REG - GB Group PLC - Final Results
11/06/2024 07:00
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RNS Number : 8761R GB Group PLC 11 June 2024
Embargoed until 7.00 a.m. 11 June 2024
GB GROUP PLC
("GBG", the "Group" or the "Company")
Results for the year ended 31 March 2024
FY25 outlook reiterated; positive momentum continues
GB Group plc, (AIM: GBG), the experts in global identity and location
software, today announces its audited results for the financial year ended 31
March 2024.
Financials FY24 FY23
Revenue £277.3m £278.8m
Constant currency revenue(1) £277.3m £270.1m
Adjusted operating profit(1) £61.2m £59.8m
Adjusted operating profit excluding FX gain £61.4m £56.8m
Adjusted operating margin ex FX gain 22.1% 20.4%
Operating (loss)(2) (£41.4)m (£112.4)m
(Loss) before tax (£50.4)m (£118.8)m
Adjusted diluted earnings per share(3) 15.1p 16.4p
Diluted (loss) per share (19.2)p (47.5)p
Net debt(1) (£80.9)m (£105.9)m
Final dividend per share 4.20p 4.00p
(1)Defined within note 19 to the results. (2)Exceptional costs of £59.6m
include a £54.7million non-cash goodwill impairment charge as reported at the
half-year results (FY23: Exceptional costs of £127.2 million included a
£122.2m non-cash goodwill impairment charge) as explained further within the
financial review and note 13 to the results. (3) Defined within note 10 to the
results.
Dev Dhiman, CEO, commented:
"This is my first set of results since taking the role of Chief Executive and
I am pleased to report a more positive trading momentum. My first few months
have focused on our teams, customers and business partners across GBG. This
has reinforced my confidence in our competitive differentiation and our market
opportunity. I believe we have opportunities to build on our momentum and
capitalise on the strong and attractive structural growth drivers in the
market.
The time I have spent with our key stakeholders has informed our focus areas
around simplicity; being globally aligned; driving a performance culture and
differentiation through innovation. I am looking forward to working with
everyone across GBG to deliver on these priorities. In doing so, we will
ensure that GBG continues to help our 20,000+ customers grow, by giving them
the intelligence to make the best decisions, when it matters most.
GBG plays an important role in protecting consumers and businesses from fraud
while enabling our customers to reach and build trust with their customers.
And we will continue to play this critical and increasingly relevant role over
the long term for the benefit of all of our stakeholders."
Financial summary
· Final results are in line with the trading update released on 23
April 2024
· On a reported basis, revenue decreased by 0.5%. On a constant
currency basis, growth was 2.7%
‒ Growth accelerated to 5.0% in the final quarter of the year, driven
by improved trends in Identity Americas and EMEA
· Strong focus on simplification and cost-effectiveness throughout
the Group which delivered £10 million of annualised savings with a £8.8
million in-year benefit
‒ Adjusted operating profit of £61.4 million, up 8.0% excluding net
gains from foreign exchange
‒ On a reported basis, operating loss of £41.4m, caused by the £54.7
million exceptional non-cash goodwill impairment charge that was recognised in
the first half
· Strong cash conversion of 90.6% (FY23: 67.3%) led to a reduction
in net debt to £80.9 million (31 March 2023: £105.9 million)
· The Board is recommending a final dividend per ordinary share of
4.20p, up 5% (FY23: 4.00p)
FY25 outlook reiterated
· The new financial year has begun in-line with our expectations, with
improved momentum in Identity and Location continuing from the final quarter
of FY24
· For the year as a whole, we expect mid-single-digit revenue growth on
a constant currency basis, which will drive high single-digit growth in
adjusted operating profit given the operational efficiency gains achieved in
FY24
Clear on our focus areas
· Simplicity: A series of initiatives are underway to make it
easier for customers and partners to engage and operate with GBG covering a
brand refresh, sales and organisational structure
· Being globally aligned: An important area of strategic progress
since January has been our drive towards greater alignment through the
implementation of a global operating model
· Driving a performance culture: We are working towards delivering
a high-performance culture where everyone is hungry to win, determined to
outperform our competition, and to celebrate our success
· Differentiation through innovation: Continued to drive innovation
that enhances our leadership in the identity fraud and location intelligence
markets including solutions such as GBG Trust, while our investments in AI are
delivering increased performance across our portfolio
Notable customer successes
· Location: Supporting e-commerce expansion for high-street brands,
while capturing growing demand from our large and diverse customer and partner
base including HelloFresh, Aldi, Santander and Reltio
· Identity: AIG, Floa, Tide and Sumup are among a diverse group of
customers utilising the breadth of our solutions, while in US Gaming we have
had success with ESPNBET and Bally's
· Fraud: Our fraud monitoring solutions were chosen by large
financial institutions in Southeast Asia, and demand in Europe for our fraud
investigation capabilities included UK Companies House
Results presentation
Management will host an in-person presentation this morning at 0930hrs GMT for
sell-side analysts and institutional investors. If you would like to attend in
person, please contact: GBG@teneo.com (mailto:GBG@teneo.com)
To register to view the event live online, please use the following link:
https://www.investis-live.com/gb-group/663caee77e7bb30d0033f88b/tseer
(https://www.investis-live.com/gb-group/663caee77e7bb30d0033f88b/tseer)
This will be available on-demand via our investor website along with the
materials shortly after the event.
For further information, please contact:
GBG
Dev Dhiman, CEO & David Ward, CFO +44 (0) 1244 657333
Richard Foster, Investor Relations +44 (0) 7816 124164
Numis (Nominated Adviser and Corporate Broker) +44 (0) 0207 260 1000
Simon Willis & Joshua Hughes
Barclays (Corporate Broker) +44 (0) 207 623 2323
Robert Mayhew & Stuart Jempson
Teneo (Financial PR) +44 (0) 20 7260 2700
James Macey White & Matt Low GBG@teneo.com
Website www.gbgplc.com/investors
About GBG
GBG is the leading expert in global identity and location. In an increasingly
digital world, GBG helps businesses grow by giving them intelligence to make
the best decisions about their customers, when it matters most.
Every second, our global data, agile technology, and expert teams, power over
20,000 of the world's best-known organisations to reach and trust their
customers.
To find out more about how we help our customers establish trust with their
customers visit www.gbgplc.com (http://www.gbgplc.com) and follow us on
LinkedIn and X @gbgplc.
About GBG
GBG is the leading expert in global identity and location. In an increasingly
digital world, GBG helps businesses grow by giving them intelligence to make
the best decisions about their customers, when it matters most.
Every second, our global data, agile technology, and expert teams, power over
20,000 of the world's best-known organisations to reach and trust their
customers.
To find out more about how we help our customers establish trust with their
customers visit www.gbgplc.com (http://www.gbgplc.com) and follow us on
LinkedIn and X @gbgplc.
Chief Executive Officer's review
I wanted to use this first opportunity as CEO to update you on our performance
in FY24, and then outline my thoughts on GBG today together with our focus
areas as the Group evolves.
Summary
In an increasingly digital world, GBG exists to help businesses and
organisations grow by giving them the intelligence to make the best decisions
about their customers, when it matters most. We are consistently set apart by
our global reach and our ability to serve industry-specific solutions across a
range of sectors. Our combination of global data, agile technology, and
expertise, powers over 20,000 organisations, including the best-known global
brands. We help those organisations to reach and trust their customers across
a number of the most attractive markets globally, which are underpinned by
favourable structural trends - providing GBG with a long-term, sustainable
runway of growth.
Reflecting on FY24, we are pleased to have successfully executed our financial
plan for the year. Our strategic progress on simplification and
cost-effectiveness delivered £10 million of annualised savings enabling GBG
to be a more resilient and profitable business with the capacity to capitalise
on our future growth opportunities. As expected, our overall growth in FY24
remained constrained by two significant headwinds to our transactional
volumes; first, the subdued macroeconomic conditions impacted consumer demand,
and second, changes in consumer behaviours within the internet economy.
While macroeconomic conditions remain subdued, we have seen our growth
trajectory improve during the second half of FY24 resulting from a partial
reacceleration in Identity as consumer behaviour normalised and I am
encouraged by the operational momentum that we now carry into FY25. Net
revenue retention (NRR) improved by 580 basis points to 98.1% and we were also
pleased with a further improvement in revenue growth generated from new
customers. Our high absolute customer retention rate and our flexible business
model featuring high levels of repeatable revenue means we are well-placed as
business confidence returns, both through improved top-line growth and the
operating leverage arising from the cost savings we delivered.
Strong strategic progress has also been delivered this year. We launched
innovative products that further enhance our leadership in the identity fraud
market, such as GBG Trust and Score to optimise the onboarding journey. In
Location, we scaled up the deployment of our AI-parsing and deep-learning
technology to seventeen more countries to increase our industry-leading
performance in emerging markets. More broadly, a greater emphasis on
collaboration and global alignment is ensuring that we can appropriately
leverage our scale and expertise for commercial success. This includes
strengthening our Americas Identity business in go-to-market, sales enablement
and product to more effectively pursue the large market opportunity, and we
are pleased by the improvement seen in that business as a result of our
actions to date.
In summary, we are pleased with the financial and strategic progress delivered
in FY24, particularly the stronger final quarter in Identity. Our achievements
demonstrate the focus, tenacity and effort of the GBG team during the year and
I thank them all for their hard work and dedication to our customers. I am
excited about what we will achieve together in FY25.
Financial results overview
Both revenue and adjusted operating profit are in line with the trading update
released on 23 April 2024.
Group revenue of £277.3 million grew by 2.7% on a constant currency basis.
This reflects improving net revenue retention (NRR) of 98.1% compared with
92.3% in FY23 and a further improvement in revenue growth generated from new
customers won in the last 12 months to 4.6% (FY23: 4.5%).
Despite our high levels of absolute customer retention, revenue growth
opportunities continued to be impacted by transaction volume demand linked to
the two specific headwinds mentioned earlier which impacted our year-on-year
comparison. However, as consumer behaviour normalised, the headwinds related
to certain internet economy customers abated as we moved through the year, and
it was pleasing to see growth accelerate to 5.0% in the final quarter of FY24
driven by our Americas and EMEA identity businesses.
As a result of the subdued macroeconomic environment in which to drive
top-line growth, we have been particularly focused on execution to drive the
Group's profitability. These initiatives to deliver increased simplicity and
cost-effectiveness have balanced delivering growth in returns for shareholders
and the need to invest and optimise our core solutions in a competitive
market. We have made excellent progress with these initiatives, which began
during FY23 and have achieved an annualised run-rate reduction in operating
expenditure of £10 million. This has contributed to an adjusted operating
profit growth, excluding net gains on foreign exchange, of 8.0% to £61.4
million, with our operating profit margin on that basis expanding by 170bps to
22.1%.
On a reported basis there was an operating loss of £41.4m, caused by the
£54.7 million exceptional non-cash goodwill impairment charge that was
recognised in the first half.
Our cash conversion normalised at 90.6% (FY23: 67.3%) which contributed to a
good reduction in the Group's net debt to £80.9 million at 31 March 2024 (31
March 2023: £105.9 million) and net debt to EBITDA leverage below 1.3x as
expected. While our near-term capital allocation priority is to use cash
generation to reduce net debt, the Board remains committed to a disciplined
approach to capital allocation that focuses on delivering long-term
shareholder value. As a result of our strong cash performance and its
confidence in GBG's enduring market opportunity, the Board recommends a final
dividend per share of 4.20 pence (FY23: 4.00 pence per share), which
represents a year-on-year increase of 5.0%.
Our segmental performance
Location (29% of the Group's revenues)
Location had another good year; revenue was up 7.3% on a constant currency
basis to £81.1 million as the business continued to perform resiliently. We
successfully mitigated the impact of softer transactional volumes from our
e-commerce customers by driving go-to-market activity on expanding the
relevant use cases into a diverse sector and geographic footprint such as
financial services, utilities, telecoms and via channel partners.
Notable customer success:
· Capturing growing demand from our large and diverse customer and
partner base, including HelloFresh, Aldi, Santander and Reltio
· Supporting retail customers such as New Balance, Kurt Geiger,
Neiman Marcus and Marc Jacobs
· Facilitating the customer checkout journey for some of Asia's
largest e-commerce marketplaces to enhance address accuracy as they experience
growing cross-border demand
Identity (56% of the Group's revenues)
Revenue of £156.1 million represents a small 0.7% decline on a constant
currency basis, in line with our expectations for Identity this year. A strong
performance in our APAC identity business driven by financial services and
partner activity in Australia was offset by tough prior-year comparatives for
the first three quarters of the year in the Americas, reflecting the trends
discussed earlier. As expected, year-on-year growth accelerated by
mid-single-digits in the fourth quarter as a result of improving trends in
both our EMEA and Americas businesses. Our absolute customer retention rate
remained strong in a period when usage volumes remained subdued, and we are
pursuing a more globally aligned approach to cross-sell/up-sell opportunities
that leverages the competitive differentiation of our solutions to deliver
improved onboarding success, identity fraud detection and customer return on
investment.
Notable customer success:
· Demonstrating an increased focus on identity fraud detection, Floa
chose our mobile fraud signal solution with an upsell to our fraud monitoring
capabilities and, Tide selected our Multibureau and Trust solutions
· Customers leveraging our global expertise include AIG, Atlantic
Lottery, Currencies Direct and SumUp who all utilised our expanded
international data coverage while investment platform, Webull, chose GBG as
its end-to-end onboarding partner in EMEA and APAC
· In the Americas gaming, where changes in regulation continue to create
opportunity for GBG, we had success with customers such as ESPNBET and Bally's
Fraud (15% of the Group's revenues)
Revenue for our fraud prevention, detection and investigation solutions grew
by 7.8% at constant currency to £40.2 million. This was underpinned by
licence renewals, upgrades and new business wins with leading financial
institutions in this segment's core Southeast Asia and EMEA markets, albeit
sales of software licences slowed in the final quarter of FY24 after two
strong years of growth. In these markets, our solutions have an established
reputation and play a critical part in our customer's compliance ecosystems,
helping them monitor rapidly evolving fraud threats and comply effectively
with new regulatory standards.
Notable customer success:
· Agreements for our fraud monitoring solutions in Indonesia
include Bank Syariah and Bank Ina Digital and in Thailand with TMBThanachart
Bank and Kiatnakin Phatra Bank
· Nordic-focused Express Bank who upgraded to our fraud compliance
platform
· Robust demand for our specialist fraud investigation capabilities
in the UK includes emerging use cases working with one of the UK's leading
transport firms to support revenue protection on its network and supporting UK
Companies House with investigations related to new Economic Crime legislation
Our focus areas
GBG is a high-quality business with a proven track record of delivering
profitable growth and a reputation for addressing our customers' complex
identity challenges. Through our expertise and innovation, we have developed
strong competitive differentiation that underpins our leadership positions
across our markets.
Since becoming CEO at the end of January, my interactions with our team, our
customers and partners has reinforced why I'm excited about GBG's strategic
position in a growing market. That said, I recognise there is scope for
performance improvement, and my overriding objective is to improve the organic
growth rate for the business. This has directly informed our initial focus
areas:
Simplicity: We believe our success will have its foundation in being a simple
and efficient organisation and we were pleased that cost initiatives executed
in FY24 delivered £10 million of annualised savings. Building on this,
simplicity will support our push to be globally aligned, to develop better
innovation, and to drive a performance culture. By operating simply, we will
drive change to make GBG easier to work with, easier to understand, and easier
to prosper within.
We have structured global teams to better focus on our priorities, and we will
continue to simplify our product portfolio to optimise our investments to
increase the effectiveness and innovation of our solutions. We are also
streamlining commercial processes, making it easier for customers to engage
with us, with a key example being a brand refresh. This is designed to enable
our teams to communicate our value proposition more clearly to key
stakeholders, creating a richer understanding of who we are and what we offer.
Being globally aligned: While our Location business has been run globally for
some time, we are continuing to drive towards greater alignment through the
implementation of a global operating model for our Identity Fraud activities.
In our core regions, we are often solving similar complex challenges and there
is still further opportunity to work more closely with greater consistency to
become a stronger and faster organisation that stands out in all the markets
we serve.
We are bringing our identity and fraud capabilities closer together, with our
Chief Product Officer leading a more centralised approach to development and
innovation. By exploiting our size and scale as one of the largest providers
in the market, we will leverage common identity fraud platforms and
capabilities to serve our customers worldwide through localised solutions. We
are also benefiting from being more commercially effective by managing key
suppliers and reducing duplication of investment with a build-once approach.
An example is being able to offer our customers increased performance by
delivering our improved international data sets, developed in our EMEA
Identity business, to customers around the world.
A newly created role of Head of Market Development is focused on leading our
global go-to-market strategy and sales enablement across our Identity Fraud
activities working closely with our regional leaders. This approach will
improve effectiveness and pace across our sales and marketing cycle. We are
already seeing the benefits of this approach in our Americas Identity
business.
Driving a performance culture: As we make progress towards building a simpler
and more efficient organisation focused on growth, we expect to create
momentum across the business that enhances the experience for our customers
and builds on a culture that differentiates us. Across all areas of the Group,
we will increase the emphasis on performance delivery from the significant
talent within the GBG team, which has seen over 130 team members promoted this
year to expanded roles. We have also implemented a high-performance
development programme for key sales and product leaders globally and embedded
performance initiatives that celebrate the collaborative success of the team.
GBG has always had a strong focus on team member engagement, and this will not
change as we evolve. Our latest Gallup survey resulted in 90% of the team
recommending GBG as a great place to work (FY23: 93%) with a total
participation rate of 92%. We did expect to see a moderation in this score
versus the prior year given the level of change and focus on efficiency during
the last 12 months. Strong team engagement is directly correlated with
satisfied customers, and we were particularly pleased to see our latest Net
Promoter Score (NPS) of 50, our highest to date and a 19% increase year on
year in a period when we expanded our NPS monitoring globally.
Differentiation through innovation: Meeting the evolving needs of customers
will be crucial in maintaining our competitive advantage and accelerating our
growth through value-added activities that increase the intelligence provided
to support a customer's decision-making. Our GBG Score solution is
facilitating discussions with customers to understand the confidence they can
place in their current onboarding journey. This complements GBG Trust, our
proprietary identity fraud network to stop fraud at the point of onboarding.
Customers across sectors have contributed more than 50 million identity
records into the network to help onboard consumers more quickly, differentiate
their journey based on a 'trust' score and share insight on bad actors.
We have extensive experience deploying AI and machine learning. Advances in
technology and our product portfolio, such as the Trust network,
mean AI will continue to be a key focus. Product highlights include
new computer vision and machine learning models within our document &
biometric capabilities, delivering a 4.5x improvement in match rate
performance as well as enhancements to our document tamper detection. We
also improved our location intelligence using deep learning models and data
parsing to increase match results by up to 17% in emerging markets. At the
same time as we make significant progress enhancing extensive AI capabilities
to augment our products, we are extending its use across our broader business
operations for improved productivity to provide an exceptional end-to-end
customer experience from setup to support.
Outlook and summary
GBG is a high-quality business with market-leading positions in the key
sectors and geographies we operate. We have good momentum to continue our
journey of building one of the largest identity and location players in the
market through the evolution of our strategy to concentrate and exploit the
most attractive market growth opportunities, with a relentless focus on
delivering shareholder value.
Our focus on identity onboarding supports our customers in managing this
critical stage of a customer lifecycle to help them grow and build long-term
trusted relationships. Products such as GBG Trust reinforce our strength in
this market as the digital transformations of our customers progress and the
world continues to face exponential growth in the threat of fraud.
The new financial year has begun in-line with our expectations, with improved
momentum in Identity and Location continuing from the final quarter of FY24.
The Board is confident GBG will deliver mid-single-digit revenue growth, on a
constant currency basis, which will drive high single-digit growth in adjusted
operating profit. As we look further forward, the Board remains confident that
GBG has the market position, technology leadership and business model to
capitalise upon the significant growth opportunities ahead, delivering
significant and sustainable shareholder value.
Dev Dhiman
Chief Executive Officer
On behalf of the Board
10 June 2024
Financial review
We are pleased that we were able to successfully execute our financial plan
for the year. We had a strong focus on simplification and cost-effectiveness
and as a result have delivered structural savings that we expect will benefit
GBG into the future. Our continued focus on growth initiatives led to us
achieving the acceleration in year-on-year growth in quarter four that we had
expected and built into our plan. This improved revenue growth of
approximately 5.0%, on a constant currency basis, was primarily driven by an
acceleration in the Identity segment, as a result of improving trends in the
Americas and EMEA. This gives us positive momentum going into the new
financial year.
Revenue growth opportunities in FY24 continued to be impacted by the general
macroeconomic conditions which has suppressed consumer demand and business
confidence leading to lower transactional volumes for GBG. However, some of
the more specific headwinds the Group faced in the previous year, relating to
changes in consumer behaviours driving demand reductions in the internet
economy and particularly fintech businesses, somewhat abated from the fourth
quarter of the year.
In FY24 we delivered constant currency revenue growth of 2.7% and as a result
of the sharp focus on simplification and efficiencies, we recorded our highest
ever level of adjusted operating profit.
GBG's mix of commercial models and resilient customer retention continues to
support strong cash generation and good forward visibility due to our high
levels of repeatable revenue, with 57.5% (FY23: 56.7%) from subscriptions and
94.8% (FY23: 93.7%) of revenue coming from the combination of subscriptions
and consumption.
This focus on driving simplicity and efficiency has enabled GBG to prioritise
the disciplined investment required to optimise our core solutions in a
competitive market, while at the same time deliver growth in returns for
shareholders. These initiatives, which began during FY23, have achieved an
annualised run-rate reduction in operating expenditure of £10 million and
helped deliver an improved adjusted operating profit margin of 22.1%, which
was ahead of the reported FY23 margin of 21.5%. This was despite inflationary
pressures and the FY23 margin benefiting from an unusually large FX gain
primarily from the retranslation of intercompany loans. Excluding gains and
losses on foreign exchange, the FY24 adjusted operating profit margin was
still 22.1%, against 20.4% in the prior year.
Our financial position and balance sheet is strong and in FY24 cash conversion
returned to more normal levels at 90.6% (FY23: 67.3%). By the end of the year
GBG's net debt had reduced to £80.9 million from £105.9 million at the
previous year end. The net debt to EBITDA ratio reduced to 1.27 times (FY23:
1.68 times). As we enter the new financial year, we remain focused on cash
generation and further repayment of debt.
Revenue and gross margin
Revenue declined on a reported basis by 0.5% but after adjusting for changes
in foreign exchange rates, the constant currency revenue growth in FY24 was
2.7%. More detail on revenue performance in each of our operating segments is
included in the Chief Executive Officer's Review.
We were particularly pleased with the level of revenue growth attributable to
new customers won in the last 12 months which has increased to 4.6% (FY23:
4.5%) and as expected, Net Revenue Retention (NRR) of 98.1% has improved
compared to the prior year (92.3%). In FY24 we have seen a reduction in the
NRR associated with Fraud segment, which is more susceptible to short-term
fluctuations in NRR as contracts are generally larger and revenue timing
dependant on renewal dates. NRR, excluding the Fraud segment, increased from
91.1% to 99.0%.
Gross margin for the year of 70.1% was a small reduction against the prior
year when the gross margin was 71.0%. This reflects the revenue mix in the
year both across our segments but also between direct and partner channels, in
addition to an increase in cloud hosting costs. In the second half of the year
the revenue mix, along with a focus on cloud hosting optimisation, resulted in
gross margin of 71.0%, compared to 69.2% in the first half.
Operating profit and cost management
On a reported basis, there was an operating loss of £41.4 million (FY23: loss
of £112.4 million), principally due to the goodwill impairment charge of
£54.7 million recognised at the half year (FY23: £122.2 million).
Adjusted operating profit was £61.2 million (FY23: £59.8 million), which
represents a margin of 22.1% (FY23: 21.5%) and an 8% increase over FY23,
excluding the £3 million foreign exchange gain in the prior year.
This improvement reflects a tight focus on cost efficiency and simplification
of our business, combined with disciplined prioritisation of investment to
capitalise on our long-term market opportunities.
Despite the general inflationary pressures of the markets in which we operate,
our adjusted operating expenses were £8.8 million or 6.3% lower than the
prior year. We managed headcount tightly and carefully considered our team
member recruitment and the replacement of leavers. This, together with
targeted redundancies, led to an 8% reduction in our average headcount over
the course of the year.
We also completed a review of our physical office footprint reducing
commitments and costs meaningfully to reflect the hybrid working environment
of our teams as well the changes we have implemented over the last few years
to our geographical footprint, particularly for our technology teams.
Total spend on technology decreased to £46.5 million (FY23: £54.0 million),
which represents a reduction of 13.9%. We achieved this through strict
prioritisation of technology projects to ensure our teams are focused on fewer
projects and ones of highest opportunity for GBG as well as further resource
offshoring to lower cost locations.
These cost saving initiatives underpinned our profit delivery in FY24 but have
also enabled some level of re-investment into a small number of key product
development activities to ensure we maintain our competitive differentiation
and are positioned to achieve our short, medium and long-term goals.
Normalised and exceptional items
Amortisation of acquired intangibles
The charge for the year of £39.4 million (FY23: £42.8 million) represents
the non-cash cost of amortising separately identifiable intangible assets
including technology-based assets and customer relationships that were
acquired through business combinations. The decreased charge in FY24 is due to
the impact of some intangibles becoming fully amortised during the year, in
addition to changes in exchange rates.
Share-based payments
During FY24 3.9 million (FY23: 3.3 million) new share option awards were
granted to directors and team members across the Group, including through the
GBG Sharesave scheme. This increase was due to the share price being
comparatively lower in FY24 leading to a greater number of shares being
awarded for any given value.
The charge for the year of £3.5 million (FY23: £2.3 million) has increased
as FY23 included a credit due to a change in the assumption for the percentage
of awards expected to vest based on EPS and TSR performance.
Impairment of goodwill
As required under IFRS, the Group conducts an annual impairment review of
goodwill and intangible assets. This review compares the carrying value on the
Group's balance sheet of those assets against the present value of the future
cashflows they are expected to generate.
As reported in our half year results for the six months ended 30 September
2023, significant increases to central bank interest rates since 31 March 2023
resulted in the post-tax discount rate used in our assessment and applied to
the US cashflows increasing from 9.2% at 31 March 2023 to 9.9%. This resulted
in an exceptional non-cash goodwill impairment charge of £54.7 million. More
detail can be found in note 13.
Other exceptional items
In addition to the goodwill impairment charge, other exceptional costs of
£4.9 million (FY23: £5.0 million) were incurred by the Group in the year and
have been detailed in note 6. Broadly, these exceptional charges arose in
support of our initiatives to achieve future operational simplification and
efficiency.
The most significant elements were the exit costs for a number of team members
which totalled £4.0m as part of this group wide review; and £0.7m of
integration costs as we finalised projects to align systems from the Acuant
acquisition.
Net finance costs
The Group incurred net finance costs for the year of £9.0 million (FY23:
£6.4 million). The increase is due to the annualised impact of the
significant increases in the Secured Overnight Financing Rate (SOFR) interest
rate during FY23 (from 0.3% to 4.8%), upon which the Group's loan facility
interest rate is linked. SOFR continued to increase until July 23 and has
remained around the 5.3% level throughout the rest of FY24.
Strong cash generation has enabled the Group to reduce net debt by £25.0
million and making repayments against the loan facility will continue to be a
focus during FY25.
Taxation
The total tax credit of £1.8 million (FY23: £1.0 million charge) includes
£8.8 million of current tax payable on the Group's taxable profits and losses
in the year (FY23: £12.9 million), offset by a deferred tax credit of £10.6
million (FY23: £11.9 million).
The reported effective tax rate for the Group has moved from negative 0.8% in
FY23 to 3.6% in FY24.
The adjusted effective tax rate, which excludes the impact of amortisation of
acquired intangibles, share-based payments and exceptional items increased
from 21.3% to 25.2%. The majority of this increase is due to UK statutory tax
rate increasing from 19% to 25% from 1 April 2023.
The tax rate attributable to US State taxes has fallen and largely this is due
to changes in the calculation method for some US States. GBG Americas has
significant deferred tax assets that have been revalued at the lower tax rate
resulting in a tax charge that is fully recognised as a discrete item in the
year to 31 March 2024.
The Group expects its future adjusted effective tax rate to be approximately
25%.
Earnings per share
Basic earnings per share improved from a loss of 47.5 pence to a loss of 19.2
pence reflecting the reduction in the non-cash goodwill impairment charge.
Adjusted earnings (adjusted operating profit less net finance costs and
adjusted tax) decreased to £39.0 million (FY23: £42.1 million) due to the
higher net finance cost and higher adjusted tax charge. This resulted in a
7.7% decrease in adjusted diluted earnings per share from 16.4 pence to 15.1
pence.
The basic weighted average number of shares at 31 March 2024 increased
minimally to 252.6 million (FY23: 252.2 million), due primarily to the full
year impact of shares issued during the prior year.
Deferred and accrued revenue
Deferred revenue at the end of the year decreased by 2.1% to £55.3 million
(FY23: £56.5 million).
This balance principally consists of contracted licence revenues and profits
that are payable up front but recognised over time as the Group's revenue
recognition criteria are met. The deferred revenue balance does not represent
the total contract value of any future unbilled annual or multi-year,
non-cancellable agreements as the Group more typically invoices customers in
annual or quarterly instalments. The deferred revenue balance at any point in
time is determined by several factors, including seasonality, the compounding
effects of renewals, invoice duration, invoice timing, FX rates and new
business linearity within a reporting period.
Accrued revenue at the end of the year increased by £6.9 million to £14.5
million (FY23: £7.6 million). This increase was primarily due to timing
differences with several larger contracts, mostly in the Fraud and Location
segments, signed or renewed during the year where the revenue recognition
profile is different to the invoicing profile.
Cash flows
Group operating activities before tax payments and exceptional items generated
£57.8 million of cash (FY23: £42.5 million) representing an Adjusted EBITDA
to operating cash conversion ratio of 90.6% (FY23: 67.3%). Following the
specific and non-recurring factors impacting cash conversion during the prior
year, the operating cash conversion has returned to a level more consistent
with previous years and GBG's medium-term guidance.
During the year to 31 March 2024, net repayments against the RCF were £23.0
million, resulting in outstanding balances of $129 million (FY23: $149
million) and £nil (FY23: £7 million).
Overall, our net debt at 31 March 2024 decreased to £80.9 million. This was
despite the £10.1 million full year dividend payment, £1.2 million payment
of contingent consideration related to the Cloudcheck acquisition and
exceptional cash costs of £5.4 million. Offsetting these costs were a
positive £1.8 million retranslation impact from the conversion of the
non-sterling denominated cash and debt into pound sterling and a £1.3 million
receipt following the sale of an owned property during the year.
Further detailed analysis of this movement is included in the consolidated
cash flow statement .
We were pleased to obtain approval for the exercise of the second of the
one-year extension options on the existing revolving credit facility.
Extending the length of the facility through to July 2027 provides a platform
to support investment in organic growth and potential future M&A activity.
Dividend
At the AGM, the Board of Directors will propose a final ordinary dividend of
4.20 pence per share (FY23: 4.00 pence), amounting to £10.6 million (FY23:
£10.1 million).
If approved, this will be paid on 2 August 2024 to ordinary shareholders whose
names appear on the register of members at the close of business on 21 June
2024. The Group continues to operate a Dividend Reinvestment Plan, allowing
eligible shareholders to reinvest their dividends into GBG shares.
In proposing the FY24 final dividend amounting to £10.6 million, the
Directors have assessed each of the components of equity at 31 March 2024 and
assessed how much of each component is considered distributable in accordance
with applicable guidance. The Company has assessed that £86,739,000 of Merger
Reserve recognised upon the acquisition of Acuant Intermediate Holding Corp is
considered to be a realised profit, as a realised loss has been recognised on
the impairment of the related asset - being the investment in GBG (US)
Holdings LLC.
Therefore, the Directors consider that there are sufficient distributable
reserves available at 31 March 2024 for the declaration of this dividend.
Treasury policy and financial risk
The Group's treasury operation is managed by a Treasury Committee within
formally defined policies and reviewed by the Board. The Treasury Committee
meets on a regular basis to review cash flow forecasts, covenant compliance,
exposure to interest rate and foreign currency movements and make
recommendations to the Board based on these reviews.
The Treasury Committee receives weekly cash information to monitor liquidity
across the Group and ensure that significant cash outflows, such as
acquisition payments, dividends and loan repayments, could be made without
exposing the Group to undue risk.
The Group finances its activities principally with cash, short-term deposits
and borrowings but has the ability to draw down up to £72.8 million of
further funding from a committed revolving credit facility. 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
used to repay the RCF, whilst ensuring that a suitable operational level of
cash is retained.
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. It is not the Group's policy to engage in speculative
activity or to use complex financial instruments.
Approved by the Board on 10 June 2024
David Ward
Chief Financial Officer
10 June 2024
Consolidated statement of profit or loss
Year ended 31 March 2024
2024 2023
Note Before Normalised and Before Normalised and
exceptional exceptional exceptional exceptional
items items(1) Total items items(1) Total
£000 £000 £'000 £000 £000 £'000
Revenue 3, 4 277,325 - 277,325 278,810 - 278,810
Cost of sales (82,805) - (82,805) (80,994) - (80,994)
Gross profit 194,520 - 194,520 197,816 - 197,816
Operating expenses (132,386) (102,548) (234,934) (141,235) (172,246) (313,481)
Net (loss)/gain on foreign exchange (162) - (162) 3,022 - 3,022
(Increase)/decrease in expected credit losses of trade receivables (775) - (775) 214 - 214
Operating profit/(loss) 61,197 (102,548) (41,351) 59,817 (172,246) (112,429)
Finance income 3, 7 262 - 262 636 - 636
Finance costs 8 (9,297) - (9,297) (7,037) - (7,037)
Profit/(loss) before tax 52,162 (102,548) (50,386) 53,416 (172,246) (118,830)
Income tax credit/(charge) 9 (13,155) 14,958 1,803 (11,354) 10,390 (964)
Profit/(loss) after tax for the year attributable to equity holders of the
parent
39,007 (87,590) (48,583) 42,062 (161,856) (119,794)
Earnings per share 10
- basic earnings per share for the year 15.4p (19.2p) 16.7p (47.5p)
- diluted earnings per share for the year 15.1p (19.2p) 16.4p (47.5p)
( )
(1) Normalised items include: amortisation of acquired intangibles
£39,447,000 (2023: £42,758,000) and share-based payment charges £3,488,000
(2023: £2,313,000). Exceptional items total £59,613,000 (2023:
£127,175,000) (see note 6).
The accompanying notes are an integral part of this consolidated statement of
profit or loss.
Consolidated statement of comprehensive income
Year ended 31 March 2024
2024 2023
£'000 £'000
Loss after tax for the period attributable to equity holders of the parent (48,583) (119,794)
Other comprehensive (expense)/income:
Items that may be reclassified to profit or loss in subsequent periods:
Exchange differences on retranslation of foreign operations (net of tax) (12,306) 35,060
Total items that may be reclassified to profit or loss in subsequent periods (12,306) 35,060
Items that will not be reclassified to profit or loss in subsequent periods
Fair value movement on investments (1,600) 700
Total items that may be reclassified to profit or loss in subsequent periods (1,600) 700
Total other comprehensive (expense)/income (13,906) 35,760
Total comprehensive expense for the period attributable to equity holders of
the parent
(62,489) (84,034)
The accompanying notes are an integral part of this consolidated statement of
comprehensive income.
Consolidated statement of changes in equity
Year ended 31 March 2024
Other reserves
Foreign currency translation reserve
Equity Share premium Capital redemption reserve Total other reserves
share Merger reserve Treasury shares Retained earnings/(accumulated losses) Total
capital equity
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 April 2022 6,297 566,769 99,999 3 1,423 - 101,425 112,636 787,127
Loss for the period - - - - - - - (119,794) (119,794)
Other comprehensive income - - - - 35,060 - 35,060 700 35,760
Total comprehensive income/(expense) for the period - - - - 35,060 - 35,060 (119,094) (84,034)
Issue of share capital 14 812 - - - - - - 826
Investment in own shares - - - - - (2,500) (2,500) (2,500)
Cost of employee benefit trust shares issued to employees - - - - - 1,426 1,426 (1,417) 9
Share-based payments - - - - - - - 2,313 2,313
Tax on share options - - - - - - - (143) (143)
Net share forfeiture receipt - - - - - - - 146 146
Equity dividend 11 - - - - - - - (9,600) (9,600)
Balance at 31 March 2023 6,311 567,581 99,999 3 36,483 (1,074) 135,411 (15,159) 694,144
Loss for the period - - - - - - - (48,583) (48,583)
Other comprehensive income - - - - (12,306) - (12,306) (1,600) (13,906)
Total comprehensive iexpense for the period - - - - (12,306) - (12,306) (50,183) (62,489)
4 - - - - - - - 4
Issue of share capital
Investment in own shares - - - - - - - - -
Cost of employee benefit trust shares issued to employees - - - - - 947 947 (939) 8
Share-based payments - - - - - - - 3,488 3,488
Tax on share options - - - - - - - 104 104
Net share forfeiture refund - - - - - - - (37) (37)
Equity dividend 11 - - - - - - - (10,093) (10,093)
Balance at 31 March 2024 6,315 567,581 99,999 3 24,177 (127) 124,052 (72,819) 625,129
The accompanying notes are an integral part of this consolidated statement of
changes in equity.
Consolidated balance sheet
As at 31 March 2024
Note
2024 2023
£'000 £'000
Assets
Non-current assets
Goodwill 12 561,622 626,394
Other intangible assets 12 181,064 224,834
Property, plant and equipment 12 1,650 3,752
Right-of-use assets 12 1,565 1,449
Investments 1,426 3,026
Deferred tax asset 937 793
Trade and other receivables 14 6,223 4,305
754,487 864,553
Current assets
Inventories 1,316 2,619
Trade and other receivables 14 72,841 65,313
Current tax 2,939 1,083
Cash and cash equivalents 21,321 21,552
98,417 90,567
Total assets 852,904 955,120
Equity and liabilities
Capital and reserves
Equity share capital 6,315 6,311
Share premium 567,581 567,581
Other reserves 124,052 135,411
Accumulated losses (72,819) (15,159)
Total equity attributable to equity holders of the parent 625,129 694,144
Non-current liabilities
Loans and borrowings 16 101,115 126,411
Lease liabilities
875 524
Provisions 741 792
Deferred revenue 2,337 1,492
Deferred tax liability 23,819 34,986
128,887 164,205
Current liabilities
Lease liabilities 836 1,242
Trade and other payables 15 43,669 37,312
Deferred revenue 52,961 55,015
Contingent consideration 17 - 1,237
Current tax 1,422 1,965
98,888 96,771
Total liabilities 227,775 260,976
Total equity and liabilities 852,904 955,120
The accompanying notes are an integral part of this consolidated balance
sheet.
Approved by the Board on 10 June 2024
D Dhiman - Director
D M Ward - Director
Registered in England number 2415211
Consolidated cash flow statement
Year ended 31 March 2024
Note 2024 2023
£'000 £'000
Loss before tax: (50,386) (118,830)
Adjustments to reconcile loss before tax to net cash flows
Finance income 7 (262) (636)
Finance costs 8 9,297 7,037
Depreciation of plant and equipment 12 1,306 1,771
Depreciation of right-of-use assets 12 1,155 1,491
Amortisation of intangible assets 12 39,612 42,826
Impairment of goodwill and intangible assets 12 54,707 125,022
Loss on disposal of plant and equipment and intangible assets (24) 379
Loss on disposal of businesses - 113
Fair value adjustment on contingent consideration - (1,660)
Unrealised gain on foreign exchange (61) (3,512)
Share-based payments 3,488 2,313
Decrease/(increase) in inventories 1,227 (1,448)
Decrease in provisions (36) (47)
Increase in trade and other receivables (11,723) (20)
Increase/(decrease) in trade and other payables 5,373 (16,229)
Cash generated from operations 53,673 38,570
Income tax paid (10,131) (4,263)
Net cash generated from operating activities 43,542 34,307
Cash flows used in investing activities
Acquisition of subsidiaries, net of cash acquired 17 (1,200) (4,991)
Purchase of plant and equipment 12 (448) (968)
Purchase of software 12 (9) (57)
Proceeds from disposal of plant and equipment 1,306 79
Net outflow from disposal of businesses - (18)
Interest received 7 82 569
Net cash flows used in investing activities (269) (5,386)
Cash flows used in financing activities
Finance costs paid (8,147) (6,426)
Proceeds from issue of shares 4 826
Purchase of shares for Employee Benefit Trust - (2,500)
(Refund)/proceeds from share forfeiture (37) 146
Proceeds from new borrowings, net of arrangement fee 16 9,714 12,000
Repayment of borrowings 16 (32,967) (22,394)
Repayment of lease liabilities (1,399) (2,062)
Dividends paid to equity shareholders 11 (10,093) (9,600)
Net cash flows used in financing activities (42,925) (30,010)
Net increase/(decrease) in cash and cash equivalents 348 (1,089)
Effect of exchange rates on cash and cash equivalents (579) 339
Cash and cash equivalents at the beginning of the period 21,552 22,302
Cash and cash equivalents at the end of the period 21,321 21,552
The accompanying notes are an integral part of this consolidated cash flow
statement.
Notes to the Accounts
1. Basis of preparation
The consolidated financial statements have been prepared in accordance with
UK-adopted international accounting standards, as applied in accordance with
the provisions of the Companies Act 2006. Accounting policies have been
applied consistently to all years presented unless otherwise stated.
The preliminary announcement covers the period from 1 April 2023 to 31 March
2024 and was approved by the Board on 10 June 2024. It is presented in Pounds
Sterling (£) and all values are rounded to the nearest thousand pounds
(£'000) except where otherwise indicated.
The financial information set out herein does not constitute the Company's
statutory accounts for the years ended 31 March 2024 or 2023 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 2024. Statutory accounts for 2023 have
been delivered to the Registrar of Companies, and those for 2024 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.
Non-GAAP Measures
The Group presents the non-GAAP performance measure 'adjusted operating
profit' on the face of the consolidated statement of profit or loss. Adjusted
operating profit is not defined by IFRSs and therefore may not be directly
comparable with the adjusted operating profit measures of other companies.
The business is managed and measured on a day-to-day basis using adjusted
results. To arrive at adjusted results, certain adjustments are made for
normalised and exceptional items that are individually significant and which
could, if included, distort the understanding of the performance for the year
and the comparability between periods.
Normalised items
These are recurring items which management considers could affect the
underlying results of the Group.
These items relate to:
• amortisation of acquired intangibles; and
• equity-settled share-based payments charges.
Other types of recurring items may arise; however, no others were identified
in either the current or prior year. Recurring items are adjusted each year
irrespective of materiality to ensure consistent treatment.
Management consider these items to not reflect the underlying performance of
the Group.
Exceptional Items
The Group presents as exceptional items those significant 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. Such items may include, but are not restricted to,
significant acquisition, restructuring and integration related costs,
adjustments to contingent consideration, profits or losses on disposal of
businesses and significant impairment of assets. Exceptional costs are
discussed further in note 6.
Redundancy costs are only classified within exceptional items if they are
linked to a reorganisation of part of the business, including when as a result
of a business integration.
Management consider these significant and/or non-recurring-items to be
inherently not reflective of the future or underlying performance of the
Group.
Going concern
The assessment of going concern relies heavily on the ability to forecast
future cash flows over the going concern assessment period which covered the
period through to 30 September 2025. Although GBG has a robust budgeting and
forecasting process, the continued economic uncertainty caused by the
macroeconomic environment means that additional sensitivities and analysis
have been applied to test the going concern assumption under a range of severe
but plausible downside scenarios and a reverse stress test scenario.
The Group has continued to successfully convert adjusted operating profit into
cash. During the year to 31 March 2024, GBG's operating cash to Adjusted
EBITDA ratio ('cash conversion') was 90.6% an increase of 23.3% on the prior
year. This improvement was due to a number of specific non-recurring factors
which distorted the cash conversion in the prior period, with the performance
now more reflective of historic and expected future levels.
At 31 March 2024 GBG was in a net debt position of £80.9 million (FY23:
£105.9 million), an improvement of £25.0 million since 31 March 2023. Cash
flow was negatively impacted by continued increases in interest rates during
the first half of the year (Secured Overnight Financing Rate (SOFR)) increased
by over 0.5% throughout the financial year which has led to higher interest
payments on the RCF facility.
The RCF facility has a maximum level of £175 million which could be drawn
down for working capital purposes if required. As at 31 March 2024, the
available undrawn facility was £72.8 million compared to £47.5 million at 31
March 2023.
Following bank approval in October 2023 for the exercise of the one-year
extension on the facility, the Group has access to a £175 million facility
until July 2026 and £140 million until July 2027.
The facility agreement has the following covenants:
· Leverage - consolidated net borrowings as a multiple of
Adjusted EBITDA for the last 12 months, assessed quarterly in arrears, must
not exceed 3.00:1.00
· Interest cover - Adjusted EBITDA for the past 12 months
as a multiple of consolidated net finance charges, for the last 12 months,
assessed quarterly in arrears, must not fall below 4.00:1.00
The Board approved budget showed continued significant headroom in the
covenant compliance tests and sufficient liquidity to maintain operations. The
budget model was then adjusted to reflect a severe but plausible downside
scenario, including increases in costs, interest rates as well as reduced
revenue growth both on an overall Group basis and specific to certain areas of
the business. Under these downside scenarios, the covenant compliance and
liquidity position did not result in any risk to going concern. Relative to
the budget produced by management there have not been any adverse variances in
the overall trading performance since the year-end.
Following consideration of the budget and a range of downside scenarios, the
Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future.
Therefore, the Directors consider it appropriate to adopt the going concern
basis of accounting in preparing the consolidated financial statements.
2. Accounting Policies
The preliminary statement has been prepared on a consistent basis with the
accounting policies set out in the last published financial statements for the
year ended 31 March 2023. New standards and interpretations which came into
force during the year did not have a material impact on the Group's financial
statements.
3. Revenue
Revenue disclosed in the consolidated statement of profit or loss is analysed
as follows:
2024 2023
£'000 £'000
Subscription revenues:
Consumption-based 46,440 45,427
Term-based 112,995 112,034
Total subscription revenues 159,435 157,461
Consumption 103,433 103,834
Hardware 7,825 8,660
Other 6,632 8,655
Revenue 277,325 278,810
4. Segmental information
The Group's operating segments are aggregated and internally reported to the
Group's Chief Executive Officer as three reportable segments: Location,
Identity and Fraud on the basis that they provide similar products and
services.
'Central overheads' represents Group operating costs such as technology,
compliance, finance, legal, people team, information security, premises,
Directors' remuneration and PLC costs.
The measure of performance of those segments that is reported to the Group's
Chief Executive Officer is adjusted operating profit, being profits before
amortisation of acquired intangibles, equity-settled share-based payments,
exceptional items, net finance costs and tax, as shown below.
Information on segment assets and liabilities is not regularly provided to the
Group's Chief Executive Officer and is therefore not disclosed below.
Location Identity Fraud Total
Year ended 31 March 2024 £'000 £'000 £'000 £'000
Subscription revenues:
Consumption-based 17,437 26,827 2,176 46,440
Term-based 55,444 24,945 32,606 112,995
Total subscription revenues 72,881 51,772 34,782 159,435
Consumption 7,203 94,533 1,697 103,433
Hardware - 7,825 - 7,825
Other 982 1,931 3,719 6,632
Total revenue 81,066 156,061 40,198 277,325
Contribution 32,384 42,704 14,812 89,900
Central overheads (27,766)
Foreign exchange loss (162)
Expected credit losses of trade receivables (775)
Adjusted operating profit 61,197
Amortisation of acquired intangibles (39,447)
Share-based payments charge (3,488)
Exceptional items (59,613)
Operating loss (41,351)
Finance income 262
Finance costs (9,297)
Income tax credit 1,802
Loss for the year (48,583)
Location Identity
Fraud Total
Year ended 31 March 2023 £'000 £'000 £'000 £'000
Subscription revenues:
Consumption-based 16,809 27,427 1,191 45,427
Term-based 53,522 27,586 30,926 112,034
Total subscription revenues 70,331 55,013 32,117 157,461
Consumption 5,917 96,269 1,648 103,834
Hardware - 8,860 - 8,860
Other 642 2,587 5,426 8,655
Total revenue 76,890 162,729 39,191 278,810
Contribution 29,897 47,623 10,259 87,779
Central overheads (31,198)
Foreign exchange gain/(loss) 3,022
Expected credit losses of trade receivables 214
Adjusted operating profit 59,817
Amortisation of acquired intangibles (42,758)
Share-based payments charge (2,313)
Exceptional items (127,175)
Operating loss (112,429)
Finance income 636
Finance costs (7,037)
Income tax expense (964)
Loss for the year (119,794)
5. Operating loss
This is stated after charging:
2024 2023
£'000 £'000
Research and development costs recognised as an operating expense 15,683 20,176
Other technology related costs recognised as an operating expense 30,802 33,817
Total Technology related costs recognised as an operating expense 46,485 53,993
6. Exceptional items
2024 2023
£'000 £'000
(a) Integration costs 729 686
(b) Costs associated with team member reorganisations 4,018 1,813
(c) Rationalisation of office locations 159 391
(d) Impairment of goodwill (note 12 & 13) 54,707 122,225
(e) Impairment of intangibles - 2,797
(f) Acquisition related costs/(income) - (1,087)
(g) Loss on disposal of businesses - 113
(h) Write off of cloud-based software - 237
Total exceptional costs 59,613 127,175
(a) Integration costs have been incurred in relation to the integration of
the Acuant and Cloudcheck acquisitions. This principally relates to
consultancy fees paid to advisors in running programmes to deliver revenue and
cost synergies from the acquisitions, travel for specific integration
meetings, costs relating to the alignment of global systems and business
operations, the costs of additional other temporary resources required for the
integration and claims associated with the pre acquisition period. To 31 March
2024, the Group expensed £729,000 (2023: £686,000) relating to the
integration of Acuant and Cloudcheck. Integration activities have ended during
the year ended 31 March 2024. Due to the size and nature of acquisition and
integration costs, management consider that they do not reflect the Group's
trading performance and so are adjusted to ensure consistency between periods.
(b) Costs associated with team member reorganisations relate to exit costs
of personnel leaving the business on an involuntary basis, either as a result
of integrating acquisitions or due to reorganisations within our operating
divisions as part of a Group-wide restructuring exercise. Due to the nature of
these costs, management deem them to be exceptional in order to better reflect
our underlying performance. Exit costs outside of these circumstances are
treated as an operating expense.
(c) During the year to 31 March 2023, a project was started to rationalise
the Group's office locations. In the year to 31 March 2024, the Group expensed
£159,000 (2023: £391,000) with £254,000 relating to the costs associated
with exiting leased buildings and £95,000 credit relating to a gain on
disposal from the sale of an owned property. Due to the nature of these costs,
management deem them to be exceptional in order to better reflect our
underlying performance. This rationalisation project was finalised at the end
of FY24.
(d) As part of the Group's annual impairment testing in the prior year, it
was identified that the goodwill allocated to the Identity - Americas group of
CGUs was impaired and an impairment charge of £122,225,000 was recognised in
the year to 31 March 2023. Due to increases in discount rates during the year
to 31 March 2024, an additional impairment charge of £54,707,000 was
recognised during the year.
(e) During the year to 31 March 2023, as part of the continued integration
of Acuant and simplification of our brands in the Americas region, Acuant was
rebranded as IDology. As a result, the value of the Acuant brand included
within acquired intangibles was considered to be £nil and an impairment
charge of £2,797,000 was recognised.
(f) Acquisition related costs of £nil (2023: £1,087,000 credit).
During the year to 31 March 2023, acquisition related costs included:
· Foreign exchange movement on contingent consideration
(see note 17). The contingent consideration liabilities related to IDology and
Cloudcheck are based on the US Dollar and New Zealand dollar respectively. As
a result, the liabilities were retranslated at the balance sheet date with a
loss of £379,000 being treated as an exceptional item.
· Legal and professional advisor costs directly
attributable to the acquisition of Acuant and the possible offer by GTCR to
acquire GBG of £573,000.
· A fair value reassessment was made to the Cloudcheck
contingent consideration liability. Based on actual performance in the period
following acquisition, it was determined that the performance criteria would
not be met in full and a credit of £2,753,000 was taken within exceptional
items. The contingent consideration in respect of pre-acquisition tax losses
within IDology Inc was also settled during the year, with an additional charge
of £806,000 being recognised in exceptional items. £92,000 was also received
from the IDology escrow administrator to reimburse pre-acquisition liabilities
paid to the seller.
(g) During the year to 31 March 2021, the business disposed of its
Marketing Services and Employ and Comply businesses which resulted in an
overall profit on disposal. In the year to 31 March 2023, additional costs of
£113,000 were incurred in relation to the finalisation of the disposal of
these businesses.
(h) During the year to 31 March 2023, a write off of cloud-based software
of £237,000 has been recognised. A final agenda decision by the IFRS
Interpretations Committee clarified that configuration or customisation costs
from cloud computing arrangements do not usually meet the definition of
intangible assets under IAS 38 Intangible Assets' and therefore should not be
capitalised. As a result, previously capitalised costs that did not satisfy
the clarified recognition criteria were written off.
The total cash net outflow during the year as a result of exceptional items
was £4,124,000 (2023: £3,934,000 outflow). The tax impact of the exceptional
items was a tax credit of £1,158,000 (2023: tax credit of £917,000).
7. Finance income
2024 2023
£'000 £'000
Bank interest receivable 73 16
Interest income on multi-year contracts 180 53
Tax interest receivable 9 567
262 636
8. Finance costs
2024 2023
£'000 £'000
Bank interest payable 8,712 6,413
Interest on long service award 21 9
Amortisation of bank loan fees 341 326
Other interest payable 133 14
Unwinding of discount on contingent consideration liability 20 165
Lease liability interest 70 110
9,297 7,037
9. Income tax (credit)/charge
a) Tax on loss
The tax (credit)/charge in the consolidated statement of profit or loss for
the year is as follows:
2024 2023
£'000 £'000
Current income tax
UK corporation tax on loss for the year 4,590 4,485
Amounts underprovided in previous years 229 637
Foreign tax 3,985 7,754
8,804 12,876
Deferred tax
Origination and reversal of temporary differences (8,054) (12,539)
Amounts (overprovided) in previous years (209) (225)
Impact of change in tax rates (2,344) 852
(10,607) (11,912)
Tax (credit)/charge in the consolidated statement of profit or loss
(1,083) 964
b) Reconciliation of the total tax (credit)/charge
The loss before tax multiplied by the standard rate of corporation tax in the
UK would result in a tax charge as explained below:
2024 2023
£'000 £'000
Consolidated loss before tax (50,586) (118,830)
Consolidated loss before tax multiplied by the standard rate of corporation
tax in
(12,596) (22,578)
the UK of 25% (2023: 19%)
Effect of:
Permanent differences 16,886 31,813
Non-taxable income (1,988) (809)
Rate changes (2,344) 775
Recognition of previously unrecognised deferred tax assets (204) (266)
Tax provision recognised - 392
Adjustments in respect of prior years 20 412
Research and development incentives (417) (123)
Patent Box relief (752) (509)
Share option relief 488 518
Effect of higher taxes on overseas earnings (896) (8,660)
Total tax (credit)/charge reported in the consolidated statement of profit or
loss
(1,803) 964
The Group's reported effective tax rate for the year was 3.6% (2023: (0.8)%).
After adjusting for the impact of amortisation of acquired intangibles,
equity-settled share-based payments and exceptional items, the adjusted
effective tax rate was 25.2% (2023: 21.3%). These measures are defined in the
non-GAAP measures note.
10. Earnings per ordinary share from continuing operations
Basic Diluted Adjusted Basic Adjusted Diluted
pence per pence per pence per pence per
share share share share
2024 (19.2) (19.2) 15.4 15.1
2023 (47.5) (47.5) 16.7 16.4
Basic
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company from continuing operations by the basic weighted
average number of ordinary shares in issue during the year.
Diluted
Diluted earnings per share is calculated by dividing the profit for the year
attributable to ordinary equity holders from continuing operations 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.
2024 2023
No. No.
Basic weighted average number of shares in issue 252,552,462 252,235,803
Basic weighted average number of shares held by the EBT (161,495) (269,104)
Dilutive effect of share options 5,247,463 5,030,313
Diluted weighted average number of shares in issue 257,638,430 256,997,012
For the year ended 31 March 2024 and 31 March 2023, potential ordinary shares
are antidilutive, as their inclusion in the diluted loss per share calculation
would reduce the loss per share, and have therefore been excluded.
Adjusted
Adjusted earnings per share is defined as adjusted operating profit less net
finance costs and adjusted tax divided by the basic weighted average number of
ordinary shares of the Company.
Basic Diluted Basic Diluted
2024 2024 2023 2023
2024 pence per share pence per 2023 pence per share pence per
£'000 share £'000 share
Adjusted operating profit 61,197 24.2 23.8 59,817 23.7 23.3
Less net finance costs (9,035) (3.6) (3.6) (6,401) (2.5) (2.5)
Less adjusted tax (13,155) (5.2) (5.1) (11,354) (4.5) (4.4)
Adjusted earnings 39,007 15.4 15.1 42,062 16.7 16.4
11. Dividends paid and proposed
2024 2023
£'000 £'000
Declared and paid during the year
Final dividend for 2023 paid in July 2023: 4.00p (final dividend for 2022 paid 10,093 9,600
in July 2022: 3.81p)
Proposed for approval at AGM (not recognised as a liability at 31 March)
Final dividend for 2024: 4.20p (2023: 4.00p) 10,609 10,098
12. Non-current assets
Property, plant & equipment Right-of-use assets
Goodwill Other intangible assets £'000 £'000
£'000 £'000
Cost
At 1 April 2023 748,756 357,807 11,467 7,153
Additions - 171 613 1,322
Disposals - (663) (5,728) (4,479)
Foreign exchange adjustment (14,400) (6,644) (276) (68)
At 31 March 2024 734,356 350,671 6,076 3,928
Depreciation, impairment and amortisation
At 1 April 2023 122,362 132,973 7,715 5,704
Charge for the period - 39,612 1,306 1,155
Impairment (note 13) 54,707 - - -
Disposals - (663) (4,439) (4,462)
Foreign exchange adjustment (4,335) (2,315) (156) (34)
At 31 March 2024 172,734 169,607 4,426 2,363
Net book value
At 31 March 2024 561,622 181,064 1,650 1,565
At 1 April 2023 626,394 224,834 3,752 1,449
13. Impairment
Summary
At 30 September 2023, GBG's half year end, it was determined that there was an
indicator of potential impairment in Identity - Americas and Identity - APAC
groups of CGUs. This was as a result of an increase in the applicable discount
rate assumptions used in the value-in-use calculations versus the assumption
used as at the previous impairment review which was conducted as at 31 March
2023.
Following the completion of this impairment review, the carrying value of the
Identity - Americas group of CGUs was reduced to its recoverable amount
through recognition of an impairment charge of £54,707,000 against goodwill.
This charge was recognised within exceptional items in the consolidated
statement of profit or loss. No impairment was identified against the Identity
- APAC group of CGUs.
The annual impairment review was performed at 31 March 2024 for all groups of
CGUs to which goodwill is allocated. Despite performing an impairment review
for the Identity - Americas and Identity - APAC group of CGUs during the half
year review as at 30 September 2023, these two groups of CGUs have been
reviewed again. The results of the annual impairment review are detailed
below.
With the exception of the impairment charge recognised during the period to 30
September 2023 in the half-year review, no impairment was identified in the
other groups of CGUs tested at 31 March 2024. When an impairment loss has
previously been recognised for goodwill, that impairment loss cannot be
reversed in a subsequent period.
Impairment review
Goodwill and intangible assets acquired through business combinations is
allocated to the CGUs that are expected to benefit from that business
combination and has been allocated for impairment testing purposes to seven
groups of CGUs as follows:
§ Location CGU (represented by the Location operating segment excluding the
Location - APAC Unit)
§ Location - APAC CGU (part of the Location operating segment)
§ Identity - EMEA CGU (part of the Identity operating segment)
§ Identity - APAC CGU (part of the Identity operating segment)
§ Identity - Americas CGU (part of the Identity operating segment)
§ Fraud - Investigate CGU (part of the Fraud operating segment)
§ Fraud - APAC CGU (part of the Fraud operating segment)
2024 2023
Goodwill Acquired Intangibles Total Goodwill Acquired Intangibles Total
Name £'000 £'000 £'000 £'000 £'000 £'000
Location Unit 61,622 7,912 69,534 61,775 10,634 72,409
Location - APAC Unit 2,228 468 2,696 2,336 614 2,950
Identity - EMEA Unit 103,070 21,990 125,060 104,484 26,588 131,072
Identity - APAC Unit 73,180 21,631 94,811 75,325 26,402 101,727
Identity - Americas Unit 304,372 127,301 431,673 364,662 157,251 521,913
Fraud - Investigate Unit 3,608 1,661 5,269 3,608 2,821 6,429
Fraud - APAC Unit 13,542 33 13,575 14,204 456 14,660
561,622 180,996 742,618 626,394 224,766 851,160
( )
Key Assumptions Used in Value in Use Calculations - Base Case
The key assumptions for value in use calculations are those regarding the
forecast revenue growth, discount rates and long-term growth rates.
The Group prepares cash flow forecasts using:
· budgets and forecasts approved by the Directors covering
a 5 year period;
· an appropriate extrapolation of cash flows is applied
beyond this to determine a terminal value using a combination of:
o for the Identity segment only - industry analysis of market growth
rates to 2032; and
o a long-term average growth rate applied to perpetuity for the
geographic market being assessed.
Forecast revenue growth rates, margins and cash flow conversion rates were
based on past experience, industry market analysis and strategic opportunities
specific to the group of CGUs being assessed.
The use of a pre-perpetuity projection period of more than five years for the
Identity segment is an accounting judgement. It was considered that beyond the
initial period covered by budgets and forecasts, it was most appropriate to
include a further period of three years of growth rates (2023: four years of
growth rates) that are higher than the long-term average growth rates for that
particular region. The growth rates were considered to be reliable since they
were determined on the basis of multiple pieces of independent, external
industry and market research covering the Identity and Identity Fraud markets
which supported that, over this period, this market is expected to grow at a
higher rate than the long-term growth rates of these geographic markets as a
whole.
Beyond this forecast period, the long-term average growth rate is not greater
than the average long-term retail growth rate in the territory where the group
of CGUs is based UK - 2.0%; USA - 2.5%; Australia - 3.0% (2023: UK - 2.0%; USA
- 2.4%; Australia - 3.6%).
The Directors estimate discount rates using pre-tax rates that reflect current
market assessments of the time value of money and the risks specific to the
individual CGU. Growth rates reflect long-term growth rate prospects for the
economy in which the CGU operates.
2024 2023
Name Pre-tax Growth rate Pre-tax Growth rate
discount rate (in perpetuity) discount rate (in perpetuity)
% % % %
Location Unit 13.7% 2.0% 13.5% 2.0%
Location - APAC Unit 12.7% 3.0% 13.6% 3.6%
Identity - EMEA Unit* 13.4% 2.0% 13.5% 2.0%
Identity - APAC Unit* 12.6% 3.0% 13.6% 3.6%
Identity - Americas Unit* 12.2% 2.5% 12.3% 2.4%
Fraud - Investigate Unit 13.8% 2.0% 13.5% 2.0%
Fraud - APAC Unit 12.7% 3.0% 13.6% 3.6%
* For the year to 31 March 2024, the following revenue growth rates have been
applied to the three year period from 1 April 2029 to 31 March 2032 for these
groups of CGUs: Identity - EMEA 8.0% (2023: 10.3%), Identity - APAC 10.0%
(2023: 12.5%) and Identity - Americas 14.7% (2023: 14.7%).
The headroom/(impairment) (i.e. the excess/(shortfall) of the value of
discounted future cash flows over the carrying amount of the CGU) under the
base case scenario was as follows:
2024 2023
Name Base case(1) Base case(1)
£'000 £'000
Location Unit 246,384 102,029
Location - APAC Unit 15,876 12,298
Identity - EMEA Unit 36,439 32,301
Identity - APAC Unit 34,658 2,741
Identity - Americas Unit 4,144 (122,208)
Fraud - Investigate Unit 62,206 26,628
Fraud - APAC Unit 62,710 49,372
(1) The excess of the recoverable amount over the carrying amount of the CGU
before applying sensitivities
The above assessment is stated after the goodwill impairment recorded at 30
September 2023. The carrying value of the Identity - Americas group of CGUs
was reduced to its recoverable amount through recognition of an impairment
charge of £54,707,000 against goodwill during the period to 30 September
2023. Further details of the reason for this impairment are in the summary
section above and in the Financial Review.
This charge is recognised within exceptional items in the consolidated
statement of profit or loss. Any additional adverse movement in the key
assumptions at the balance sheet date would lead to a further impairment of
goodwill.
Key Assumptions Used in Value in Use Calculations - Sensitised Case
The Group has considered the impact of changes in future revenue growth and
key assumptions on the base case value in use model, to create a sensitised
value in use model. The table below shows the impact on the base case headroom
as a result of the following changes, with all other assumptions being
unchanged:
0.1% change in annual revenue growth forecast 0.1% change in discount rate 0.1% change in long-term growth rate
Name £'000 £'000 £'000
Location Unit (906) (3,660) (2,770)
Location - APAC Unit (312) (279) (225)
Identity - EMEA Unit (1,515) (1,991) (1,204)
Identity - APAC Unit (901) (2,026) (1,364)
Identity - Americas Unit(1) (9,437) (6,616) (4,333)
Fraud - Investigate Unit (320) (755) (569)
Fraud - APAC Unit (767) (1,137) (912)
A sensitised model has been included below, applying the cumulative impact of:
· Increasing pre-tax discount rates by 50bps (2023: 25bps),
to reflect potential increases in government bond yields and associated
risk-free rates. We have increased the sensitivity of this assumption given
the greater volatility observed in discount rates in the last 12 month period;
· Decreasing average annual growth forecasts o between 2025
and 2032 by 100bps (2023: average annual growth forecasts between 2029 and
2032 50bps), to reflect the potential for a worse than predicted market
outlook; and
· Decreasing long term growth rates by 25bps (2023: 25bps),
to reflect a worse than predicted long-term global economic outlook.
It was not deemed necessary to sensitise the operating margin of the CGU given
the strategy for growth. Despite the forecast growth the unsensitised forecast
cash flows do not assume any operating leverage which would increase operating
profit margins. Management determined that should growth be slower than
estimated then there was adequate headroom in the estimates of costs that
operating margins could be preserved.
The headroom/(impairment) (i.e. the excess of the value of discounted future
cash flows over the carrying amount of the CGU) under the sensitised scenario
is below:
2024 2023
Name Base case headroom Change in headroom increasing discount rate by 50bps Change in headroom decreasing annual revenue growth rates during the forecast Change in headroom decreasing long term growth rates by 25bps Sensitised(1) Sensitised(1)
period by 100bps
£'000 £'000
£'000 £'000 £'000
£'000
Location Unit 246,384 (17,491) (13,352) (5,692) 209,849 95,680
Location - APAC Unit 15,876 (1,319) (977) (440) 13,140 11,622
Identity - EMEA Unit 36,439 (9,508) (13,757) (2,292) 10,882 23,337
Identity - APAC Unit 34,658 (9,560) (8,209) (2,589) 14,300 (2,776)
Identity - Americas Unit 4,144 (31,361) (36,990) (8,140) (72,347) (157,506)
Fraud - Investigate Unit 62,206 (3,607) (2,962) (1,164) 54,473 25,445
Fraud - APAC Unit 62,710 (5,369) (3,788) (1,793) 51,760 46,517
(1) Headroom after adjusting future cash flows and key assumptions to create a
sensitised value in use model
The sensitised scenario would lead to impairment of £72,347,000 for Identity
- Americas. Therefore, a reasonably possible change in the value of the key
assumptions could cause CGU carrying amount to exceed its recoverable amount.
When considering goodwill impairment, the break-even rate at which headroom
within each CGU is reduced to £nil, if all other assumptions remain
unchanged, has also been considered.
2024 2023(1)
Name Pre-tax Decrease in base case cash flows Revenue growth rate Pre-tax Decrease in base case cash flows Revenue growth rate
discount rate (2029 to 2032) discount rate (2029 to 2032)
Location Unit 56.7% (78.0)% n/a 28.7% (58.0)% n/a
Location - APAC Unit 67.7% (85.0)% n/a 48.6% (80.0)% n/a
Identity - EMEA Unit 16.5% (23.0)% (1.4)% 15.8% (20.0)% 4.5%
Identity - APAC Unit 15.8% (27.0)% (4.7)% 13.9% (3.0)% 11.4%
Identity - Americas Unit 12.3% (1.0)% 14.2% n/a n/a n/a
Fraud - Investigate Unit 248.9% (92.0)% n/a 63.7% (80.0)% n/a
Fraud - APAC Unit 53.9% (82.0)% n/a 41.1% (76.0)% n/a
With the exception of the Identity - Americas groups of CGUs, the Directors do
not believe that any reasonably possible changes in the value of the key
assumptions noted above would cause a CGU carrying amount to exceed its
recoverable amount.
14. Trade and other receivables
2024 2023
£'000 £'000
Current
Trade receivables 57,157 52,892
Allowance for unrecoverable amounts (2,416) (2,394)
Net trade receivables 54,741 50,498
Prepayments 9,441 10,818
Accrued income 8,659 3,997
72,841 65,313
Non-current
Prepayments 493 701
Accrued income 5,730 3,604
6,223 4,305
15. Trade and other payables
2024 2023
£'000 £'000
Trade payables 13,568 11,427
Other taxes and social security costs 4,983 3,996
Accruals 25,118 21,889
43,669 37,312
16. Loans and borrowings
Bank loans
During the year to 31 March 2024, the Group drew down an additional
£10,000,000 and made repayments of $20,000,000 (£15,967,000) and
£17,000,000. The outstanding balance on the loan facility at 31 March 2024
was £102,175,000 (2023: £127,470,000) representing £nil in GBP (2023:
£7,000,000) and $129,000,000 in USD (2023: $149,000,000).
The facility was due to expire in July 2026 but on 27 October 2023, the Group
exercised the second of the one-year extension options on the existing
revolving credit facility so that the Group has access to a £175 million
facility until July 2026 and £140 million until July 2027. A further
arrangement fee of £286,000 was payable for this extension. Loan arrangement
fees have been netted off the loan balance.
The debt bears an interest rate of Sterling Overnight Index Average (SONIA)
for GBP drawdowns or Secured Overnight Financing Rate (SOFR) for USD drawdowns
plus a margin of between 1.6% and 2.4% depending on the Group's current
leverage position.
The loan is secured by a fixed and floating charge over the assets of the
Group.
2024 2023
£'000 £'000
Opening bank loan 126,411 128,226
New borrowings 10,000 12,000
Agency fee paid (56) -
Loan fees paid for extension (286) (357)
Repayment of borrowings (32,967) (22,394)
Amortisation of loan fees 341 326
Foreign currency translation adjustment (2,328) 8,610
Closing bank loan 101,115 126,411
Analysed as:
Amounts falling due within 12 months - -
Amounts falling due after one year 101,115 126,411
101,115 126,411
Analysed as:
Bank loans 102,175 127,470
Unamortised loan fees (1,060) (1,059)
101,115 126,411
17. Contingent consideration
2024 2023
£'000 £'000
At 1 April 1,237 7,776
Remeasurement of contingent consideration charged to profit or loss 20 806
Unwinding of discount - 165
Release of contingent consideration - (2,753)
Foreign exchange - unrealised (57) 234
Settlement of consideration (1,200) (4,991)
At 31 March
- 1,237
Analysed as:
Amounts falling due within 12 months - 1,237
Amounts falling due after one year - -
At 31 March
- 1,237
The opening balance at 1 April 2022 included £3,842,000 related to the
pre-acquisition tax assets within IDology Inc. A value equivalent to the cash
benefit GBG received for these assets was payable to the sellers once the cash
benefit had been received by GBG. In December 2022, IDology received the cash
refund which was subsequently paid to the sellers. There are no further
payments due in respect of the IDology acquisition.
The remaining contingent consideration was in respect of the acquisition of
Cloudcheck during the year ended 31 March 2022. In July 2023, a payment was
made based on performance in the first of two earn-out periods. Based on
actual performance during the year, it has been determined that the remaining
performance criteria has not been met and so there are no further payments due
in respect of the Cloudcheck acquisition.
19. Alternative performance measures
Management assess the performance of the Group using a variety of alternative
performance measures. In the discussion of the Group's reported operating
results, alternative performance measures are presented to provide readers
with additional financial information that is regularly reviewed by
management. However, this additional information presented is not uniformly
defined by all companies including those in the Group's industry. Accordingly,
it may not be comparable with similarly titled measures and disclosures by
other companies. Additionally, certain information presented is derived from
amounts calculated in accordance with IFRS but is not itself an expressly
permitted GAAP measure. Such measures are not defined under IFRS and are
therefore termed 'non-GAAP' measures. These non-GAAP measures are not
considered to be a substitute for or superior to IFRS measures and should not
be viewed in isolation or as an alternative to the equivalent GAAP measure.
The Group's consolidated statement of profit or loss and segmental analysis
separately identify trading results before certain items. The Directors
believe that presentation of the Group's results in this way is relevant to an
understanding of the Group's financial performance, as such items are
identified by virtue of their size, nature or incidence. This presentation is
consistent with the way that financial performance is measured by management
and reported to the Board and assists in providing a meaningful analysis of
the trading results of the Group. In determining whether an event or
transaction is presented separately, management considers quantitative as well
as qualitative factors such as the frequency or predictability of occurrence.
Examples of charges or credits meeting the above definition, and which have
been presented separately in the current and/or prior years include
amortisation of acquired intangibles, share-based payments charges,
acquisition related costs and business restructuring programmes. In the event
that other items meet the criteria, which are applied consistently from year
to year, they are also presented separately.
In respect of revenue performance measures, the primary measure is revenue
growth at constant currency.
Where the current or prior year revenue has been impacted either by
acquisitions/disposal or significant non-repeating revenue, alternative
measures are presented to provide a more reflective method to compare
performance from one period to another.
Organic revenue growth is used to remove the revenue from businesses acquired
or disposed within the previous 12 months. Organic growth is defined by the
Group as year-on-year continuing revenue growth, excluding acquisitions which
are included only after the first anniversary following their purchase and
disposed businesses.
Pro forma revenue growth is used to remove the impact of material
non-repeating revenue. For example, in the year to 31 March 2023 pro forma
revenue was presented to remove revenue from the US Government's stimulus
programme and exceptional cryptocurrency volume that arose during the year to
31 March 2022.
The following are the key non-GAAP measures used by the Group:
Constant currency
Constant currency means that non-Pound Sterling revenue in the comparative
period is translated at the same exchange rate applied to the current year
non-Pound Sterling revenue. This therefore eliminates the impact of
fluctuations in exchange rates on underlying performance and enables
measurement of performance on a comparable year-on-year basis without the
impact of foreign exchange movements.
2024
Location Identity Fraud Total
£'000 £'000 £'000 £'000
Revenue 81,066 156,061 40,198 277,325
Constant currency adjustment - - - -
Revenue at constant currency 81,066 156,061 40,198 277,325
2023
Location Identity Fraud Total
£'000 £'000 £'000 £'000
Revenue 76,890 162,729 39,191 278,810
Constant currency adjustment (1,321) (5,547) (1,890) (8,758)
Revenue at constant currency 75,569 157,182 37,301 270,052
Growth
Location Identity Fraud Total
% % % %
Revenue 5.4% (4.1%) 2.6% (0.5%)
Constant currency adjustment 1.9% 3.4% 5.2% 3.2%
Revenue at constant currency 7.3% (0.7%) 7.8% 2.7%
Normalised items
These are recurring items which management considers could affect the
underlying results of the Group.
These include:
· amortisation of acquired intangibles; and
· share-based payment charges
Normalised items are excluded from statutory measures to determine adjusted
results.
Adjusted operating profit
Adjusted operating profit means operating profit before exceptional items and
normalised items. Adjusted results allow for the comparison of results
year-on-year without the potential impact of significant one-off items or
items which do not relate to the underlying performance of the Group. Adjusted
operating profit is a measure of the underlying profitability of the Group.
2024 2023
£'000 £'000
Operating loss (41,351) (112,429)
Amortisation of acquired intangibles 39,447 42,758
Share-based payment charges 3,488 2,313
Exceptional items 59,613 127,175
Adjusted operating profit 61,197 59,817
Adjusted operating profit margin
Adjusted operating profit margin is calculated as adjusted operating profit as
a percentage of revenue.
Adjusted operating expenses
Adjusted operating expenses means reported operating profit before exceptional
items and normalised items. Adjusted operating expenses allow for the
comparison of results year-on-year without the potential impact of significant
one-off items or items which do not relate to the underlying operating
expenses of the Group. Adjusted operating expenses is a measure of the
underlying operating expenses of the Group.
2024 2023
£'000 £'000
Reported operating expenses 234,934 313,481
Amortisation of acquired intangibles (39,447) (42,758)
Share-based payments (3,488) (2,313)
Impairment of goodwill (54,707) (122,225)
Other exceptional items (4,906) (4,950)
Adjusted operating expenses 132,386 141,235
Cash conversion %
This is calculated as cash generated from operations in the consolidated cash
flow statement, adjusted to exclude cash payments in the year for exceptional
items, as a percentage of adjusted operating profit. This measures how
efficiently the Group's operating profit is converted into cash.
2024 2023
£'000 £'000
Cash generated from operations before tax payments (from consolidated cash 53,673 38,570
flow statement)
Opening unpaid exceptional items 1,251 1,372
Total exceptional items 59,613 127,175
Non-cash exceptional items (55,836) (123,362)
Closing unpaid exceptional items (904) (1,251)
Cash outflow for exceptional items 4,124 4,474
Cash generated from operations before tax payments and exceptional items paid 57,797 42,504
Adjusted EBITDA 63,823 63,147
Cash conversion % 90.6% 67.3%
Adjusted EBITDA
Adjusted EBITDA means adjusted operating profit before depreciation and
amortisation of non-acquired intangibles. Adjusted EBITDA is a measure of the
underlying cash generation and the profit measure used in our covenant
compliance calculations under the RCF agreement.
2024 2023
£'000 £'000
Adjusted operating profit 61,197 59,817
Depreciation of property, plant and equipment 1,306 1,771
Depreciation of right-of-use assets 1,155 1,491
Amortisation of non-acquired intangibles 165 68
Adjusted EBITDA 63,823 63,147
Adjusted tax
Adjusted tax means income tax charge before the tax impact of amortisation of
acquired intangibles, share-based payment charges and exceptional items. This
provides an indication of the ongoing tax rate across the Group.
Adjusted effective tax rate
The adjusted effective tax rate means adjusted tax divided by adjusted
earnings.
2024 2023
Loss before tax Income tax charge Effective tax rate Profit before tax Income tax charge Effective tax rate
£'000 £'000 % £'000 £'000 %
Reported effective tax rate (50,386) (1,803) 3.6% (118,830) 964 (0.8%)
Add back:
Amortisation of acquired intangibles 42,758 9,463 (12.9%)
39,447 13,391 (109.5%)
Equity-settled share-based payments 2,313 10 (0.5%)
3,488 409 (55.1%)
Exceptional items 59,613 1,158 186.2% 127,175 917 35.5%
Adjusted effective tax rate 52,162 13,155 25.2% 53,416 11,354 21.3%
Adjusted earnings per share ('Adjusted EPS')
Adjusted EPS represents adjusted earnings divided by a weighted average number
of shares in issue and is disclosed to indicate the underlying profitability
of the Group. Adjusted EPS is a measure of underlying earnings per share for
the Group. Adjusted earnings represents adjusted operating profit less net
finance costs and income tax charges. Refer to note 10 for calculation.
Net (debt)/cash
This is calculated as cash and cash equivalent balances less outstanding
external loans. Unamortised loan arrangement fees are netted against the loan
balance in the financial statements but are excluded from the calculation of
net cash/debt. Lease liabilities following the implementation of IFRS 16 are
also excluded from the calculation of net cash/debt since they are not
considered to be indicative of how the Group finances the business. This is a
measure of the strength of the Group's balance sheet.
2024 2023
£'000 £'000
Cash and cash equivalents 21,321 21,552
Loans on balance sheet 101,115 126,411
Unamortised loan arrangement fees 1,060 1,059
External loans 102,175 127,470
Net debt (80,854) (105,918)
Debt leverage
This is calculated as the ratio of net (debt)/cash to adjusted EBITDA. This
demonstrates the Group's liquidity and its ability to pay off its incurred
debt.
2024 2023
£'000 £'000
Net debt (80,854) (105,918)
Adjusted EBITDA 63,823 63,147
Debt leverage 1.27 1.68
Website
The Investors section of the Company's website, (www.gbgplc.com/investors), contains detailed information on news, press releases,
key financial information, annual and interim reports, share price information, dividends and key contact details.
Our share price is also available on the London Stock Exchange website. The following information is a summary and readers are encouraged to view the website for more detailed information.
Dividend Reinvestment Plan
The Company offers a Dividend Reinvestment Plan that enables shareholders to reinvest cash dividends into additional shares in the
Company. Application forms can be obtained from Equiniti.
Share scams
Shareholders should be aware that fraudsters may try and use high pressure tactics to lure investors into share scams. Information on
share scams can be found on the Financial Conduct Authority's website, www.fca.org.uk/scams.
Financial calendar 2024
Annual General Meeting 23 July 2024
Dividend Ex-Div Date 20 June 2024
Dividend Record Date 21 June 2024
Dividend Payment Date 2 August 2024
Shareholder enquiries
GBG's registrar, Equiniti, can deal with any enquiries relating to your
shareholding, such as a change of name or address or a replacement of a share
certificate. Equiniti's Shareholder Contact Centre can be contacted on +44 (0)
371 384 2365. Lines are open from 8:30 a.m. to 5:30 p.m. (UK time), Monday to
Friday, excluding public holidays in England and Wales. You can also access
details of your shareholding and a range of other shareholder services by
registering at www.shareview.co.uk.
Company Secretary & Registered Office Auditor
Annabelle Burton
PricewaterhouseCoopers LLP
GB Group plc 1 Hardman Square
The Foundation, Herons Way Manchester
Chester Business Park M3 3EB
Chester Solicitors
Squire Patton Boggs (UK) LLP
CH4 9GB
1 Spinningfields
United Kingdom
1 Hardman Square
Manchester
Registered in England & Wales
M3 3EB
Company Number: 2415211
Ashurst LLP
T: +44 (0)1244 657333
London Fruit & Wool Exchange
E: enquiries@gbgplc.com
1 Duval Square
W: www.gbgplc.com
London
E1 6PW
Nominated Advisor and Joint Broker Registrars
Numis Securities Limited
Equiniti
45 Gresham Street Aspect House
London Spencer Road
EC2V 7BF Lancing
West Sussex
Joint Broker
Barclays Bank plc BN99 6DA
1 Churchill Place,
Canary Wharf,
London,
E14 5HP
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