GB Group plc Interim Management Statement

GB Group plc Interim Management Statement

GB Group, the identity management specialist, announces its Interim Management Statement relating to the performance of the business for its third quarter ended 31 December 2011.

Highlights for the 9 months to 31 December 2011 are as follows.

Financial Highlights

  • The positive momentum of the Group announced in the half year report continued into the third quarter.
  • Group revenues increased by 20% to £21.2m compared to the same period last year (2010: £17.7m).  On an organic basis, excluding revenue from acquisitions, revenue increased by 7% to £19.0m.
  • Operating profit1 for the period increased by 100% to £2.4m compared to the same period last year (2010: £1.2m).  On an organic basis, excluding the effect of acquisitions, operating profit increased by 84% to £2.2m.
  • Significant enhancements in margins were achieved as a result of the continuing operational leverage. Operating margin, based on the operating profit1 for the 9 months, increased to 11.4% from 6.8%.
  • Cash balances of £2.5m as at 31 December 2011 (2010: £5m) after payments of £1.1m for the final dividend and £4.2m in respect of consideration for acquisitions.

1 Operating profit is the operating profit before amortisation, exceptional items and share-based payments.

Operational Highlights

  • GB Group's three acquisitions made between June and November 2011 are integrating well.  Capscan, the largest and most recent acquisition, is performing well and in line with expectations for the business.  We expect to see the synergistic effect of our greater scale and efficiency come through over the coming months. 
  • In our DataSolutions business unit, sales of our ID tracing service continued to show strong growth following our acquisition of Data Discoveries earlier in the year, which created a market leading position with strongly differentiated products and services.
  • Revenue for the Datasolution's business as a whole for the 9 months to 31 December 2011 increased by 21% to £12.2m (2010: £10.1m)
  • In our DataAuthentication business, the provider of our Identity Verification Services, new product enhancements and the addition of new countries to GB Group's international identification service, ID3, contributed to a significant increase in organic growth and improved profitability.  GB Group's Citizensafe service, launched in December 2010, has seen continued success in the important area of ID Assurance which is being sponsored by central and local government.  Whilst revenues remain modest, we see this as a significant, potential future market.
  • Revenue in DataAuthentication was £9.0m in the 9 months to 31 December 2011 (2010: £7.6m) - a growth of 18% over the period.

Strategy
In today's rapidly growing on-line business world, it is a fundamental requirement for organisations to immediately prove customer identity and understand their behaviours, so that the customers can have efficient and enjoyable interactions which are profitable for the organisation.  GB Group's strategy of aggressively expanding and deepening our offering in Identity Management in order to lead this emerging market on a worldwide basis is enabling GB Group both to grow its revenue and further enhance its future potential.  In addition to strong organic growth across its key divisions, the Group has, in line with its strategy set out at the time of our move to AIM in mid-2010, expanded significantly the breadth and depth of its ID service offerings through the acquisition of three businesses during 2011.  We will continue to look for other selected accretive acquisitions and for ways to improve our operations and margins in pursuit of this strategy.

Outlook
The performance of the Group has been very encouraging in the third quarter and, consequently, we anticipate that our full year results will be at least in line with current market expectations.  The next update on trading, in respect of the final results for the twelve months ending 31 March 2012, is expected to be issued in April 2012.

Richard Law, the Group's Chief Executive Officer, said: "The year to date has been one of significant progress for the Group, advancing our strategic objectives and focusing on delivering on our targets and commitments.  The strong operational performance reported in the first half has continued and the acquisitions have all integrated well.  I am excited about the future prospects for GB Group and the Board remains very confident for the outcome for the year."  

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