Gb Group Regulatory News (GBG)

1 Jun 2005 07:01

GB Group PLC01 June 2005 For immediate releaseWednesday, 1 June 2005 GB GROUP PLC ("GB" or the "Group") Preliminary Results for the Year Ended 31 March 2005 Highlights • URU(TM) (GB DataAuthentication division's joint service with BT) achieved strong growth within its key target markets of Online Gaming, Financial Services and Mobile Telecommunications. The number of subscribers to the service at 31 May 2005 was 59 (1 subscriber at 31 March 2004). • Turnover from URU(TM) increased significantly to £600,000 (2004: £6,000) • The existing business, comprising of GB's DataIntegrity and DataSolutions operations, generated operating profits, before exceptional items, £186,000 ahead of last year. • Exceptional, non-recurring costs were in line with expectations at £321,000. • Operating loss, after goodwill but before exceptional items, was in line with expectations at £242,000 (2004: £123,000) and included increased investment in URU(TM) of £354,000. • The existing business continues to be strongly cash generative and, as planned, funded the cash investment in URU(TM). • Cash balances were £6.7m at the year end (2004: £6.9m). • Dividend of 0.5p per ordinary share maintained. John Walker-Haworth, Chairman, commented: "This year is one of significance for the Group, particularly in relation to thegrowth of our DataAuthentication business and, as explained more fully in theChief Executive's Report, GB has a clear strategy to develop this further. Froman initial assessment of the growth experienced to date, your Board isincreasingly confident that there are substantial and profitable opportunitiesin this new market and is deploying appropriate resources to enhance the Group'sposition. As in previous years, the profitability of our DataIntegrity and DataSolutionsoperations will be weighted towards the second half of the year in line withcontract renewals, however, during the year as a whole, we expect the cash flowfrom these businesses to continue to fund the greater part of our investment in our DataAuthentication business and in particular URU(TM). Your Board looks to the current year ahead with confidence and optimism." - Ends - For further information, please contact: GB Group plcRichard Law, Chief Executive 01244 657333Mona Navin-Mealey, Finance Director Weber Shandwick Square Mile 020 7067 0700Richard HewsRachel Taylor 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 one of their greatest assets - customer data. The Company hasexpertise across a range of sectors and is able to transform customer data intovaluable information, enabling clients to make better, more informed decisions. The development of innovative software and services, through to the provision ofthe UK's most comprehensive consumer business databases - The National Register(R) and the National Authentication Register - positions GB Group as a widelyacknowledged industry leader in its specialist markets. GB Group plc has three business areas: • The DataAuthentication division helps businesses validate personal identity information and provides anti-fraud solutions to fight crime. • The DataIntegrity division helps companies capture and maintain accurate customer contact data, an essential foundation for any profitable customer relationship. • The DataSolutions division 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 Standard Life, Scottish Power and TD Waterhouse in helping them derivemaximum value from their customer data and sustain real advantage over theircompetition. GB Group is supported by its key relationships with major organisations withwhom it partners 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). About URU(TM) The URU(TM) service, the DataAuthentication division's principle offering, has been developed jointly with BT. It combines GB's Authenticator (TM) search engineand decision making software, access to GB's comphrensive range of identitydata and BT's high capacity web delivery. It helps organisations to protect themselves from the growing problem of identity theft and fraud, which is estimated to cost the UK economy over £1.3 billion per annum. URU(TM) enablescompanies subscribing to the service to make an instant decision whether toaccept the identity claimed by any given individual and confirm their age inseconds. URU(TM) works by cross checking personal information provided by an individual atthe point of acquisition against a comprehensive range of up-to-date UK andInternational population datasources to confirm that an individuals is who they claim to be, live where they claim to live and meet certain minimum legal agerequirements. No personal data is disclosed by the reference databases and as a result URU(TM)is compliant with the Data Protection Act. URU(TM) also provides a valuable audit trail demonstrating that the necessarychecks have taken place, thereby helping companies comply with legislation,including the 2nd European Money Laundering Directive, Proceeds of Crime Act andMinimum Legal Age requirements of certain industry sectors. The addition of data from CallCredit also enables users of URU(TM) to incorporatecredit reference data. CHAIRMAN'S STATEMENT The Group has made very positive progress throughout the year, both inconsolidating its position in its existing markets and quickly moving towards aleading position in the emerging 'electronic identity verification' market withthe URU(TM) service which has been developed by GB's DataAuthentication divisionin collaboration with BT. I am pleased to report that this major new initiative,which has involved a significant investment in financial and managementresources, has been managed within our financial plans for the year and has notprevented us from achieving profit improvement within our existing business. Revenue from the DataAuthentication division grew strongly during the year inline with the increase in subscriptions to the URU(TM) service. At 31 May 2005,59 business clients had been installed as subscribers of the service, includingclients such as Betfair, TD Waterhouse and O2. This early success provides URU(TM) with valuable endorsements within our target markets of Online Gaming, Financial Services and Mobile Telecommunications. URU(TM) is addressing a market which is growing fast and where prospects areexcellent. Our relationship with BT means that together, we have the commercialand technical infrastructure to continue to establish a strong market positionfor URU(TM) in the UK and the expertise and resource to develop URU(TM) into aservice capable of expanding internationally. The profitability of the existing DataIntegrity and DataSolutions operationsincreased compared to the previous year as a result of continued focus onimproving margins and the introduction of efficiencies. The markets in which ourexisting businesses operate are mature and although competition is keen, thesebusinesses are of high quality and accordingly have good prospects. Overall, the Group's performance for the year was in line with expectations and,as planned, we were able to fund the development of URU(TM) from the cash flowfrom our existing business. I am pleased to report, therefore, that the Group's financial position remainsstrong and cash balances at 31 March 2005, after taking account of the dividendof £398,000 paid during the year, were £6.7 million (2004: £6.9 million). As aresult of the Group's continued financial strength and its prospects, theDirectors will propose the payment of a maintained dividend of 0.5p per ordinaryshare (2004: 0.5p) at the Annual General Meeting to be held in July. With respect to the current year, in the period to the end of May, sales in theDataAuthentication division have continued to grow in line with the take up ofURU(TM). The performance of our existing business is marginally ahead of the sameperiod last year and we remain pleased with progress. This year is one of significance for the Group, particularly in relation to thegrowth of our DataAuthentication business and, as explained more fully in theChief Executive's Report, GB has a clear strategy to develop this further. Froman initial assessment of the growth experienced to date, your Board isincreasingly confident that there are substantial and profitable opportunitiesin this new market and is deploying appropriate resources to enhance the Group'sposition. As in previous years, the profitability of our DataIntegrity and DataSolutionsoperations will be weighted towards the second half of the year in line withcontract renewals, however, during the year as a whole, we expect the cash flowfrom these businesses to continue to fund the greater part of our investment in our DataAuthentication business and in particular URU(TM). The GB team, led by Richard Law, has continued to work well and effectivelyduring the past year. All of our employees are to be congratulated on the partthey have played, and are continuing to play, in improving the overall qualityof our business. Your Board looks to the current year ahead with confidence andoptimism. J L Walker-Haworth Chairman CHIEF EXECUTIVE'S REVIEW Overview The Group continued to make good progress throughout the year. GB's DataAuthentication division has achieved pleasing growth in revenue as aresult of increased sales of URU(TM), its joint service with BT. In addition, GB'sexisting DataIntegrity and DataSolutions divisions continued to operateeffectively and efficiently, albeit in increasingly competitive markets. The highlights of the year were as follows: • Revenue in the DataAuthentication division grew throughout the year and accelerated towards the end of the year reaching £450,000 in the second half of the year, up from £150,000 in the first half, as a result of both higher subscriber numbers to URU(TM) and higher usage of the service by those subscribers. Revenue for the full year was £600,000 (2004: £6,000). • The DataAuthentication division has continued to successfully develop its Authenticator(TM) technology on which URU(TM) is based and has increased the breadth of data which URU accesses. In October 2004, GB entered into an agreement with Aristotle Inc. of the USA for the inclusion of international identity data into URU(TM). As a result of these and other joint initiatives with BT, URU(TM) has established a strong position in the markets in which it is focusing its efforts and is now the market leader for the provision of identity verification service in the Online Gaming sector. • As expected, the Group made a small operating loss, before exceptional costs, of £242,000 (2004: £123,000) after taking account of significantly increased investment in URU(TM). The combined profitability of GB's existing DataIntegrity and DataSolutions operations, however, improved compared to the previous year by £186,000. • Combined turnover from the DataIntegrity and DataSolutions businesses was lower than in the previous year principally as a result of the decision to discontinue low margin third party software sales, taken in March 2004, and also as a result of increased competition. The decision to discontinue third party software sales had a positive impact on profitability. • The overall quality of the Company and its prospects were significantly improved during the year. DataAuthentication Division A year ago, the problems associated with the ability of criminals to commitidentity fraud and to launder money were already well known. Since then, newproblems, such as the need to verify that online gamblers are of the legal age,have started to emerge. The scale of these problems has increased as a result ofboth the significant growth in the volume of transactions conducted over thetelephone and the internet and the ability of fraudsters to obtain high quality,false identity documents. URU(TM), the DataAuthentication division's principle offering, is an effectivesolution addressing these problems and is capable of providing instantaneousassurance of an individual's true identity without the individual being presentor the need for paper based proofs. It does this by combining GB's Authenticator(TM)search engine and decision making software and GB's access to a comprehensiverange of identity data together with BT's high capacity web services delivery. The number of subscribers for URU(TM) is now 59, spread principally across the keytarget sectors of Online Gaming, Financial Services and MobileTelecommunications. URU(TM) has developed a strong position in each of thesesectors and in Online Gaming we now believe URU(TM) to be the UK market leader. In the current year, increased regulation in our markets, such as the GamblingAct which was introduced in April 2005 and now makes age verification checks anobligation for all UK based gambling businesses, is expected to result in thecontinued development of the market. Although the take up of electronic identity verification is increasing, thenumber of checks performed using electronic methods comprises only a smallproportion of the total potential market and the majority of identity checks arestill performed manually. It is GB's aim in the year ahead to lead thedevelopment of the market for electronic identity verification in the UK and toimplement our plans for taking electronic identity verification intointernational markets in the future. In order to achieve this aim and continue the strong growth in revenues, we planto increase investment beyond that anticipated at this stage last year. Thisinvestment will be used to develop further the functionality and efficacy of theAuthenticator(TM) technology, to acquire more international data and increase oursales and marketing resource. Our work to develop an international identity verification service is already showingearly signs of success. In April 2005, GB entered into a contract with NETellerPlc, the leading provider of electronic wallet services, to develop a version ofthe URU(TM) service for the verification of their customers in the UK and Europe.Our expectations for the growth of the international market in the current yearare modest, however this development is an important indication that aninternational market for electronic identity verification exists. In summary, the Directors are very encouraged by the progress made by theDataAuthentication division in this growing and exciting market and inparticular its work with BT to develop and market URU(TM). We believe that ourinvestment plans in the current year will enable us to continue to exploit thesignificant potential of this opportunity. DataIntegrity and DataSolutions Divisions GB's existing DataIntegrity and DataSolutions operations produced operatingprofits, before exceptional costs, £186,000 ahead of the previous year.Exceptional costs, associated with the amalgamation of GB's two locations andthe consolidation of a number of functions, are in line with the expectationsset out in our statement at the half-year. The DataIntegrity and DataSolutions operations continue to be businesses of highquality. A large proportion of the turnover from these businesses is derivedunder long-term contracts or contracts which renew annually. In the currentyear, the markets served by these businesses are expected to remain challenging,however, the efficiencies flowing from the merger of our two locations, whichtook place during the last year, together with new product and serviceofferings, will help to offset these competitive pressures. Our assessment of these businesses is that they should be capable of maintainingprofitability in the current year and indications during the first two months ofthe year support this view. Our priority in the current year is to provide highquality, innovative products to our clients and to continue to provide excellentcustomer service, and in so doing, continue to remain competitive. Management and People The Executive Management Team has been strengthened during the year with thepromotion of Rob Laurence to Managing Director of our DataAuthenticationdivision. Rob has been, and continues to be, responsible for building GB'sDataAuthentication business which incorporates the URU(TM) service. In addition, a number of new managers have been recruited to strengthen furtherour team of dedicated and talented professionals. Summary The Group continues to make good progress. The DataAuthentication division hasworked well with BT to establish an impressive client base for URU(TM) and theservice now has a proven track record and is showing exciting growth. During thecurrent year it is our objective to secure a strategic position in the marketfor electronic identity verification which is capable of yielding materialfuture benefit to the Group. The prospects for our existing DataSolutions and DataIntegrity operations remainpositive and these businesses are expected to continue to be both profitable andcash generative during the current year. Overall, we expect the increased investment in our DataAuthentication divisionto exceed our cash-flow from the existing businesses in the current year. Theamount of this net investment will be largely dependent on how quickly themarket develops and accordingly, how quickly we expand our resource andinfrastructure. As a guide, however, the estimate based on our current plans isthat cash balances should not fall below £5.5 million during the course of theyear. These are exciting times for GB and I am pleased by our progress and encouragedby our prospects. R A Law Chief Executive FINANCIAL AND OPERATING REVIEW As outlined in the Chairman's statement and Chief Executive's review, theCompany made good progress during the year, increasing significantly theturnover of URU(TM) in its DataAuthentication division and producing combinedprofits ahead of last year in its existing DataSolutions and DataIntegritybusinesses, despite a reduction in turnover. The table below shows an analysisof the Group's profit and loss performance. URU Existing Exceptional Total Total Business Items 2005 2005 2005 2005 2004 £'000 £'000 £'000 £'000 £'000 Turnover 600 10,631 - 11,231 11,916 Cost of sales (520) (4,158) - (4,678) (5,224) ------- ------- ------- ------- --------Gross profit 80 6,473 - 6,553 6,692 Other operating expenses (excluding exceptional items and goodwill) (847) (5,421) - (6,268) (6,239) ------- ------- ------- ------- --------Operating profit/(loss) before exceptional items and goodwill (767) 1,052 - 285 453 Exceptional items - office merger & restructuring - - (321) (321) (89) ------- ------- ------- ------- --------Operating profit/(loss) before goodwill amortisation (767) 1,052 (321) (36) 364 Goodwill amortisation - (527) - (527) (576) ------- ------- ------- ------- --------Operating (loss)/profit URU (767) - - (767) (413)Existing business - 525 - 525 290Exceptional items - - (321) (321) (89) ------- ------- ------- ------- -------- (767) 525 (321) (563) (212) ------- ------- ------- ------- -------- During the year, the Group invested an additional £354,000 in the development ofthe URU(TM) opportunity compared to the previous year. This investment waspartially offset by greater profitability, before exceptional costs, from ourexisting business of £186,000 leaving Group losses greater than last year at theoperating line, before exceptional costs, of £168,000. The Group incurredexceptional costs of £321,000 which were associated with outstanding rentals ona building the Group no longer uses or requires and restructuring costs. Thesecosts are non-recurring and as a result ongoing operating costs are lower. Moredetails on these points are as follows: • GB's investment in URU(TM), principally in development and marketing costs, increased by £354,000 to £767,000 and resulted in turnover increasing to £600,000 compared to £6,000 in the previous year. The following table compares the results for URU(TM) to last year. URU(TM) 2005 2004 * Variance £000 £000 £000 Turnover 600 6 594 Costs & sales (520) (11) (509) ------ ------ ------ Gross profit/(loss) 80 (5) 85 Other operating expenses (excluding exceptional items and goodwill) (847) (408) (439) ------ ------ ------ Operating profit/(loss) before goodwill amortisation (767) (413) (354) ------ ------ ------ * Results shown for "new business" in the 2004 accounts of £41,000 included £35,000 with respect to sales of Authenticator(TM) Software and £6,000 with respect to URU(TM). • The existing business (DataIntegrity and DataSolutions) increased operating profit before goodwill amortisation by £186,000 compared to the previous year. Turnover reduced by £1.3 million following the decision to withdraw from the sale of third party software, which in the previous year generated sales of £667,000, and also as a result of a competitive marketplace. Increased focus on margins and the introduction of efficiencies resulted in an increase in operating profit before goodwill of 21% compared to the previous year. The following table compares the results to the previous year. Existing Business 2005 2004 * Variance £000 £000 £000 Turnover 10,631 11,910 (1,279) Costs & sales (4,158) (5,213) 1055 ------- ------- ------- Gross profit 6,473 6,697 (224) Other operating expenses (excluding exceptional items and goodwill) (5,421) (5,831) 410 ------- ------- ------- Operating profit before goodwill amortisation 1,052 866 186 ------- ------- ------- • Other operating expenses before exceptional items and goodwill were in line with those of the previous year as the increased investment in URU(TM) was offset by lower costs elsewhere. • Exceptional costs (primarily costs relating to the consolidation of two office locations and restructuring costs) of £321,000 were expensed during the year, compared to one-off exceptional costs of £89,000 in the previous year. > Goodwill amortised during the year was £527,000 (2004: £576,000), net interest earned during the year was £280,000 (2004: £212,000) resulting in a loss after goodwill but before taxation for the year of £283,000 (2004: £10,000). > Cash generated from operating activities during the year was £94,000 (2004: £440,000). Interest receivable was £280,000 (2004: £212,000) and dividends paid were £398,000 (2004: £398,000) leaving cash balances held at 31 March 2005 of £6.7 million (2004: £6.9 million). Gross Profit and Cost of Sales The gross profit margin for the Group for the year increased by 2 percentagepoints to 58% (2004 : 56%). This was principally as a result of the removal oflower margin third party software sales which previously had an adverse impacton the overall Group margin. Other Operating Expenses before Exceptional Costs Other operating expenses, excluding exceptional costs and goodwill amortisation,were £6.3 million (2004: £6.3 million), however, the mix of expenditure changedcompared to the previous year as follows:- • URU(TM) development costs increased by £439,000, due primarily to sales and marketing costs and technical development costs. • Operating costs with respect to the existing business reduced by £410,000 principally as a result of discontinued activities. Goodwill Amortisation The goodwill amortised during the year ended 31 March 2005 was £527,000 (2004:576,000). Group Profit/Loss The operating profit before goodwill amortisation and exceptional items was£285,000 (2004: £453,000). The operating loss after goodwill amortisation, butbefore exceptional items, was £242,000 (2004: £123,000) and interest earnedduring the year was £280,000 (2004: £212,000) resulting in a profit before taxand exceptional costs of £38,000 (2004: £79,000). Interest Receivable Interest is earned on cash balances which are invested in accordance with theGroup's treasury policy. Interest earned during the year was £280,000 (2004:£212,000). Taxation The Group provided for taxation credits of £109,000 (2004: tax charge of £4,000)principally with respect to research and development tax credits. In accordancewith Financial Reporting Standard ('FRS') 19, the Group has recognised adeferred tax asset of £346,000 (2004: £340,000). At 31 March 2005, the Group had potential deferred tax assets of £6.8 million(2004: £7.1 million) of which £346,000 (2004: £340,000) had been recognised. In accordance with FRS 19, trading losses carried forward were £19.8 million(2004: £20.1 million) and capital losses were £2.3 million (2004: £2.2 million). Dividend The Board of Directors will propose a final dividend of 0.5p (2004: 0.5p)approval and payment of which is subject to ratification by the shareholders atthe Annual General Meeting on 21 July 2005. Amounts Transferred from Reserves The amount transferred from reserves after accounting for the proposed dividendof £400,000 (2004: £400,000) is £574,000 (2004: £412,000). Balance Sheet and Liquidity Explanations of the most significant items in the Balance Sheet during the yearare as follows: Intangible Assets The carrying value of intangible assets at 31 March 2005 was £6.0 million (2004:£6.5 million). During the year, goodwill amortised was £527,000 (2004:£576,000). Debtors The value of debtors reduced by £153,000 to £2.6 million at 31 March 2005,compared to the same date last year. This was principally as a result of adecrease in the level of trade debtors. Cash and Short Term Deposits At 31 March 2005, the Group held cash and short term deposit balances of £6.7million (2004: £6.9 million) and, in accordance with the Group's treasurypolicy, all funds are placed with major UK clearing banks and buildingsocieties. The principal source of funds during the year were cash inflows from operatingactivities of £94,000 (2004: £440,000) and interest earned of £280,000 (2004:£212,000). The principal uses of funds recognised in the balance sheet during the year werethe net investment in tangible fixed assets of £173,000 (2004: £153,000) and thedividend payment of £398,000 (2004: £398,000). Creditors The value of creditors falling due within one year has reduced by £428,000 to£2.7 million at 31 March 2005, compared to the same date last year. Theprincipal reason for this is a reduction in the value of trade creditors, othertaxes and social security costs and deferred income. International Accounting Standards During the year ended 31 March 2006, GB will be required to publish itsconsolidated Financial Statements in accordance with International FinancialReporting Standards ("IFRS"). As a result, the Group's interim results for theperiod ended 30 September 2005 will be the first results to be reported underIFRS. MT Navin-MealeyGroup Finance Director GROUP PROFIT AND LOSS ACCOUNTYear ended 31 March 2005-------------------------------------------------------------------------------- Unaudited 2005 2004 Note £'000 £'000 Turnover 11,231 11,916 Cost of sales (4,678) (5,224) -------- -------Gross profit 6,553 6,692 Other operating expenses (excluding goodwill amortisation and exceptional items) (6,268) (6,239) Goodwill amortisation (527) (576) Exceptional items (321) (89) -------- -------Other operating expenses (7,116) (6,904) --------------------------------------------------------------------------------Operating loss before exceptional items (242) (123)Exceptional items (321) (89)--------------------------------------------------------------------------------Operating loss (563) (212) Share of operating loss in associate - (10) -------- -------Total operating loss: Group and share of associate (563) (222)Interest receivable 280 212 -------- ------- Loss on ordinary activities before taxation (283) (10) Taxation 109 (4) -------- ------- Loss on ordinary activities after taxation (174) (14) Proposed dividend (400) (398) -------- ------- Amount transferred from reserves (574) (412) -------- ------- (Loss)/earnings per 2.5p ordinary share (pence) - basic 1 (0.2) 0.0 -------- ------- (Loss)/earnings per 2.5p ordinary share (pence) - diluted 1 (0.2) 0.0 -------- -------Adjusted earnings per 2.5p ordinary share (pence) - before goodwill 1 0.5 0.7 -------- ------- Dividend per share (pence) 0.5 0.5 -------- ------- GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES There were no other recognised gains or losses in the year ended 31 March 2005or in the year ended 31 March 2004 apart from those shown in the profit and lossaccount for the year. GROUP BALANCE SHEETAs at 31 March 2005-------------------------------------------------------------------------------- Unaudited 2005 2004 Note £'000 £'000 Fixed assets Intangible assets 5,979 6,504 Tangible assets 361 410 -------- ------- 6,340 6,914 -------- -------Current assets Stock - 18 Debtors 2,571 2,724 Cash at bank and in hand 6,749 6,859 -------- ------- 9,320 9,601 Creditors: amounts falling due within one year (2,685) (3,113) -------- -------Net current assets 6,635 6,488 -------- -------Total assets less current liabilities 12,975 13,402 Provisions for liabilities and charges (230) (132) -------- ------- 12,745 13,270 -------- ------- Capital and reserves Called up share capital 2,001 1,989 Share premium account 3,170 3,133 Merger reserve 6,575 6,575 Capital redemption reserve 3 3 Profit and loss account 996 1,570 -------- ------- Shareholders' funds attributable to equity interests 3 12,745 13,270 -------- ------- GROUP STATEMENT OF CASH FLOWSYear ended 31 March 2005-------------------------------------------------------------------------------- Unaudited 2005 2004 Note £'000 £'000 Net cash inflow from operating activities 2a 94 440 Returns on investments and servicing of finance Interest received 280 212 Taxation Corporation tax 58 (4) Capital expenditure and financial investment Payments to acquire tangible fixed assets (173) (153) Acquisitions and disposals Acquisitions of subsidiary undertakings (20) - Disposal of associate - 12 Equity dividends paid (398) (398) ------- ------ Net Cash (outflow)/inflow before management of liquid resources (159) 109 Management of liquid resources Cash (deposited to)/withdrawn from short-term deposits (259) 291 Financing Proceeds from issue of ordinary shares 49 2 ------- ------ (Decrease)/increase in cash 2b (369) 402 ------- ------ Notes to the Preliminary Announcement: 1. Earning per Ordinary Share Earnings per share have been calculated in accordance with Financial ReportingStandard 14 by reference to the following: Unaudited 2005 Unaudited 2004 pence per 2005 pence per 2004 share £'000 share £'000 Loss after taxation (used in basic and diluted EPS calculation) (0.2) (174) 0.0 (14)Add goodwill amortisation 0.7 527 0.7 576 ------- -------- ------- -------- Adjusted earnings after taxation(used in adjusted EPS calculation) 0.5 353 0.7 562 ------- -------- ------- -------- Unaudited 2005 2004 No. No. Basic weighted average number of shares in issue 79,754,856 79,585,369Diluted effect of share options - - ---------- ----------Diluted weighted average number of shares in issue 79,754,856 79,585,369 ---------- ---------- The Directors consider that EPS calculated on the adjusted profit is anappropriate measure of the Group's performance. 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 2005 isidentical 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 of FinancialReporting Standard No. 14 (FRS 14). 2(a) Reconciliation of operating (loss)/profit to net cash inflows from operating activities Unaudited 2005 2004 £'000 £'000 Operating loss (563) (212)Depreciation 222 257Goodwill amortisation 527 576Decrease/(increase) in stocks 18 (16)Increase/(decrease) in provisions 98 (58)Decrease in debtors 204 220Decrease in creditors (412) (327) ------ ------ Net cash inflow from operating activities 94 440 ------ ------ 2(b) Reconciliation of net cash flow to movement in net funds 2005 2004 £'000 £'000 At the beginning of the year 6,859 6,748(Decrease)/increase in cash (369) 402Movement in short-term deposits with banks 259 (291) ------ ------ At the end of year 6,749 6,859 ------ ------ 2(c) Analysis of net funds 2004 2005 £'000 £'000 £'000 Cash at bank and in hand 1,327 (369) 958Short-term deposits * 5,532 259 5,791 -------- -------- -------- 6,859 (110) 6,749 -------- -------- -------- * Short-term deposits are included within cash at bank and in hand on thebalance sheet. 3. Reconciliation of Movements in Shareholders' Funds Group Unaudited 2005 2004 £'000 £'000 Total recognised (loss)/profit (174) (14)Issue of shares 49 2Proposed dividend (400) (398) ------- -------Total movements during the year (525) (410) Shareholders' funds attributable to equity interests at 1 April 2004 13,270 13,680 ------- -------Shareholders' funds attributable to equity interests at 31 March 2005 12,745 13,270 ------- ------- 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 2005 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 2004 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 31 June 2005. 3. The ex-dividend date is 29 June 2005; the record date is 1 July 2005; the payment date is 29 July 2005. 4. The AGM will take place on 21 July 2004. 5. The 2005 interim results announcement is expected to be on 30 November 2005. 6. This report will also be available on the GB Group web site: www.gb.co.uk from 1 June 2005. 7. The Company intends to dispatch to shareholders printed copies of the full annual report and accounts for the year to 31 March 2003 by 24 June 2005. This information is provided by RNS The company news service from the London Stock Exchange