GB Group to take near-term margin hit as one-offs lead to hefty loss

(Alliance News) - GB Group PLC on Tuesday said one-off development costs will hurt margins in the current financial year, as one-off charges dragged it into the red in the recently completed year.

In response, shares in the Chester, England-based identity verification and fraud prevention company fell 11% to 218.77 pence each in London on Tuesday. GB Group was the worst performing stock in the FTSE 250 index, which was up 1.0%.

GB Group said the planned GBP6 million investment in financial 2027 will release additional capability earlier aligned with customer demand.

But reflecting this, operating profit margins, on an adjusted basis are expected to reduce to between 21% and 22% in financial 2027, before returning to the firm's target range of 23% to 24% in financial 2028. In the medium-term, GB Group expects operating margins of above 24%.

In the financial year that ended in March, adjusted operating margin was flat year-on-year at 23.7%.

GB Group expects the investment to deliver incremental revenue growth in financial 2028 of at least 1% and around 2% once fully commercialised.

The FTSE 250-listing reported a pretax loss of GBP74.5 million in financial 2026, swung from a profit of GBP15.7 million in financial 2025, reflecting a non-cash impairment charge of GBP73.1 million.

This reflects more cautious assumptions as to the medium-term growth outlook for its Americas business, GB Group explained. It also recognised a non-cash write-off charge of GBP16.5 million following the decision to retire the Compliance platform.

Diluted loss per share was 30.7 pence, swung from earnings per share of 3.4p a year ago.

On an adjusted basis, operating profit edged up to GBP67.5 million from GBP67.0 million, with EPS of 19.0p, up from 17.4p.

Revenue increased 3.2% to GBP285.0 million from GBP276.3 million, and GB Group said it expects mid-single-digit percentage revenue growth in financial 2027.

GB Group is "well-positioned" to accelerate within a growing market backed by market tailwinds driven by structural drivers such as digital transformation, AI-accelerated fraud and increasing regulation, which are expanding its addressable market, it asserted.

An unchanged final dividend of 4.40p per share was declared. No interim payout was made.

By Jeremy Cutler, Alliance News reporter

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