Gb Group Regulatory News (GBG)

5 Jun 2007 07:02

GB Group PLC05 June 2007 Embargoed until 07.00 5 June 2007 GB GROUP PLC ("GB" or the "Group") Preliminary Results for the Year Ended 31 March 2007 GB Group is today pleased to announce preliminary results for the year ended 31March 2007. Highlights • Group revenue increased by 16% to £15 million (2006: £12.8 million) • DataAuthentication revenue more than doubled to £4.8 million (2006:£1.9 million) • DataAuthentication has increased its customer base to 174 as at 31 May 2007 from 101 at 31 March 2006. • Group has invested over £1 million in new technology and infrastructure to provide a platform for future growth. • DataIntegrity has launched online web-based delivery solutions and has successfully displaced competing products and services. • International ID verification service launched during the year. DataAuthentication's solutions are now able to confirm a person's identity electronically, within seconds, in 26 countries covering a combined population of some 800 million individuals. • Cash balances at 31 March were £5.2 million (2006: £6.7 million). • Proposed full year dividend of 0.75p per share (2006: 0.75p per share). Commenting on current trading, John Walker-Haworth, Chairman, said: "GB has substantially improved its prospects over the course of the year throughits continued investment in developing its businesses. These developments mean that the Group is well placed to continue its growth inthe year ahead." - Ends - For further information, please contact: GB Group plc Richard Law, Chief Executive 01244 657333Mona Navin-Mealey, Finance Director Weber Shandwick Financial 020 7067 0700 Richard Hews Helen Thomas Website www.gb.co.uk Notes to Editors About GB Group plc GB Group plc provides a range of products and services to enable organisationsto capitalise on their greatest asset - their customers. GB has expertise acrossa range of sectors and is able to transform customer data into valuableinformation, enabling clients to truly fulfil the strategic objective of "knowyour customer" and in doing so make better, more informed decisions. We are constantly improving our products and services by applying our corevalues of Innovation, Quality and Excellence. This has been demonstrated overthe course of the last year by the launch of ID3-Check(TM), GB's internationalidentity verification service and by the launch in January 2007 byDataIntergrity of online services which replace the periodic supply of data ondisk to the real time availability of data via a web-based delivery solution. Know Your Customer ("KYC") Many people will be aware that there is a regulatory requirement in theFinancial Services sector for organistaions to "Know Your Customer". We believethat knowing your customer is fundamental to all businesses, not just those infinancial services, and GB has three complimentary offerings enabling ourclients to achieve that. These are • DataAuthentication helps businesses validate personal identity information and provides anti-fraud solutions to fight crime. • DataIntegrity helps companies capture and maintain accurate customercontact data, an essential foundation for any profitable customer relationship. • DataSolutions empowers companies to consolidate and analyse customer data from various sources, enabling them to make better, more informed decisions. Established since 1989, GB's core competencies combined with industry sectorknowledge have enabled the company to deliver significant value to organisationssuch as DSG International, Scottish Power and Lloyds TSB in helping them derivemaximum value from their customer relationships and sustain real advantage overtheir competition. GB Group is supported by its key relationships with major organisations withwhom it works on major initiatives (an example being British Telecom),together with a team of highly talented and motivated staff successfullydelivering business solutions. GB Group plc is listed on the London Stock Exchange (www.gb.co.uk). DataAuthentication, GB's fastest growing business area, specializes inelectronic ID verification through its URUTM and ID3-CheckTM services. About URU(TM) URU is an online identity verification service which was developed jointly withBT and is DataAuthentication's principle offering. URU, which is powered by GB'sID3(TM) search engine and decision making technology, provides access to GB'scomprehensive range of identity data and BT's high capacity web delivery. Ithelps organisations to protect themselves from the growing problem of identitytheft and fraud, which is estimated to cost the UK economy over £1.7 billion perannum. URU enables companies subscribing to the service to make an instantdecision whether to accept the identity claimed by any given individual andconfirm their age in seconds. URU works by cross checking personal information provided by an individual atthe point of acquisition against a comprehensive range of datasources to confirmthat an individual is who they claim to be, live where they claim to live andmeet certain minimum legal age requirements. No personal data is disclosed by the reference databases and as a result URU iscompliant with the Data Protection Act. URU also provides a valuable audit trail demonstrating that the necessary checkshave taken place, thereby helping companies comply with legislation, includingthe 2nd European Money Laundering Directive, Proceeds of Crime Act and MinimumLegal Age requirements of certain industry sectors. The addition of data from CallCredit also enables users of URU to incorporatecredit reference data. As a result of legislation, new opportunities and social responsibilityrequirements, the market for online ID verification is significant and growing.Although an estimated 0.5 billion manual ID checks are conducted annually in theUK, less than 6%* of these are currently performed electronically.(* figures as at November 2006) URU has demonstrated that online checks are more effective, less expensive andmore robust. The market is moving towards online checks as fraudulent documents become evermore sophisticated, more readily available and more difficult to check manually.It is estimated that by 2010, the market for online ID checks could be 0.3billion checks per annum. GB works closely with trade and industry associations, such as the Finance andLeasing Association, the Remote Gambling Association and the FinancialTechnology Research Centre, to advise businesses that more robust processes canprevent financial crime. We have worked closely with the Gaming Industry toaddress social issues such as underage gambling and addiction and our SocialResponsibility Consultancy helps Gaming operators formulate best practice tocomply with regulatory requirements and improve profitability. About ID3-Check(TM) ID3-Check is an international online identity verification service developed byGB's DataAuthentication business. It is a hybrid international version of thetechnology underpinning URU, GB's joint project with BT which is now the UK'sleading online age and identity verification service. The service helps organisations to protect themselves from the growing globalproblem of identity theft and fraud. ID3-Check enables organisations subscribingto the service to make an instant decision whether to accept the identityclaimed by an individual and confirm their age in seconds. ID3-Check can confirmthe age and identity of some 800 million individuals in 25 countries includingAustralia, Canada, the USA and most Western European countries. ID3-Check works by cross checking personal information provided by an individualat the point of acquisition against a comprehensive range of data sources toconfirm that an individual is who they claim to be, live where they claim tolive and meet certain minimum legal age requirements. No personal data is disclosed by the reference databases and as a resultID3-Check is compliant with Data Protection laws. ID3-Check also provides a valuable audit trail demonstrating that the necessarychecks have taken place, thereby helping companies comply with internationallegislation, As a result of legislation, new opportunities and socialresponsibility requirements, the market for online ID verification acrossborders is significant and growing. CHAIRMAN'S STATEMENT GB has substantially improved its prospects over the course of the year throughits continued investment in developing its businesses. When GB issued its trading update in April 2007, we indicated that the resultsof this investment had brought with it increased revenue for the Group with theexpectation that revenue from GB's DataAuthentication business would more thandouble. The final results for the year ended 31 March 2007 were in line with theexpectations set at the time of the trading update; Group revenue increased to£15 million (2006: £12.9 million), revenue from DataAuthentication increased to£4.8 million (up from £1.9 million in 2006), pre-tax losses were £1.2 millionand cash balances were £5.2 million. As I indicated in April, the Directors will recommend a maintained finalordinary dividend of 0.75p per share which, if approved, will be paid in July2007. GB's businesses developed well during the year and, as explained in more detailin the Chief Executive's Report, DataAuthentication has successfully establisheditself as a leader in the growing market for electronic identity managementsolutions. At the same time, our DataIntegrity and DataSolutions businesses havecontinued to update their principal products and services to embrace onlinetechnology and create product differentiation in competitive markets. These developments mean that the Group is well placed to continue its growth inthe year ahead. With respect to the current year, like-for-like revenue for the two months tothe end of May 2007 is ahead of the same period last year and is in line withthe Directors' expectations at this stage. Growth plans for the current yearoverall are exciting and reflect principally the continuing rapid development ofthe market for electronic identity verification both in the UK andinternationally. J L Walker-Haworth Chairman CHIEF EXECUTIVE'S REVIEW GB made excellent progress in the year ended 31 March 2007 towards achieving itsvision of becoming an international leader in the field of electronic identityverification (EIDV). Revenue in our DataAuthentication business, which providesEIDV services, more than doubled. In the UK market, URU (our joint EIDV offeringwith BT) consolidated its leadership and new services were introduced under GB'sown brand, ID3-Check, to authenticate individuals in 25 other countries. In our DataIntegrity and DataSolutions businesses, new services based on theonline delivery of valuable data were introduced to give these businesses addeddifferentiation in their markets. The Group also invested over £1 million in new technology and infrastructure to provide a platform for future growth. Since 31 March 2007, our businesses have traded well and our strategic progresshas continued. DataAuthentication has continued to grow its customer base forURU and ID3 and DataIntegrity and DataSolutions have gained substantialcontracts with Her Majesty's Revenue & Customs (HMRC) and MyTravel UK for theirnew services. GB remains financially strong with £5.2 million of cash at the end of March 2007and, taken together with our market leading products and services, the prospectsfor the year ahead and beyond are encouraging. DataAuthenticationWe believe that the markets served by DataAuthentication continue to representan exceptional opportunity for GB. The ability of organisations to confirm that individuals are who they claim tobe, before they trade with them, is both a commercial and a legal requirement inan increasing number of countries across the world. Identity theft and fraudcontinue to grow and the globalisation of money laundering has prompted manycountries to increase legislation to counter it. GB's vision is to provide its clients with the ability to confirm, quickly andeffectively, the identity of their customers, irrespective of nationality and,in so doing, reduce fraud losses and comply with legislation. This, for instance,enables organisations to trade with their customers in many countries over theInternet immediately and with confidence. GB is now able to confirm a person's identity electronically, within seconds, in26 countries covering a combined population of some 800 million individuals. Webelieve that the GB offering is unique, making it a global leader in this fieldwith the ability to build a business of considerable value as the market movesrapidly towards electronic verification solutions and away from paper-basedmethods. DataAuthentication made substantial progress in the year ended 31 March 2007,building its customer base from 101 to 164 and more than doubling revenue to£4.8 million. In addition, contracted prepaid revenue deferred to future periodsas at 31 March 2007 was £1.2 million, £0.9 million of which will be recognisedin the year to 31 March 2008. As expected, revenue run rate in the current year to date is around 24% higherthan the same period last year. This largely excludes the contracted prepaidrevenue referred to above which will be predominantly recognised in the latterhalf of this year. Accordingly, growth is expected to continue in the currentyear assisted by the increase in contracted URU clients which, at 31 May 2007,had increased to 174. GB's strategy for the year ahead is to continue developing the UK market for URUwhere we expect to deliver the majority of our growth. The Financial Servicessector, which remains our largest and most valuable market, will continue toutilise the majority of our resource as we seek to add new clients and also togrow the usage of URU within key existing accounts such as Lloyds TSB, HBOS and The Royal Bank of Scotland Group. We will also continue to address new sub-sectors within Financial Services where the lack of legacy systems, together with GB's superior service and technology, provides the opportunity to create a market leading position. An example is the emergence of companies providing pre-paid debit cards where URU is being used by 80% of the organisations in this growing sector. Elsewhere, we are confident of maintaining and extending our market leadingpositions in Online Gaming and Mobile Telecommunications and in furtherdeveloping emerging electronic markets such as Retail. Although the UK market will continue to be our largest source of revenuethroughout the year to 31 March 2008, we expect the number of clients using ourinternational services to increase substantially. DataIntegrity and DataSolutionsThe DataIntegrity and DataSolutions markets, essentially the capture, processingand analysis of data, are moving from the present periodic supply of data ondisks to the real time availability of data via web-based delivery solutions. GB has developed such an online solution and since its introduction in January2007, has successfully displaced competing disk-based products. In particular,HMRC signed a substantial contract with GB in May 2007 for the provision of dataservices to assist them in the collection of tax and payment of Tax Credits andChild Benefit. As planned, investment in sales and marketing has increased in these businessareas in order to capitalise on the differentiation which has led to this earlysuccess. SummaryGB has products and services which are clearly differentiated and have a strongidentity in their respective markets. We are seeing success in terms of ourability to identify and develop new markets, increase new business and displacecompeting products and services. The current year has started well with revenueat the end of May ahead of the same period last year and cash balances remainingstrong at £5.4 million (March 2007: £5.2 million). R A Law Chief Executive BUSINESS AND FINANCIAL REVIEW The Group's BusinessThe Group's principal business activities represent a single segment butcorrespond to three distinct business propositions: DataAuthentication,DataIntegrity and DataSolutions. DataAuthentication provides electronic identity verification services. Servicesare provided under two brands, URU(TM) and ID3-Check. URU was jointly developedwith BT and principally verifies the identity of UK residents. URU now has 174live customers. ID3-Check is GB's international verification service which wasdeveloped independently and was launched during the year to 31 March 2007. Themarket for electronic identity verification continues to grow and represents asignificant future growth opportunity for the Group. DataIntegrity offers a range of solutions to maintain the integrity of clientscustomer data through a suite of products and services which includeGBAccelerator(TM), GBAccelerator e-Trace(TM) and DataCare(TM). DataSolutions specialises in designing, building and managing marketingdatabases. Group Vision, Objectives and StrategyThe Group's vision is to become a global leader in the provision of electronicidentity management solutions and to reinstate growth in its mature businessareas by creating products and services which are unique compared to competitorofferings and consequently add greater value for GB's clients. The Group's strategy is, therefore, to create and maintain unique products whichhave additional value for clients and that are of sufficient strength to enablethe Group to consistently win new business and displace the competition. TheGroup achieves this through investment in business development opportunities andthe application of innovation, quality and excellence in everything it does. Group OverviewThe year ended 31 March 2007 was significant in terms of developing theopportunity for DataAuthentication in the rapidly growing market for electronicverification. Also during the year, DataIntegrity and DataSolutions successfullydeveloped online delivery solutions for many of their products and services and,in so doing, have created additional differentiation against competitorofferings. The following table sets out the results of the Group for the year ended 31March 2007. Years ended 31 March 2007 2006 £'000 £'000 Revenue 14,952 12,835 -------- -------- Operating loss (1,519) (570) Finance revenue 294 302 -------- -------- Loss before tax (1,225) (268) Income tax (expenses)/credit (16) 26 -------- -------- Loss for the financial year (1,241) (242) -------- -------- 2007 Financial Year Compared to 2006 Financial YearIn the year to 31 March 2007, revenue for the Group increased 16% to £15.0million (2006: £12.8 million) resulting from growth in DataAuthentication.Losses before taxation were £1.2 million (2006: £0.3 million) after continuedinvestment in business development across the Group. Explanations of the significant items in the Income Statement during the yearare as follows: RevenueRevenue for the Group showed good growth as a result of increasedDataAuthentication revenues. Revenues from DataAuthentication more than doubledto £4.8 million (2006: £1.9 million). Combined revenues from DataIntegrity andDataSolutions were £10.2 million (2006: £10.9 million). Gross Profit and Cost of SalesGroup gross profit margins were 49% compared with 55% for the year to 31 March2006. The reduction was due primarily to the increase in DataAuthenticationrevenues, as a proportion of Group revenue. Revenue from DataAuthenticationattracts higher cost of sales than GB's other business areas. The principalcost of sales for DataAuthentication is represented by payments to BT under GB'sjoint URU agreement with BT. Consequently, DataAuthentication generates a lowerunderlying gross margin compared to that generated in DataIntegrity andDataSolutions. Other Operating ExpensesOther operating expenses were £8.8 million (2006: £7.5 million). The increase inoperating expenses was due to further investment in DataAuthentication,specifically the areas of sales, marketing and development combined withinvestment in infrastructure and technology associated with the Group's onlinedelivery platforms. Exceptional ItemsExceptional items totalled £100,000 (2006: £58,000). This related to the one-offcosts associated with moving the Group's place of business during the year inorder to support future growth. Group LossThe Group generated an operating loss of £1.5 million (2006: £0.6 million) andfinance revenue earned during the year was £0.3 million (2006: £0.3 million)resulting in a loss before tax of £1.2 million (2006: £0.3 million). TaxationThe current tax charge of £16,000 (2006: £12,000 credit) reflects an adjustmentfor taxation credits with respect to research and development provided inprevious years. DividendThe Board of Directors will propose a maintained final ordinary dividend of 0.75pence per share, amounting to £628,000 (2006: £621,000). The final ordinarydividend with respect to the year ended 31 March 2007, if approved, will be paidon 30 July 2007 to ordinary shareholders whose names were on the register on 6July 2007. Amounts Transferred From ReservesThe amount transferred from reserves is £1.6 million (2006: £447,000) afteraccounting for the previous year's dividend of £621,000 (2006: £404,000) whichwas paid during the year ended 31 March 2007. Balance Sheet and LiquidityExplanations of the most significant items in the Balance Sheet during the yearare as follows: Intangible AssetsIntangible assets are carried at £6.7 million (2006:£6.5 million). This includesthe carrying value of goodwill at 31 March 2007 of £6.5 million (2006: £6.5million) comprising of goodwill arising on the acquisition of GB Mailing Systemsin 1998 and e-Ware Interactive in 2002. It also includes the carrying value ofproduct development costs capitalised in accordance with IAS 38 'IntangibleAssets' of £162,000 (2006: £Nil). Intangible assets are tested annually forimpairment and no impairment was required for the year ended 31 March 2007. Trade and Other ReceivablesThe value of trade and other receivables increased by £884,000 to £3.8 millionat 31 March 2007, compared to the same date last year, principally as a resultof higher overall revenues particularly in March 2007. Cash FlowsCash and cash equivalents reduced by £1.5 million (2006: £2,000) during the yeardue primarily to the investment in property, plant and equipment and dividendspaid. Further analysis of this movement is included in the Consolidated CashflowStatement below. Cash and Cash EquivalentsAt 31 March 2007, the Group held cash and short-term deposit balances of £5.2million (2006: £6.7 million) and in accordance with the Group's treasury policy,all funds are placed with major UK clearing banks and building societies. Trade and Other PayablesThe value of trade and other payables has increased by £1.8 million to £5.1million (2006: £3.3 million) at 31 March 2007 compared to the same date lastyear. The increase is as a result of increased revenue and the growth ofdeferred income which has been carried forward for recognition in futureperiods. Deferred income at 31 March 2007 was £1.2 million (2006: £558,000). Key Performance IndicatorsThe Board monitors the Group's progress against its strategic objectives and thefinancial performance of the Group's operations on a regular basis. Performanceis assessed against strategy and budgets using financial and non-financialmeasures. The following details some of the principal Key Performance Indicators (KPIs)used by the Group, their purpose, the basis of calculation and the source of theunderlying data. A summary of performance against these KPIs is given below. • Financial The Group uses the following primary measures to assess its performance and propositions. o Revenue (Group & DataAuthentication) Revenue and revenue growth are used for internal performance analysis and by investors to assess progress against outlook statements in the market. o Operating result Operating result and profitability growth is used by the Group for internal performance analysis and by investors to assess progress against outlook statements in the market. o Earnings per share Earnings per share is calculated as basic earnings per share from continuing operations. o Cash Cash and cash equivalent balances are used by the Group for internal performance analysis and by investors to assess progress against outlook statements. • Customers o DataAuthentication Live Client Numbers Client based KPIs for the rapidly growing DataAuthentication market are important measures for internal performance analysis and management also believes that it provides useful information for investors regarding the success of the Group's customer acquisition activities. The data used to calculate the KPI is derived from the Group's billing and financial systems for those contracted clients who have begun utilising the services. • Transaction Based o Underlying Identity Verifications Management believe that DataAuthentication's transaction-based measures provide useful information for investors regarding trends in client revenue derived from electronic identity verification services and the extent to which clients have adopted the service. The data used to calculate this KPI is extracted from the Group's billing and financial systems. Underlying identity verifications is the total number of verifications on the Group's URUTM and ID3-CheckTM systems and excludes one-off batch verifications. Performance Against KPIsA summary of the Group's progress in achieving its objectives, as measuredagainst KPIs, is set out below. Years ended 31 March 2007 2006 Group Revenue Growth 16% 14% Operating (Loss)/Profit Growth (166%) (325%) Loss Per Share (1.4)p (0.3)p Cash (£'000) 5,213 6,747 DataAuthentication Revenue Growth 151% 218% DataAuthentication Live Customer Numbers 164 101 Underlying Identity Verifications 3,508,006 1,534,559 Group revenue growth remains positive and has increased from 14% in the year to31 March 2006 to 16% in year ended 31 March 2007. The Board believes that growthwill continue as the Group continues to derive value from its businessopportunities. The investment in business development across both years has resulted in anoperating loss being reported. The Group should realise the results of thisinvestment during future years as increased revenue flows through. Principal Risks and UncertaintiesManagement use a common model to identify and assess the impact of risks to thebusiness under four key headings - financial, strategic, operational andknowledge. For each risk, the likelihood and consequence are identified,management controls are confirmed and results reported. The more significantrisks and uncertainties faced by the Group are set out below: • Regulatory risk: legislation in all the markets we serve changes on a regular basis and interpretation of existing laws can also change to create ever tightening standards often requiring additional human and financial resources and the provision of new assets and systems. Whilst the Group is committed to respond positively to new regulation and legislation, changes could affect the pricing for, or adversely affect the revenue from, the services the Group offers. • Competitive position: the Group operates in competitive markets and intensified competition could lead to a reduction in the rate at which the Group adds new customers and to a decrease in the size of the Group's market share if clients chose to receive services from other providers. • Non-supply by major supplier: the Group sources some of its data and infrastructure from third party suppliers and partners. The removal from the market of one or more of these third party suppliers could adversely affect the Group's operations and could result in additional expenditure by the Group. • Disaster recovery and business continuity: the Group has an understandable reliance on its place of business, IT systems and people and currently operates from a single site. The loss of key components could affect the Group's operations and result in additional expenditure whilst the established business continuity plan is effected following an incident. RelationshipsOther than our shareholders, the Group's performance and value are influenced byother stakeholders principally our customers, suppliers, employees and ourstrategic partners. Relationships are managed both on an individual basis andvia representative groups. The Group participates in industry groups whichprovide genuine access to clients, supplier groups, decision makers ingovernment and other regulatory bodies. Treasury Policy and Financial Risk ManagementThe Group's treasury operation is managed within formally defined policies whichare reviewed by the Board. The Group finances its activities with cash andshort-term deposits. Other financial assets and liabilities, such as tradereceivables and trade payables, arise directly from the Group's operatingactivities. Surplus funds of the Group are invested through the use ofshort-term deposits with the objective of maximising fixed interest rate returnswhilst still providing the flexibility to fund on-going operations whenrequired. It is not the Group's policy to engage in speculative activity or touse complex financial instruments. MT Navin-MealeyGroup Finance Director CONSOLIDATED INCOME STATEMENT Year ended 31 March 2007----------------------------------------------------------------------------------- 2007 2006 £'000 £'000 Note Revenue 14,952 12,835 Cost of sales (7,617) (5,800) ------- ------- Gross profit 7,335 7,035 Other operating expenses (8,754) (7,547) Exceptional items (100) (58) ------- ------- Operating loss (1,519) (570) Finance revenue 294 302 ------- ------- Loss before tax (1,225) (268) Income tax (expense)/credit (16) 26 ------- ------- Loss for the year attributable to equity holders of the parent (1,241) (242) ------- ------- Loss per share - basic loss per share for the year 1 (1.4)p (0.3)p - diluted loss per share for the year 1 (1.4)p (0.3)p CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year ended 31 March 2007------------------------------------------------------------------------------------------- Equity Merger Capital Retained Total share reserve redemption earnings equity Capital reserve £'000 £'000 £'000 £'000 £'000 Balance at 1 April 2005 5,171 6,575 3 1,869 13,618 ------- ------- ------- ------- ------- Loss for the period - - - (242) (242) ------- ------- ------- ------- ------- Total income and expense for the period - - - (242) (242) Exercise of options 279 - - - 279 Cost of share-based payments - - - 199 199 Equity dividend - - - (404) (404) ------- ------- ------- ------- ------- Balance at 31 March 2006 5,450 6,575 3 1,422 13,450 ------- ------- ------- ------- ------- Loss for the period - - - (1,241) (1,241) ------- ------- ------- ------- ------- Total income and expense for the period - - - (1,241) (1,241) ------- ------- ------- ------- ------- Exercise of options 167 - - - 167 Cost of share-based payments - - - 217 217 Equity dividend - - - (621) (621) ------- ------- ------- ------- ------- Balance at 31 March 2007 5,617 6,575 3 (223) 11,972 ------- ------- ------- ------- ------- COMPANY STATEMENT OF CHANGES IN EQUITY Year ended 31 March 2007------------------------------------------------------------------------------------------- Equity Merger Capital Retained Total share reserve redemption earnings Equity capital reserve £'000 £'000 £'000 £'000 £'000 Balance at 1 April 2005 5,171 6,575 3 4,185 15,934 ------- ------- ------- ------- ------- Loss for the period - - - (242) (242) ------- ------- ------- ------- ------- Total income and expense for the period - - - (242) (242) Exercise of options 279 - - - 279 Cost of share-based payments - - - 199 199 Equity dividend - - - (404) (404) ------- ------- ------- ------- ------- Balance at 31 March 2006 5,450 6,575 3 3,738 15,766 ------- ------- ------- ------- ------- Loss for the period - - - (1,241) (1,241) ------- ------- ------- ------- ------- Total income and expense for the period - - - (1,241) (1,241) Exercise of options 167 - - - 167 Cost of share-based payments - - - 217 217 Equity dividend - - - (621) (621) ------- ------- ------- ------- ------- Balance at 31 March 2007 5,617 6,575 3 2,093 14,288 ------- ------- ------- ------- ------- CONSOLIDATED BALANCE SHEET As at 31 March 2007------------------------------------------------------------------------------------- 2007 2006 £'000 £'000 ASSETS Non-current assets Property, plant and equipment 1,108 331Intangible assets 6,668 6,506Deferred tax asset 360 360 ------- ------- 8,136 7,197 ------- ------- Current assets Trade and other receivables 3,752 2,868Current tax - 57Cash and short-term deposits 5,213 6,747 ------- ------- 8,965 9,672 ------- ------- TOTAL ASSETS 17,101 16,869 ------- ------- EQUITY AND LIABILITIES Capital and reserves Equity share capital 5,617 5,450Merger reserve 6,575 6,575Capital redemption reserve 3 3Retained earnings (223) 1,422 ------- ------- Total equity attributable to equity holders of the parent 11,972 13,450 ------- ------- Current liabilities Trade and other payables 5,129 3,311Provisions - 108 ------- ------- 5,129 3,419 ------- ------- TOTAL LIABILITIES 5,129 3,419 ------- ------- TOTAL EQUITY AND LIABILITIES 17,101 16,869 ------- ------- COMPANY BALANCE SHEET As at 31 March 2007------------------------------------------------------------------------------------ 2007 2006 £'000 £'000ASSETS Non-current assets Property, plant and equipment 1,108 331Intangible assets 162 -Investments 9,317 9,317Deferred tax asset 360 360 ------- ------- 10,947 10,008 ------- ------- Current assets Trade and other receivables 3,768 2,884Current tax - 57Cash and short-term deposits 5,213 6,747 ------- ------- 8,981 9,688 ------- ------- TOTAL ASSETS 19,928 19,696 ------- ------- EQUITY AND LIABILITIES Capital and reserves Equity share capital 5,617 5,450Merger reserve 6,575 6,575Capital redemption reserve 3 3Retained earnings 2,093 3,738 ------- ------- Total equity 14,288 15,766 ------- ------- Current liabilities Trade and other payables 5,640 3,822Provisions - 108 ------- ------- 5,640 3,930 ------- ------- TOTAL LIABILITIES 5,640 3,930 ------- ------- TOTAL EQUITY AND LIABILITIES 19,928 19,696 ------- ------- CONSOLIDATED CASH FLOW STATEMENT Year ended 31 March 2007------------------------------------------------------------------------------------ 2007 2006 £'000 £'000 Cash flow from operating activities Operating loss (1,519) (570)Depreciation 230 187Provision against tangible fixed assets 25 -Loss on disposal of property, plant and equipment 5 3Share-based payments 217 199Decrease in provisions (108) (122)Increase in trade and other receivables (884) (688)Increase in trade and other payables 1,818 972 ------- ------- Cash consumed from operations (216) (19) Income tax credit received 41 - ------- ------- Net cash consumed from operating activities (175) (19) ------- ------- Cash flows from investing activities Purchase of property, plant and equipment (1,027) (160) Expenditure on product development (172) - Interest received 294 302 ------- ------- Net cash flows from investing activities (905) 142 ------- ------- Cash flows from financing activities Proceeds from issue of shares 167 279 Dividends paid to equity shareholders of the parent (621) (404) ------- ------- Net cash flows from financing activities (454) (125) ------- ------- Net decrease in cash and cash equivalents (1,534) (2)Cash and cash equivalents at the beginning of the 6,747 6,749period ------- ------- Cash and cash equivalents at the end of the period 5,213 6,747 ------- ------- COMPANY CASH FLOW STATEMENT Year ended 31 March 2007------------------------------------------------------------------------------------- 2007 2006 £'000 £'000 Cash flow from operating activities Operating loss (1,519) (570)Depreciation 230 187Provision against tangible fixed assets 25 - Loss on disposal of property, plant and equipment 5 3 Share-based payments 217 199Decrease in provisions (108) (122)Increase in trade and other receivables (884) (688)Increase in trade and other payables 1,818 972 ------- ------- Cash consumed from operations (216) (19) Income tax credit received 41 - ------- ------- Net cash consumed from operating activities (175) (19) ------- ------- Cash flows from investing activities Purchase of property, plant and equipment (1,027) (160) Expenditure on product development (172) - Interest received 294 302 ------- ------- Net cash flows from investing activities (905) 142 ------- ------- Cash flows from financing activities Proceeds from issue of shares 167 279 Dividends paid to equity shareholders of the parent (621) (404) ------- ------- Net cash flows from financing activities (454) (125) ------- ------- Net decrease in cash and cash equivalents (1,534) (2)Cash and cash equivalents at the beginning of the period 6,747 6,749 ------- ------- Cash and cash equivalents at the end of the period 5,213 6,747 ------- ------- NOTES TO THE PRELIMINARY ANNOUNCEMENT 1. Earnings Per Ordinary Share BasicBasic earnings per share is calculated by dividing the profit attributable toequity holders of the Company by the basic weighted average number of ordinaryshares in issue during the year. 2007 2007 2006 2006 pence £'000 pence £'000 per per share share Loss attributable to equity holders of the parent (1.4) (1,241) (0.3) (242) -------- -------- -------- -------- DilutedDiluted earnings per share amounts are calculated by dividing the net profit forthe year attributable to ordinary equity holders by the weighted average numberof ordinary shares outstanding during the year plus the weighted average numberof ordinary shares that would be issued on the conversion of all the dilutivepotential ordinary shares into ordinary shares. 2007 2006 No. No. Basic weighted average number of shares in issue 83,380,985 81,061,685 Dilutive effect of share options - - ---------- ---------- Diluted weighted average number of shares in issue 83,380,985 81,061,685 ---------- ---------- The loss for the period and the weighted average number of ordinary shares forcalculating the diluted earnings per share for the period to 31 March 2007 areidentical to those used for the basic earnings per share. This is because theoutstanding share options would have the effect of reducing the loss perordinary share and would therefore not be dilutive under the terms ofInternational Accounting Standard No. 33 (IAS 33). 2007 2007 2006 2006 pence £'000 pence £'000 per per share share Loss attributable to equity holders of the Company (1.4) (1,241) (0.3) (242) ------- ------- ------- ------- OTHER INFORMATION 1. The above financial information, which is unaudited, does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the year ended 31 March 2007 has been extracted from the draft statutory accounts on which an unqualified audit opinion is expected to be issued. Statutory accounts for the year ended 31 March 2007 will be delivered to the Registrar in due course. The preliminary announcement is prepared on the same basis as set out in the previous year's statutory accounts. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. 2. The preliminary statement was approved by the Board of Directors of GB Group plc on 4 June 2007. 3. The ex-dividend date is 4 July 2007; the record date is 6 July 2007; the payment date is 30 July 2007. 4. The AGM will take place on 19 July 2007. 5. The 2008 interim results announcement is expected to be on 27 November 2007. 6. This report will also be available on the GB Group web site: www.gb.co.uk from 5 June 2007. 7. The Company intends to dispatch to shareholders printed copies of the full annual report and accounts for the year to 31 March 2007 by 26 June 2007. This information is provided by RNS The company news service from the London Stock Exchange