487 - Repayment of borrowings 12 (781) - Dividends paid to equity shareholders (1,955) (1,632) Net cash flows from/(used in) financing activities 13,414 (1,301) Net increase in cash and cash equivalents 4,103 5,538 Effect of exchange rates on cash and cash equivalents (171) - Cash and cash equivalents at the beginning of the period 11,846 6,308 Cash and cash equivalents at the end of the period 15,778 11,846 Company Cash Flow Statement Year ended 31 March 2015 Note 2015 2014 £'000 £'000 Company profit before tax 6,924 4,753 Adjustments to reconcile Company profit before tax to net cash flows Finance revenue (16) (6) Finance costs 75 85 Depreciation of plant and equipment 8 771 514 Amortisation of intangible assets 9 175 85 Loss/(profit) on disposal of plant and equipment 55 (3) Fair value adjustment on contingent consideration 17 (206) - Share-based payments 14 971 747 (Decrease)/Increase in provisions (267) 315 Increase in trade and other receivables (1,249) (1,889) Increase in trade and other payables 3,247 6,050 Cash generated from operations 10,480 10,651 Income tax (paid)/received (60) 150 Net cash generated from operating activities 10,420 10,801 Cash flows used in investing activities Acquisition of subsidiary undertakings 16 (5,857) (1,877) Investment in subsidiary undertakings (9,122) - Investment in associates 10 - (15) Purchase of plant and equipment 8 (1,909) (749) Proceeds from disposal of plant and equipment 8 13 11 Expenditure on product development 9 (63) (226) Interest received 16 6 Net cash flows used in investing activities (16,922) (2,850) Cash flows from/(used in) financing activities Finance costs paid (75) (85) Proceeds from issue of shares 11 11,284 416 Share issue costs 11 (330) - Dividends paid to equity shareholders (1,955) (1,632) Net cash flows from/(used in) financing activities 8,924 (1,301) Net increase in cash and cash equivalents 2,422 6,650 Cash and cash equivalents at the beginning of the period 11,423 4,773 Cash and cash equivalents at the end of the period 13,845 11,423 Notes 1. CORPORATE INFORMATION GB Group plc ('the Company'), its subsidiaries and associates (together 'the Group') provide identity data intelligence products and services helping organisations recognise and verify all elements of an individual's identity at key interactions in their business processes. The nature of the Group's operations and its principal activities are set out in the Strategic Report and Finance Review. The Company is a public limited company incorporated in the United Kingdom and is listed on the London Stock Exchange with its ordinary shares traded on the Alternative Investment Market. The address of its registered office is The Foundation, Herons Way, Chester Business Park, Chester, CH4 9GB. The financial information set out herein does not constitute the Company's statutory accounts for the years ended 31 March 2015 or 2014 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 2014. Statutory accounts for 2014 have been delivered to the Registrar of Companies, and those for 2015 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 Company's financial statements are included in the consolidated financial statements of GB Group plc. As permitted by section 408 of the Companies Act 2006, the profit and loss account of the Company is not presented. 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. The financial statements have been prepared under the historical cost convention, modified in respect of the revaluation of financial assets and liabilities at fair value. 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 2015 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 consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 March each year. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has: · Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee) · Exposure, or rights, to variable returns from its involvement with the investee · The ability to use its power over the investee to affect its returns Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: · The contractual arrangement with the other vote holders of the investee · Rights arising from other contractual arrangements · The Group's voting rights and potential voting rights The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value. 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. The Group uses the acquisition method of accounting to account for business combinations of entities not under common control. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the Consolidated Statement of Comprehensive Income. 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. Foreign Currencies The Group's consolidated financial statements are presented in pounds sterling, which is also the parent company's functional currency. For each entity the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency. The Group uses the direct method of consolidation and on disposal of a foreign operation, the gain or loss that is reclassified to profit or loss reflects the amount that arises from using this method. Transactions and balances Transactions in foreign currencies are initially recorded by the Group's entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognised in profit or loss with the exception of monetary items that are designated as part of the hedge of the Group's net investment of a foreign operation. These are recognised in Other Comprehensive Income ('OCI') until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in OCI. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively). Group companies On consolidation, the assets and liabilities of foreign operations are translated into sterling at the rate of exchange prevailing at the reporting date and their statements of profit or loss are translated at average exchange rates for the period. The exchange differences arising on translation for consolidation are recognised in OCI. On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is recognised in profit or loss. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date. 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 de-recognition 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. 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 CGU'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 CGU expected to benefit from the synergies. Impairment is determined by assessing the recoverable amount of the CGU, including the related goodwill. Where the recoverable amount of the CGU 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 CGU 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 CGU 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. Borrowings After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate ('EIR') method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. 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). Leases Assets funded through finance leases and similar hire purchase contracts are capitalised as property, plant and equipment, where the Group assumes substantially all of the risks and rewards of ownership. Upon initial recognition, the leased asset is measured at the lower of its fair value and the present value of the minimum lease payments. Future instalments under such leases, net of financing costs, are included within interest-bearing loans and borrowings. Rental payments are apportioned between the finance element, which is included in finance costs, and the capital element which reduces the outstanding obligation for future instalments so as to give a constant charge on the outstanding obligation. All other leases are accounted for as operating leases and the rental charges are charged to the Group statement of comprehensive income on a straight-line basis over the life of the lease. Lease incentives are primarily rent-free periods. Lease incentives are amortised over the lease term against the relevant rental expense. 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. 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 2014, 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 IFRS 10 Consolidated Financial Statements 1 January 2014 IFRS 10, IFRS 12 & IAS 27 Investment Entities (Amendments) 1 January 2014 IFRS 11 Joint Arrangements 1 January 2014 IFRS 12 Disclosure of Interests in Other Entities 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 International Financial Reporting Interpretation Committee (IFRIC) Adoption date IFRIC 21 Levies 1 January 2014 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 IAS 19 Defined Benefit Plans: Employee Contributions - Amendments to IAS 19 1 July 2014 Various Annual Improvements to IFRS - 2010-2012 Cycle 1 July 2014 IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture - Amendments to IFRS 10 and IAS 28 1 January 2016 IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception - Amendments to IFRS 10, IFRS 12 and IAS 28 1 January 2016 IFRS 11 Accounting for Acquisitions of Interests in Joint Operations - Amendments to IFRS 11 1 January 2016 IFRS 14 Regulatory Deferral Accounts 1 January 2016 IAS 1 Disclosure Initiative - Amendments to IAS 1 1 January 2016 IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation - Amendments to IAS 16 and IAS 38 1 January 2016 IAS 16 and IAS 41 Agriculture - Bearer Plants - Amendments to IAS 16 and IAS 41 1 January 2016 IAS 27 Equity Method in Separate Financial Statements - Amendments to IAS 27 1 January 2016 Various Annual Improvements to IFRS - 2012-2014 Cycle 1 January 2016 IFRS 15 Revenue from Contracts with Customers * 1 January 2017 IFRS 9 Financial Instruments 1 January 2018 * The effective date of IFRS 15 is being deferred by one year to an effective date of 1 January 2018. 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. 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 2015 was £3,113,000 (2014: £2,127,000) and the unrecognised deferred tax asset at 31 March 2015 was £5,351,000 (2014: £1,449,000). Further details are contained in Note 6. 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 14. 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 consideration Contingent consideration relating to acquisitions is included based on management estimates of the most likely outcome (Note 17). Those judgements include the forecasting of a number of different outcomes against the performance targets and estimating a probability and risk of each outcome before arriving at a risk weighted value of contingent consideration. 3. REVENUE Revenue disclosed in the Consolidated Statement of Comprehensive Income is analysed as follows: 2015 2014 £'000 £'000 Sale of goods 24,721 19,017 Rendering of services 32,562 22,818 Revenue 57,283 41,835 Finance revenue 25 6 Total revenue 57,308 41,841 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. Segment results include items directly attributable to either Identity Proofing or Identity Solutions. Unallocated items for 2015 represent Group head office costs £591,000, share of associate investment result £10,000, exceptional costs £1,629,000, Group finance income £25,000, Group finance costs £291,000, Group income tax charge £1,127,000 and share-based payments charge £971,000. 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. 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 2015 Year ended 31 March 2015 £'000 £'000 £'000 £'000 Total revenue 25,167 32,116 - 57,283 Adjusted operating profit 4,304 7,077 (591) 10,790 Amortisation of acquired intangibles (1,097) (889) - (1,986) Share-based payments charge - - (971) (971) Exceptional items - - (1,629) (1,629) Share of associate investment result - - (10) (10) Operating profit 3,207 6,188 (3,201) 6,194 Finance revenue 25 25 Finance costs (291) (291) Income tax charge (1,127) (1,127) Profit for the year 4,801 DecTech Solutions Pty Ltd and CDMS Limited which were acquired during the year have been absorbed and are managed in the Group's Identity Proofing and Identity Solutions operating segments respectively. 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. Geographical Information Revenues from external customers Non-current assets 2015 2014 2015 2014 £'000 £'000 £'000 £'000 United Kingdom 46,210 38,031 28,370 24,858 Australia 859 4 19,755 - Others 10,214 3,800 - - Total 57,283 41,835 48,125 24,858 The geographical revenue information above is based on the location of the customer. Non-current assets for this purpose consist of plant and equipment, investments and intangible assets. 5. EXCEPTIONAL ITEMS 2015 2014 £'000 £'000 Fair value adjustments to contingent consideration liabilities (see note 17) 403 (37) Acquisition related costs (see note 16) 452 752 Costs associated with staff reorganisations 331 115 Provision for dilapidation obligations on the relocation of the Group head office 138 250 Costs associated with the relocation of the Group head office 305 - 1,629 1,080 Fair value adjustments to contingent consideration liabilities in the year to 31 March 2015 include a £250,000 downwards adjustment relating to the final settlement of contingent consideration relating to TMG.tv Limited (Note 17) along with a £653,000 charge relating to the partial unwinding of discounting relating to the contingent consideration on the acquisition of DecTech Solutions Pty Ltd and CDMS Limited (Note 17). This charge arises because contingent consideration due to be paid at a future date is discounted for the time value of money at the point of initial recognition and over the passage of time, this discount unwinds within the Consolidated Statement of Comprehensive Income although it is a non-cash item. 6. TAXATION a) Tax on profit on ordinary activities The tax charge in the Consolidated Statement of Comprehensive Income for the year is as follows: 2015 2014 £'000 £'000 Current income tax UK corporation tax on profit for the year 10 60 Foreign tax 522 - 532 60 Deferred tax Origination and reversal of temporary differences 612 346 Prior year adjustments (102) (46) Impact of change in tax rates 85 114 595 414 Tax charge in the Statement of Comprehensive Income 1,127 474 b) Reconciliation of the total tax charge The profit before tax multiplied by the standard rate of corporation tax in the UK would result in a tax charge (2014: charge) as explained below: 2015 2014 £'000 £'000 Consolidated profit before tax 5,928 3,989 Consolidated profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 21% (2014: 23%) 1,245 917 Effect of: Permanent differences 307 615 Rate changes 85 114 Utilisation of unrecognised losses (110) - Prior year adjustments (102) (46) Recognition of unrecognised deferred tax assets (366) (1,126) Effect of higher taxes on overseas earnings 68 - Total tax charge reported in the Statement of Comprehensive Income 1,127 474 The Group is entitled to current year tax relief of £647,000 (2014: £247,000), calculated at a tax rate of 21% (2014: 23%), in relation to the statutory deduction available on share options exercised in the year. c) Tax losses The Group has carried forward trading losses at 31 March 2015 of £18,418,000 (2014: £5,388,000). To the extent that these losses are available for offset against future trading profits of the Group, it is expected that the future effective tax rate would be below the standard rate. There were also capital losses carried forward at 31 March 2015 of £2,257,000 (2014: £2,257,000), which should be available for offset against future capital gains of the Group to the extent that they arise. d) Deferred tax - Group Deferred tax asset The recognised and unrecognised potential deferred tax asset of the Group is as follows: Recognised Unrecognised 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Decelerated capital allowances 1,565 508 1,333 - Share options 991 488 - 962 Other temporary differences 336 - 36 36 Capital losses - - 451 451 Trading losses 221 1,131 3,531 - 3,113 2,127 5,351 1,449 The movement on the deferred tax asset of the Group is as follows: 2015 2014 £'000 £'000 Opening balance 2,127 2,803 Acquired on acquisition 1,274 - Foreign currency adjustments (20) - Origination and reversal of temporary differences (155) (416) Impact of change in tax rates (113) (260) 3,113 2,127 The deferred tax asset has been recognised to the extent it is anticipated to be recoverable out of future taxable profits based on profit forecasts for the foreseeable future. The utilisation of the unrecognised deferred tax asset in future periods will reduce the future tax rate below the standard rate. The Group has unrecognised deductible temporary differences of £24,500,000 (2014: £4,990,000) and unrecognised capital losses of £2,257,000 (2014: £2,257,000). Deferred tax liability The deferred tax liability of the Group is as follows: 2015 2014 £'000 £'000 Intangible assets 2,968 1,251 2,968 1,251 The movement of deferred tax liability of the Group is as follows: 2015 2014 £'000 £'000 Opening balance 1,251 1,466 Acquisition of intangibles in subsidiaries 2,183 215 Foreign currency adjustments (79) - Origination and reversal of temporary differences (387) (284) Impact of changes in tax rates - (146) 2,968 1,251 e) Deferred tax - Company Deferred tax asset The recognised and unrecognised potential deferred tax asset of the Company is as follows: Recognised Unrecognised 2015 2014 2015 2014 £'000 £'000 £'000 £'000 Decelerated capital allowances 373 508 - - Share options 991 488 - 962 Other temporary differences - - 36 36 Capital losses - - 451 451 Trading losses 221 1,131 - - 1,585 2,127 487 1,449 The movement on the deferred tax asset of the Company is as follows: 2015 2014 £'000 £'000 Opening balance 2,127 2,803 Origination and reversal of temporary differences (429) (416) Impact of change in tax rates (113) (260) 1,585 2,127 The deferred tax asset has been recognised to the extent it is anticipated to be recoverable out of future taxable profits based on profit forecasts for the foreseeable future. The utilisation of the unrecognised deferred tax asset in future periods will reduce the future tax rate below the standard rate. The Company has unrecognised deductible temporary differences of £180,000 (2014: £4,990,000) and unrecognised capital losses of £2,257,000 (2014: £2,257,000). f) Change in Corporation Tax rate The main rate of Corporation Tax reduced from 21% to 20% from 1 April 2015. The deferred tax asset and liability balances at 31 March 2015 incorporate the impact of these changes. 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. 2015 pence per share 2015 £'000 2014 pence per share 2014 £'000 Profit attributable to equity holders of the parent 4.0 4,801 3.2 3,515 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. 2015 2014 No. No. Basic weighted average number of shares in issue 119,144,442 109,631,288 Dilutive effect of share options 5,395,880 6,115,575 Diluted weighted average number of shares in issue 124,540,322 115,746,863 2015 pence per share 2015 £'000 2014 pence per share 2014 £'000 Profit attributable to equity holders of the Company 3.9 4,801 3.0 3,515 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. 2015 pence per share 2015 £'000 2014 pence per share 2014 £'000 Adjusted operating profit 9.1 10,790 6.5 7,164 Less net finance costs (0.3) (266) (0.0) (79) Adjusted earnings 8.8 10,524 6.5 7,085 8. PLANT AND EQUIPMENT Group Plant and equipment £'000 Cost At 1 April 2013 4,368 Acquired on acquisition 17 Additions 916 Disposals (31) At 31 March 2014 5,270 Acquired on acquisition 295 Additions 1,961 Disposals (577) Foreign currency adjustment (18) At 31 March 2015 6,931 Depreciation and impairment At 1 April 2013 3,180 Disposals (23) Provided during the year 594 At 31 March 2014 3,751 Disposals (509) Provided during the year 873 Foreign currency adjustment (13) At 31 March 2015 4,102 Net book value At 31 March 2015 2,829 At 31 March 2014 1,519 At 1 April 2013 1,188 The net book value in respect of assets held under finance leases and hire purchase agreements is £114,000 (2014: £nil). Company £'000 Cost At 1 April 2013 4,090 Acquired on acquisition 305 Additions 749 Disposals (31) At 31 March 2014 5,113 Acquired on acquisition 1 Additions 1,909 Disposals (577) At 31 March 2015 6,446 Depreciation and impairment At 1 April 2013 3,105 Disposals (23) Provided during the year 514 At 31 March 2014 3,596 Disposals (509) Provided during the year 771 At 31 March 2015 3,858 Net book value At 31 March 2015 2,588 At 31 March 2014 1,517 At 1 April 2013 985 The net book value in respect of assets held under finance leases and hire purchase agreements is £nil (2014: £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 October 2014, the trade, assets and liabilities of Advanced Checking Services Limited 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 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 Foreign currency adjustment (273) (107) (380) (921) - (1,301) Additions - business combinations 7,875 2,582 10,457 14,884 - 25,341 Additions - product development - - - - 63 63 At 31 March 2015 14,839 3,786 18,625 30,505 1,104 50,234 Amortisation and impairment At 1 April 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 Foreign currency adjustment (17) (14) (31) - - (31) Amortisation during the year 1,257 729 1,986 - 181 2,167 At 31 March 2015 2,754 1,558 4,312 - 626 4,938 Net book value At 31 March 2015 12,085 2,228 14,313 30,505 478 45,296 At 31 March 2014 5,723 468 6,191 16,542 596 23,329 At 1 April 2013 5,546 706 6,252 16,007 447 22,706 The customer relationships intangible asset acquired through the acquisition of Capscan Parent Limited has a carrying value of £3,103,000 and a remaining amortisation period of 6.6 years. The customer relationships intangible asset acquired through the acquisition of TMG.tv Limited has a carrying value of £810,000 and a remaining amortisation period of 7.6 years. The customer relationships intangible asset acquired through the acquisition of CRD (UK) Limited has a carrying value of £725,000 and a remaining amortisation period of 8.25 years. The customer relationships intangible asset acquired through the acquisition of DecTech Solutions Pty Ltd has a carrying value of £3,623,000 and a remaining amortisation period of 9.1 years. The customer relationships intangible asset acquired through the acquisition of CDMS Limited has a carrying value of £3,462,000 and a remaining amortisation period of 9.6 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, CRD (UK) Limited, DecTech Solutions Pty Ltd and CDMS Limited. Under IFRS, goodwill is not amortised and is annually tested for impairment. Company Development costs £'000 Cost At 1 April 2013 771 Additions - product development 226 At 31 March 2014 997 Acquired on acquisition * 32 Additions - product development 63 At 31 March 2015 1,092 Amortisation and impairment At 1 April 2013 354 Amortisation during the year 85 At 31 March 2014 439 Amortisation during the year 175 At 31 March 2015 614 Net book value At 31 March 2015 478 At 31 March 2014 558 At 1 April 2013 417 * On 1 October 2014, the trade, assets and liabilities of Advanced Checking Services Limited were transferred to the Company. 10. INVESTMENTS IN ASSOCIATES The Group has a 26.70% (2014: 26.85%) 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: 2015 2014 £'000 £'000 At 1 April 10 154 Additional investment - 15 Share of loss for the period (10) (159) At 31 March - 10 The Group's share of the results of its associate, which is unlisted, and its aggregate assets and liabilities, are as follows: 2015 2014 £'000 £'000 Share of balance sheet: Total assets 531 351 Total liabilities (669) (430) (138) (79) Share of results: Revenue 985 509 Loss after tax (31) (159) Share of associate investment result (10) (159) On 27 April 2015, the Group acquired the remaining shares of Loqate Inc. and further details of this post balance sheet event are disclosed in note 18. 11. EQUITY SHARE CAPITAL 2015 2014 £'000 £'000 Authorised 147,663,704 (2014: 147,663,704) ordinary shares of 2.5p each 3,692 3,692 Issued Allotted, called up and fully paid 3,018 2,754 Share premium 23,400 12,210 26,418 14,964 2015 2014 No. No. Number of shares in issue at 1 April 110,149,466 108,690,929 Issued on placing 8,343,284 - Issued on exercise of share options 2,242,614 1,458,537 Number of shares in issue at 31 March 120,735,364 110,149,466 During the year 10,585,898 (2014: 1,458,537) ordinary shares with a nominal value of 2.5p were issued for an aggregate cash consideration of £11,284,000 (2014: £416,000). In addition to this the Company issued shares with a fair value of £500,000 as part of the consideration for the acquisition of CDMS Limited. The cost associated with the issue of shares in the year was £330,000 (2014: £nil). 12. LOANS In April 2014, the Group secured an Australian dollar three year term loan of AUS$10 million. The debt bears an interest rate of +1.90% above the Australian Dollar bank bill interest swap rate ('BBSW') and matures in April 2017. Security on the debt is provided by way of an all asset debenture. Group 2015 2014 £'000 £'000 Opening bank loan - - New borrowings 5,487 - Repayment of borrowings (781) - Foreign currency translation adjustment (317) - Closing bank loan 4,389 - Analysed as: Amounts falling due within 12 months 746 - Amounts falling due after one year 3,643 - 4,389 - 13. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT The Group's activities expose it to a variety of financial risks including: market risk (including foreign currency risk and cash flow interest rate risk), credit risk, liquidity risk and capital management. The Group's overall risk management programme considers the unpredictability of financial markets and seeks to reduce potential adverse effects on the Group's financial performance. The Group does not currently use derivative financial instruments to hedge foreign exchange exposures. Credit risk Credit risk is managed on a Group basis except for credit risk relating to accounts receivable balances which each entity is responsible for managing. Credit risk arises from cash and cash equivalents, as well as credit exposures from outstanding customer receivables. Management assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. For those sales considered higher risk, the Group operates a policy of cash in advance of delivery. The Group regularly monitors its exposure to bad debts in order to minimise exposure. Credit risk from cash and cash equivalents is managed via banking with well-established banks with a strong credit rating. Foreign currency risk The Group's foreign currency exposure arises from: · Transactions (sales/purchases) denominated in foreign currencies; · Monetary items (mainly cash receivables and borrowings) denominated in foreign currencies; and · Investments in foreign operations, whose net assets are exposed to foreign currency translation. The Group has currency exposure on its investment in a foreign operation and partially offsets its exposure to fluctuations on the translation into sterling by holding net borrowings in Australian dollars. In terms of sensitivities, the effect on equity of a 10% increase in the Australian dollar and sterling exchange rate would be an increase of £817,000. The effect on equity of a 10% decrease in the Australian dollar and sterling exchange rate would be a decrease of £998,000. The exposure to transactional foreign exchange risk within each company is monitored and managed at both an entity and a Group level. Cash flow interest rate risk The Group has financial assets and liabilities which are exposed to changes in market interest rates. Changes in interest rates impact primarily on deposits and loans by changing their future cash flows (variable rate). Management does not currently have a formal policy of determining how much of the Group's exposure should be at fixed or variable rates and the Group does not use hedging instruments to minimise its exposure. However, at the time of taking new loans or borrowings management uses its judgement to determine whether it believes that a fixed or variable rate would be more favourable for the Group over the expected period until maturity. In terms of sensitivities, the effect on profit before taxation of an increase/decrease in the basis points on floating rate borrowings of 25 basis points would be £14,000. Liquidity risk Cash flow forecasting is performed on a Group basis by the monitoring of rolling forecasts of the Group's liquidity requirements to ensure that it has sufficient cash to meet operational needs and surplus funds are placed on deposit and available at very short notice. The maturity date of the Group's loan is disclosed in Note 12. Capital management The Group manages its capital structure in order to safeguard the going concern of the Group and maximise shareholder value. The capital structure of the Group consists of debt, which includes loans disclosed in note 12, cash and cash equivalents and equity attributable to equity holders of the Company, comprising issued capital, reserves and retained earnings. The Group may maintain or adjust its capital structure by adjusting the amount of dividend paid to shareholders, returning capital to shareholders, issuing new shares or selling assets to reduce debt. In order to achieve this overall objective, the Group's capital management, amongst other things, aims to ensure that it meets financial covenants attached to borrowings. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any borrowings in the current period. No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2015 and 2014. The table below summarises the maturity profile of the Group's financial liabilities based on contractual undiscounted payments: Year ended 31 March 2015 On demand Less than 12 months 1 to 5 Years Total £'000 £'000 £'000 £'000 Loans - 4,389 4,389 Contingent consideration - 5,879 1,027 6,906 Provisions - 48 - 48 Trade and other payables 2,538 11,540 - 14,078 2,538 17,467 5,416 25,421 Year ended 31 March 2014 On demand Less than 12 months 1 to 5 Years Total £'000 £'000 £'000 £'000 Loans - - - - Contingent consideration - 750 - 750 Provisions - 250 65 315 Trade and other payables 2,463 8,354 - 10,817 2,463 9,354 65 11,882 Use of Financial Instruments A summary of the Group's use of financial instruments is set out in the Strategic Report and Finance Review. Set out below is an overview of financial instruments, other than cash and short-term deposits, held by the Group at 31 March: 2015 2014 Loans and Receivables Fair value profit or loss Loans and Receivables Fair value profit or loss £'000 £'000 £'000 £'000 Financial assets: Trade and other receivables 15,592 - 10,641 - Total current 15,592 - 10,641 - Total 15,592 - 10,641 - Financial liabilities: Loans 3,643 - - - Contingent consideration - 895 - 750 Total non-current 3,643 895 - 750 Trade and other payables 14,078 - 10,817 - Loans 746 - - - Contingent consideration - 5,733 - - Total current 14,824 5,733 10,817 - Total 18,467 6,628 10,817 750 All financial assets and liabilities have a carrying value that approximates to fair value. For trade and other receivables, allowances are made within the book value for credit risk. The Group does not have any derivative financial instruments. Contingent consideration The fair value of contingent consideration is the present value of expected future cash flows based on latest forecasts of future performance. 31 March 2015 31 March 2014 £'000 £'000 Fair value within current liabilities: Contingent consideration 5,733 - Fair value within non-current liabilities: Contingent consideration 895 750 Liabilities for contingent consideration are Level 3 financial instruments under IFRS 13. The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of inputs used in making measurements of fair value. The fair value hierarchy has the following levels: · Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. · Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and · Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs). For financial instruments that are recognised at the fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. Financial Liabilities The Group has an Australian dollar three year term loan of AUS$10 million. The debt bears an interest rate of +1.90% above the Australian Dollar bank bill interest swap rate ('BBSW'). The Group has an undrawn 3 year revolving credit facility agreement which is subject to a limit of £7.0 million. The facility bears an initial interest rate of LIBOR +1.95%. The facilities are secured by way of an all asset debenture. The Group is subject to a number of covenants in relation to its borrowings which, if breached, would result in loan balances becoming immediately repayable. These covenants specify certain maximum limits in terms of the following: · Net debt as a multiple of EBITDA · Cashflow as a multiple of debt service costs At 31 March 2015 and 31 March 2014 the Group was not in breach of any bank covenants. 14. 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 £971,000 (2014: £747,000). The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year. 2015 No. 2015 WAEP 2014 No. 2014 WAEP Outstanding as at 1 April 8,128,123 24.91p 8,481,133 24.55p Granted during the year 907,489 11.12p 1,299,869 31.08p Forfeited during the year (47,732) 59.23p (4,342) 76.80p Cancelled during the year (890) 76.80p - - Exercised during the year (2,242,613) 12.66p1 (1,458,537) 28.41p2 Expired during the year (19,600) 19.47p (190,000) 21.50p Outstanding at 31 March 6,724,777 26.93p 8,128,123 24.91p Exercisable at 31 March 2,722,038 29.64p 3,290,998 27.72p 1 The weighted average share price at the date of exercise for the options exercised is 156.57p 2 The weighted average share price at the date of exercise for the options exercised is 102.45p For the shares outstanding as at 31 March 2015, the weighted average remaining contractual life is 6.1 years (2014: 6.4 years). The weighted average fair value of options granted during the year was 143.32p (2014: 63.50p). The range of exercise prices for options outstanding at the end of the year was 2.50p - 159.00p (2014: 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 2015 and 31 March 2014. 2015 2014 Dividend yield (%) 1.0 1.6 Expected share price volatility (%) 30 30 Risk-free interest rate (%) 1.2 -1.9 0.5 -1.3 Lapse rate (%) 5.0 5.0 Expected exercise behaviour See below See below Market-based condition adjustment (%) 48.00 48.00 Expected life of option (years) 3.0 3.0 Exercise price (p) 2.50 - 159.00 2.50 - 76.80 Weighted average share price (p) 156.17 94.85 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. 15. 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: 2015 - 150 - 2014 - 60 - Directors (see below): 2015 - 33 8 2014 - 30 - Other related parties (see below): 2015 55 - (5) 2014 26 - (4) Company Sales to related parties Purchases from related parties Net amounts owed to/(by) related parties £'000 £'000 £'000 Subsidiaries: 2015 709 128 7,443 2014 634 28 6,760 Associates: 2015 - 150 - 2014 - 60 - Directors (see below): 2015 - 33 8 2014 - 30 - Other related parties (see below): 2015 55 - (5) 2014 26 - (4) 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. The Chief Executive of the Company is a director of Car Loan 4U Limited which is a client of the Group. Transactions with them have been reported under the heading of 'other related parties' in the table above. A Non-Executive Director of the Company is a director of Avanti Communications Group PLC which is a client of the Group. Transactions with them have been reported under the heading of 'other related parties' 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 2015, the Group has not made any provision for doubtful debts relating to amounts owed by related parties (2014: nil). Compensation of key management personnel (including directors) Group & Company 2015 2014 £'000 £'000 Short-term employee benefits 1,412 1,092 Post-employment benefits 23 72 Fair value of share options awarded 769 336 2,204 1,500 16. BUSINESS COMBINATIONS Acquisitions in the year ended 31 March 2015 Group Acquisition of DecTech Solutions Pty Ltd On 9 May 2014, the Company acquired 100% of the voting shares of DecTech Solutions Pty Ltd ('DecTech'), an unlisted company based in Australia providing fraud detection, credit risk management and customer management solutions. The Company acquired DecTech to enhance its ability to serve its clients globally by augmenting and broadening its product suite with highly complementary technology that is in demand in both established and developing markets. The Consolidated Statement of Comprehensive Income includes the results of DecTech for the eleven month period from the acquisition date. The fair value of the identifiable assets and liabilities of DecTech as at the date of acquisition was: Fair value recognised on acquisition £'000 Assets Technology intellectual property 1,592 Customer relationships 4,262 Non-compete agreements 101 Plant and equipment 68 Deferred tax assets 181 Trade and other receivables 957 Cash 628 Trade and other payables (1,219) Deferred tax liabilities (1,279) Total identifiable net assets at fair value 5,291 Goodwill arising on acquisition 14,382 Total purchase consideration transferred 19,673 Purchase consideration: Cash 14,212 Contingent consideration 5,461 Total purchase consideration 19,673 Analysis of cash flows on acquisition: Transaction costs of the acquisition (included in cash flows from operating activities) (73) Net cash acquired with the subsidiary (included in cash flows from investing activities) 628 Cash paid (14,212) Net cash outflow (13,657) The fair value of the acquired receivables amounts to £957,000. The gross amount of receivables is £977,000. 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 from DecTech due to their nature. These items include the expected value of synergies and an assembled workforce. None of the goodwill is expected to be deductible for income tax purposes. The transaction costs of £73,000 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, DecTech has contributed £6 million of revenue and adjusted operating profits of £1.5 million to the Group. If the combination had taken place at the beginning of the year, the Group revenue and adjusted operating profits would have been £57.5 million and £10.6 million respectively. The fair values reported in the Interim Report were provisional due to the complexity of the determination of the fair value and tax basis of certain intangible assets. As a consequence of the finalisation of these values, the identifiable net assets at fair value has reduced by £198,000 compared to that previously reported with a corresponding increase in the amount of goodwill. Contingent consideration As part of the share sale and purchase agreement, a contingent cash consideration of up to a maximum of AUS$11.5 million has been agreed. These payments are subject to certain future revenue and profit targets being met. At the acquisition date the discounted fair value of the contingent consideration was estimated at AUS$10.0 million having been determined from management's estimates of the ranges of profit forecasts and their respective likelihoods. At 31 March 2015, the value of the contingent consideration after partial unwinding of the discounting was AUS$11.1 million. Adjustments to the fair value of the contingent consideration are made in the Consolidated Statement of Comprehensive Income under IFRS 3 (Revised) Business Combinations (Note 5). Acquisition of CDMS Limited On 1 November 2014, the Company acquired 100% of the voting shares of CDMS Limited ('CDMS'), an unlisted company based in the UK that aggregates customer transactional data and delivers anti-fraud and marketing related services to both the private and public sectors in the UK. The Company acquired CDMS to strengthen GBG's Identity Intelligence offerings with a unique data asset, add a technology portfolio that complements GBG's existing solutions and bring with it recurring revenues with blue chip customers. The Consolidated Statement of Comprehensive Income includes the results of CDMS for the five month period from the acquisition date. The fair value of the identifiable assets and liabilities of CDMS as at the date of acquisition was: Fair value recognised on acquisition £'000 Assets Technology intellectual property 890 Customer relationships 3,613 Plant and equipment 227 Deferred tax assets 1,093 Trade and other receivables 1,704 Cash 767 Trade and other payables (1,146) Deferred tax liabilities (904) Total identifiable net assets at fair value 6,244 Goodwill arising on acquisition 502 Total purchase consideration transferred 6,746 Purchase consideration: Cash 5,356 Fair value of shares issued (343,284 shares at £1.4565) 500 Contingent consideration 890 Total purchase consideration 6,746 Analysis of cash flows on acquisition: Transaction costs of the acquisition (included in cash flows from operating activities) (258) Net cash acquired with the subsidiary (included in cash flows from investing activities) 767 Cash paid (5,356) Net cash outflow (4,847) The fair values above contain certain provisional amounts which will be finalised no later than one year after the date of acquisition. Provisional amounts have been included at 31 March 2015 as a consequence of the timing and complexity of the acquisition. The fair value of the acquired receivables amounts to £1,704,000. The gross amount of receivables is £1,756,000. 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 from CDMS due to their nature. These items include the expected value of synergies and an assembled workforce. None of the goodwill is expected to be deductible for income tax purposes. The transaction costs of £258,000 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, CDMS has contributed £3.1 million of revenue and adjusted operating profits of £0.4 million to the Group. The business had been loss-making prior to acquisition and if the combination had taken place at the beginning of the year, the Group revenue and adjusted operating profits would have been £59.4 million and £9.8 million respectively. Contingent consideration As part of the share sale and purchase agreement, a contingent consideration amount of up to a maximum of £1 million has been agreed. This payment, which will be settled by way of an issue of shares, is subject to certain future contract and revenue targets being met by the anniversary of the acquisition date. The number of shares to be issued to satisfy the payment will be calculated by reference to the five business day volume-weighted average price of GBG shares prior to the date of issue. The obligation has been classified as a liability in accordance with the provisions of IAS 32. At the acquisition date the discounted fair value of the contingent consideration was estimated at £890,000 having been determined from management's estimates of the ranges of outcomes and their respective likelihoods. At 31 March 2015, the value of the contingent consideration after partial unwinding of the discounting was £934,000. Adjustments to the fair value of the contingent consideration are made in the Consolidated Statement of Comprehensive Income under IFRS 3 (Revised) Business Combinations (Note 5). Other business combination adjustments During the year ended 31 March 2015, final settlement of £500,000 was made relating to the contingent consideration on the acquisition of TMG.tv Limited resulting in a reduction in the contingent consideration liability on the balance sheet. At 31 March 2014 this liability was included within non-current liabilities. A downwards fair value adjustment of £250,000 was made to this contingent consideration during the year reversing it to the Consolidated Statement of Comprehensive Income under IFRS 3 (Revised) Business Combinations (Note 5). Exceptional items The exceptional items associated with the costs of acquisitions within note 7 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 Loqate Inc. which is disclosed in Note 18. Company Acquisition of Advanced Checking Services Limited On 1 October 2014, the Company acquired the trade, assets and liabilities of Advanced Checking Services 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 1 Intangible assets 32 Trade and other receivables 174 Cash 17 Trade and other payables (147) Total net assets at fair value 77 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 £174,000. The gross amount of receivables is £180,000. None of the receivables have been impaired and it is expected that the full contractual amounts can be collected. Acquisitions in the year ended 31 March 2014 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's results for the year ended 31 March 2014. 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 year ended 31 March 2014, settlements of £447,000 and £110,000 were made relating to the acquisitions of Capscan Parent Limited and TMG.tv Limited respectively, resulting in a reduction in the deferred consideration liability on the balance sheet. 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. 17. CONTINGENT CONSIDERATION Group 2015 2014 £'000 £'000 At 1 April 750 1,307 Recognition on the acquisition of subsidiary undertakings 6,351 - Reversal of contingent consideration to the Income Statement (250) - Settlement of consideration (500) (557) Unwinding of discount 653 - Exchange differences on retranslation (376) - At 31 March 6,628 750 Analysed as: Amounts falling due within 12 months 5,733 - Amounts falling due after one year 895 750 At 31 March 6,628 750 The opening balance at 1 April 2014 represented contingent consideration amounts relating to the acquisition of TMG.tv Limited. During the year a final payment of £500,000 was made to settle the outstanding obligation and a downwards fair value adjustment of £250,000 was made to this contingent consideration during the year ended 31 March 2015 reversing it to the Consolidated Statement of Comprehensive Income under IFRS 3 (Revised) Business Combinations (Note 5). The closing balance at 31 March 2015 relates to provisions for contingent consideration for DecTech and CDMS. Company 2015 2014 £'000 £'000 At 1 April 750 1,307 Recognition on the acquisition of subsidiary undertakings 890 - Reversal of contingent consideration to the Income Statement (250) - Settlement of consideration (500) (557) Unwinding of discount 44 - At 31 March 934 750 Analysed as: Amounts falling due within 12 months 934 - Amounts falling due after one year - 750 At 31 March 934 750 The closing balance at 31 March 2015 relates to provisions for contingent consideration for CDMS. 18. POST BALANCE SHEET EVENTS Acquisition of Loqate Inc. On 27 April 2015, the Group acquired the remaining 74.5% of the shares of Loqate Inc., the San Francisco-based provider of specialist location-based software and data, that it did not already own, taking its holding to 100%. The consideration consisted of cash on completion of US$13.4 million, with a further maximum US$2.0 million payable contingent on a revenue growth target for the 12 month period ending 31 December 2015. 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. Further details of the acquisition are set out in a separate regulatory announcement released on 27 April 2015. Hive up of CDMS Limited On 1 April 2015, the Company acquired the trade, assets and liabilities of CDMS Limited at book value. Consideration for the transfer was equal to the book value of total net assets and was settled through intercompany accounts. OTHER INFORMATION i. The financial information set out herein does not constitute the Company's statutory accounts for the years ended 31 March 2015 or 2014 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 2014. Statutory accounts for 2014 have been delivered to the Registrar of Companies, and those for 2015 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 1 June 2015. iii. The ex-dividend date is 23 July 2015; the record date is 24 July 2015; the payment date is 28 August 2015. iv. In respect of this year's dividend, the Group will offer 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 2015. v. The AGM will take place on 29 July 2015. vi. The 2015 interim results announcement is expected week commencing 30 November 2014. vii. This report will also be available on the GB Group web site www.gbgplc.com from 1 June 2015. viii. The Company will make a full version of the annual report and accounts for the year to 31 March 2015 available on the Group's website (www.gbgplc.com) on 1 June 2015. ix. The Company intends to dispatch to shareholders copies of the full annual report and accounts for the year to 31 March 2015 and to make it available on the Group's website (www.gbgplc.com) by 3 July 2015. This information is provided by RNS The company news service from the London Stock Exchange END FR KFLFXEEFXBBV