Gb Group Regulatory News (GBG)

RNS Number : 5348M

GB Group PLC

26 May 2010

 

 

 

Embargoed until 7.00 a.m.

26 May 2010

 

GB GROUP PLC

("GB" or the "Group")

 

Annual Results Announcement for the Year Ended 31 March 2010

 

GB Group Plc, the identity management specialist, is pleased today to announce its annual results for year ended 31st March 2010.

 

Highlights

 

·; Year of good progress in difficult economic conditions.

 

·; Group like-for-like operating profit (before share based payments) increased slightly to £1.2 million (2009: £1.1 million) on turnover of £22.2 million (2009: £23.8 million).

 

·; Group gross profit margins were improved at 53% compared to 51% for the year to March 2009.

 

·; DataSolutions, providers of identity based marketing services, increased revenues by 6% to £12.5 million (2009: £11.8 million). New clients included Severn Trent, Racing UK, British Film Institute and London Borough of Hounslow.

 

·; Revenue in DataAuthentication, GB's identity verification business, reduced by 17% to £9.7 million (2009: £11.7 million). New clients included The Cooperative Bank and Arnold Clark.

 

·; The Group has a strong balance sheet and good cash generation. Cash and cash equivalents at the year-end of £5.7 million (2009: £4.5 million) after payment of a dividend of £1 million during the year.

 

·; An increase in the level of dividend to 1.2p per share (2009: 1.15p) to be recommended to shareholders at the forthcoming AGM.

 

Commenting, John Walker-Haworth, Chairman, said:

"GB has started the new financial year in good shape and trading in the early weeks of the year is in line with our expectations."

 

Commenting, Richard Law, Chief Executive, said:

"We are of the view that markets are uncertain at the present time but believe that GB, with its leading products, services and technology, a strong balance sheet and a particularly high quality and professional team of people, is well placed to take advantage of increased consumer activity that an improvement in the UK economy will bring."

 

- Ends -

 

 

For further information, please contact:

 

GB Group plc	01244 657333
Richard Law, Chief Executive Dave Wilson, Finance Director
Weber Shandwick Financial Nick Oborne Clare Thomas	020 7067 0700
Website	www.gb.co.uk

 

 

Notes to Editors

 

About GB Group plc

 

The most successful organisations recognise the value of understanding your individual identity - who you are, what you need and what you like. GB combines this concept of identity with technology to create an environment of trust so that organisations can connect, communicate and transact with consumers safely, responsibly and profitably. We call this identity management.

 

GB Group has three complementary identity management offerings:

 

·; Identity Verification - combating ID fraud, money laundering and under-age gambling

·; Identity Capture and Maintenance - providing accurate and up-to-date customer information for your contact strategy

·; Identity Analysis - understanding, targeting and retaining profitable customers

 

This enables our clients to make informed business decisions based on a thorough knowledge of consumer identity and behaviour, leading to more effective communication and interaction with the customer.

 

GB is listed on the London Stock Exchange (GBG). For more information, please visit GB's website: www.gb.co.uk.

 

GB Group - because identity matters™

 

 

CHAIRMAN'S STATEMENT

GB made good progress during a year of difficult economic conditions. The effect of the recession interrupted the momentum in revenue growth that had been built during the previous two years, but the Group made notable advances in its strategy to be an integrated Identity Management business and in building the strength of its team of people.

 

Although GB's revenue decreased by 7% to £22.2 million in the year (2009: £23.8 million), like-for-like operating profit (before share-based payments) was maintained and cash balances increased.

 

GB's business and revenue are of high quality, with a large proportion of clients renewing each year and it is against this backdrop that the Board will propose an increased ordinary dividend of 1.2p per share (2009: 1.15p) at the Group's Annual General Meeting in July.

 

The year ahead holds uncertainties for the level of consumer activity, a principal driver of GB's business model, but GB has a clear vision, a strong balance sheet and will approach opportunities for growth boldly but with regard to market conditions as the year progresses.

 

GB has started the new financial year in good shape, and trading in the early weeks of the year is in line with our expectations.

 

 

 

 

 

JL Walker-Haworth

Chairman

 

 

 

 

 

CHIEF EXECUTIVE'S REVIEW

 

Overview

In common with most businesses, GB faced challenges during the financial year because of the difficult economic conditions.

 

Despite this, the Group delivered like-for-like operating profit (before share based payments) of £1.2 million (2009: £1.1 million) and profit after tax for the financial year of £1.5 million (2009: £1.5 million).

 

The Group continues to be cash generative having paid an increased dividend of £1 million (2009: £0.8 million) during the year and the Group's cash balances increased further to £5.7 million (2009: £4.5 million). The strengths of GB's balance sheet and its cash are always great assets in the confidence they give our clients, particularly during periods of general economic uncertainty.

 

Full Year Review

GB's strategy of positioning itself as an Identity Management business, assisting its clients really to understand the identity of their customers and in so doing minimise fraud risk and maximise sales opportunity, has assisted the Group to mitigate the worst effects of recession. GB has done this by linking its products, services and propositions around the common theme of consumer identity to create a stronger strategic message for our markets and deliver our products and services more efficiently by using a common technology. Our sales teams in each of our business units now cross-sell the products and services of the other and the incidence of cross-sales is increasing.

 

As previously announced, at the start of the year, one of GB's largest clients, Blyk, withdrew its activities from the UK and another major client reduced its level of business with GB following a change to its business model. Neither of these DataAuthentication clients was lost to competitors, but this resulted in a revenue reduction of around £2 million in the year compared to last year with a gross margin impact of around £1.2 million.

 

Outside of these two clients, the level of business in financial services and other sectors with existing clients was, as would be expected, affected by the recession, but there were no material losses of clients to our competitors, and revenue from new business compensated for the reduction.

 

Accordingly, full year revenue for the Group held up reasonably well and at £22.2 million (2009: £23.8 million). Like-for-like operating profit (before share-based payments) was maintained which, given the market conditions and events, we believe to be a credible result.

 

The Business Units

 

DataAuthentication

GB's DataAuthentication business provides Electronic Identity Verification Services to business-to-consumer companies and other organisations to enable them to verify identity quickly, cost effectively and with confidence. GB continues to be the market leader in this developing market with particular focus in mobile telecoms, gaming and financial services.

 

In the year to 31 March 2010, revenues reduced by 17% to £ 9.7 million (2009: £11.7 million), largely as a result of the events of the two clients mentioned above.

 

The verification of a person's identity is still performed predominantly by using manual paper-based checks and, accordingly, there is scope for future growth of electronic checks by way of displacement of these manual processes. However, identity is most commonly verified at the start of a trading relationship between businesses and consumers and, therefore, the volume of verifications performed by DataAuthentication's clients is largely driven by economic activity which currently remains fairly subdued.

 

The early signs we saw towards the end of the last quarter of the year of improvement in the market for Identity Management have not changed and we wait to see whether these will be sustained now the general election has been concluded.

 

We are continuing to win new business across all of the sectors in which we operate and our investment in keeping our products and services at the leading edge of this market will ensure that this continues as economic conditions improve.

 

The number of live clients has continued to increase and new additions during the year include The Cooperative Bank and Arnold Clark.

 

DataSolutions

DataSolutions performed well and increased its revenues on a like-for-like basis by 6% to £12.5 million despite difficult market conditions. Operating profitability within DataSolutions also improved.

 

The alignment of DataSolutions' products and services within the Identity Management market has allowed us to move away from the more competitive areas of Marketing Services and develop new products and services focused on enabling our clients to understand the identity of their customers and accordingly what drives their behaviour.

 

Our online technology, originally developed for our DataAuthentication business, is now increasingly employed within the DataSolutions business to deliver sophisticated services which capture and analyse consumer data and enables our clients to serve their customers better, spot fraud patterns and find non-payers.

 

Our strategy for this business is to continue to integrate its offerings with the Identity Verification services provided by DataAuthentication to enable our clients to make informed business decisions based on the thorough knowledge of their customers.

 

During the year we were successful in wining a number of exciting new clients including Severn Trent, Racing UK, British Film Institute and London Borough of Hounslow.

 

Outlook

Trading in the financial year to date is in line with our expectations.

 

We are of the view that markets are uncertain at the present time but believe that GB, with its leading products, services and technology, a strong balance sheet and a particularly high quality and professional team of people, is well placed to take advantage of increased consumer activity that an improvement in the UK economy will bring.

 

 

 

 

 

RA Law

Chief Executive

 

 

 

 

BUSINESS AND FINANCIAL REVIEW

 

The Group's Business

GB is the UK's leading Identity Management business. It helps organisations recognise and verify all elements of an individual's identity at every interaction. Through the application of our proprietary technology, we enable organisations to connect, communicate and transact with people safely, responsibly and profitably.

 

The performance of the Group is reported by segment, reflecting the management responsibilities and economic characteristics of each division. The Group's two operating segments are as follows:

 

·; DataAuthentication - which provides electronic identity verification services for combating ID fraud, money laundering and under-age gambling

·; DataSolutions - which provides identity capture, maintenance and analysis services to provide accurate and up-to-date customer information for a contact strategy and to facilitate better understanding, targeting and retention of profitable customers

 

Group Vision, Objectives and Strategy

The Group's vision is to be the recognised leader in the field of identity management, a fundamental enabler of online business.

 

The Group's strategy continues to be to create and maintain unique online products and services which provide additional value for clients and that are of sufficient strength to enable the Group to create new markets and to consistently win new business against our competition. The Group achieves this through its investment in people and business development opportunities and the application of innovation, quality and excellence in everything it does.

 

Group Overview

 

The following table sets out the results of the Group for the year ended 31 March 2010.

 

		Years ended 31 March
		2010		2009
		£'000		£'000
Revenue		22,208		23,799
Like-for-like1 operating profit before share based payments		1,200		1,146
Operating profit before share based payments		1,200		1,479
Operating profit		1,157		1,205
Finance revenue		106		184
Profit before tax		1,263		1,389
Income tax credit		243		111
Profit for the financial year		1,506		1,500

 

Note 1 Like-for-like revenues and profits in 2009 exclude revenue of £350,000 from a one-off settlement for licence arrears. The profit associated with this settlement was £333,000.

 

2010 Financial Year Compared to 2009 Financial Year

In the year to 31 March 2010, revenue for the Group decreased 7% to £22.2 million (2009: £23.8 million) principally resulting from challenges in the DataAuthentication business, with two major clients changing their business models over the year. The impact on like-for-like1 profitability was, however, less significant with profits before interest, taxation and share based payments of £1.2 million compared to £1.2 million in the previous year.

 

Explanations of the significant items in the Statement of Comprehensive Income during the year are as follows:

 

Revenue

Revenues from DataSolutions increased by 3% to £12.5 million (2009: £12.1 million). Included in the 2009 DataSolutions performance was revenue of £350,000 associated with the exceptional settlement of licence arrears and consequently, like-for-like revenues from DataSolutions increased by 6%. In the DataAuthentication business revenues fell by 17% to £9.7 million (2009: £11.7 million).

 

Gross Profit and Cost of Sales

Group gross profit margins were improved at 53% compared to 51% for the year to 31 March 2009.

 

Other Operating Expenses

Other operating expenses were £10.6 million (2009: £10.7 million) with a decrease principally as a result of lower levels of share-based payment expenses.

 

Exceptional Items

Exceptional items totalled £94,000 (2009: £94,000). These related to final salary payments following staff reorganisations.

 

Group Profit

The Group generated an operating profit of £1.2 million (2009: £1.2 million) and finance revenue earned during the year was £0.1 million (2009: £0.2 million) resulting in a profit before tax of £1.3 million (2009: £1.4 million).

 

Taxation

The current tax credit of £243,000 (2009: £111,000 credit) reflects the recognition of an increased deferred tax asset relating to decelerated capital allowances and tax losses, partially offset by current tax.

 

Dividend

The Board of Directors will propose a final ordinary dividend of 1.2 pence per share, amounting to £1,026,000 (2009: £984,000). The final ordinary dividend with respect to the year ended 31 March 2010, if approved, will be paid on 12 August 2010 to ordinary shareholders whose names were on the register on 16 July 2010.

 

Amounts Transferred To Reserves

The amount transferred to reserves is £565,000 (2009: £929,000) after accounting for the previous year's dividend of £984,000 (2009: £845,000) which was paid during the year ended 31 March 2010.

 

Balance Sheet and Liquidity

Explanations of the most significant items in the Balance Sheet during the year are as follows:

 

Property, Plant and Equipment

The amount invested in property, plant and equipment during the year was £462,000 (2009: £353,000).

 

Intangible Assets

The carrying value of goodwill at 31 March 2010 was £6.5 million (2009: £6.5 million). The carrying value of product development costs capitalised in accordance with IAS 38 'Intangible Assets' was £98,000 (2009: £94,000). Intangible assets are tested annually for impairment and no impairment was required.

 

Trade and Other Receivables

The value of trade and other receivables increased by £20,000 to £6.2 million at 31 March 2010, compared to the same date last year.

 

Cash Flows

Cash generated from operating activities was £2.5 million (2009: £1.1 million), due in part to some favourable movements in working capital, some of which will unwind in the following year. After taking account of the payment in dividend of £1.0 million (2009: £0.8 million), investment in fixed assets of £0.5 million (2009: £0.4 million) and other investing and financing cash flows of £0.2 million (2009: £0.4 million) cash and cash equivalents increased by £1.2 million (2009: £0.2 million). Further detailed analysis of this movement is included in the Consolidated Cashflow Statement.

 

Cash and Cash Equivalents

At 31 March 2010, the Group held cash and short-term deposit balances of £5.7 million (2009: £4.5 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 Payables

The value of trade and other payables has increased by £0.9 million to £7.2 million (2009: £6.3 million) at 31 March 2010, compared to the same date last year.

 

The value of deferred income at 31 March 2010 was £0.9 million (2009: £0.9 million).

 

Key Performance Indicators

The Board monitor the Group's progress against its strategic objectives and the financial performance of the Group's operations on a regular basis. Performance is assessed against the strategy and budgets using financial and non-financial measures.

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 the underlying data. A summary of performance against these KPIs is given below.

 

·; Financial

The Group uses the following primary measures to assess the performance of the Group and its propositions.

 

o Revenue

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 earnings before interest and taxation percentage ("EBIT%") 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.

 

·; Transaction Based

o Underlying Identity Verifications

Management believe that DataAuthentication 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 URU™ and ID3-Check™ systems and excludes one-off batch verifications.

 

 

Performance Against KPIs

A summary of the Group's progress in achieving its objectives, as measured against KPIs, is set out below.

 

	Years ended 31 March
	2010		2009
Revenue Growth	-5%1		21%1
DataAuthentication Revenue Growth	-17%		56%
DataSolutions Revenue Growth	6%1		2%1
EBIT % excluding share based payments	5.4%		4.9%1
Earnings Per Share	1.8p		1.8p
Cash (£'000)	5,747		4,504
Underlying Identity Verifications	9,125,878		9,334,531

 

Note 1 Like-for-like revenues and profits in 2009 exclude revenue of £350,000 from a one-off settlement for licence arrears. The profit associated with this settlement was £333,000.

 

 

Principal Risks and Uncertainties

Management use a model to identify and assess the impact of risks to the business under four key headings - financial, strategic, operational and knowledge. For each risk, the likelihood and consequence are identified, management controls are confirmed and results reported. The corporate governance report in the Annual Report describes more about the Group's risk management process. The more significant risks 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 or interruption in supply could quickly affect the Group's operations adversely and could result in loss of revenue or additional expenditure for 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.

 

Relationships

Other than our shareholders, the Group's performance and value are influenced by other stakeholders, principally our customers, suppliers, employees and our strategic partners. Relationships are managed both on an individual basis and via representative groups. The Group participates in industry groups which give genuine access to client and supplier groups and decision makers in government and other regulatory bodies.

 

Treasury Policy and Financial Risk

The Group's treasury operation is managed within formally defined policies which are reviewed by the Board. The Group finances its activities with cash and short-term deposits. 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 invested through the use of short-term deposits with the objective of maximising fixed interest rate returns whilst still providing the flexibility to fund on-going operations when required. It is not the Group's policy to engage in speculative activity or to use complex financial instruments.

 

 

 

 

 

D Wilson

Group Finance Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Comprehensive Income

Year ended 31 March 2010

 

 

		2010		2009
		£'000		£'000
	Note
Revenue
- excluding exceptional item	3	22,208		23,449
- exceptional item	3	-		350
	3	22,208		23,799
Cost of sales		(10,330)		(11,768)
Gross profit		11,878		12,031
Other operating expenses excluding exceptional items		(10,627)		(10,732)
Exceptional items	5	(94)		(94)
Operating profit		1,157		1,205
Finance revenue - excluding exceptional item		32		184
Finance revenue - exceptional item	5	74		-
Profit before tax		1,263		1,389
Income tax credit		243		111
Profit for the year attributable to equity holders of the parent		1,506		1,500
Earnings per share	7
- basic earnings per share for the year		1.8p		1.8p
- diluted earnings per share for the year		1.8p		1.8p

 

 

Consolidated Statement of Changes in Equity Year ended 31 March 2010

 

 

			Equity share capital		Merger reserve		Capital redemption reserve		Retained earnings		Total equity
			£'000		£'000		£'000		£'000		£'000
Balance at 1 April 2008			5,683		6,575		3		(1,028)		11,233
Profit for the period			-		-		-		1,500		1,500
Total comprehensive income for the period			-		-		-		1,500		1,500
Exercise of options			184		-		-		-		184
Cost of share-based payments			-		-		-		274		274
Equity dividend			-		-		-		(845)		(845)
Balance at 31 March 2009			5,867		6,575		3		(99)		12,346
Profit for the period			-		-		-		1,506		1,506
Total comprehensive income for the period			-		-		-		1,506		1,506
Exercise of options			40		-		-		-		40
Recovery of VAT on share issue fees			114		-		-		-		114
Cost of share-based payments			-		-		-		43		43
Equity dividend			-		-		-		(984)		(984)
Balance at 31 March 2010			6,021		6,575		3		466		13,065

 

Company Statement of Changes in Equity Year ended 31 March 2010

 

 

				Equity share capital		Merger reserve		Capital redemption reserve		Retained earnings		Total Equity
				£'000		£'000		£'000		£'000		£'000
Balance at 1 April 2008				5,683		6,575		3		1,288		13,549
Profit for the period				-		-		-		1,483		1,483
Total comprehensive income for the period				-		-		-		1,483		1,483
Exercise of options				184		-		-		-		184
Cost of share-based payments				-		-		-		274		274
Equity dividend				-		-		-		(845)		(845)
Balance at 31 March 2009				5,867		6,575		3		2,200		14,645
Profit for the period				-		-		-		1,506		1,506
Total comprehensive income for the period				-		-		-		1,506		1,506
Exercise of options				40		-		-		-		40
Recovery of VAT on share issue fees				114		-		-		-		114
Cost of share-based payments				-		-		-		43		43
Equity dividend				-		-		-		(984)		(984)
Balance at 31 March 2010				6,021		6,575		3		2,765		15,364

 

Consolidated Balance Sheet

As at 31 March 2010

 

	Note		2010		2009
			£'000		£'000
ASSETS
Non-current assets
Property, plant and equipment	8		1,023		983
Intangible assets	9		6,604		6,600
Deferred tax asset			815		563
			8,442		8,146
Current assets
Trade and other receivables			6,165		6,145
Cash and short-term deposits			5,747		4,504
			11,912		10,649
TOTAL ASSETS			20,354		18,795
EQUITY AND LIABILITIES
Capital and reserves
Equity share capital	10		6,021		5,867
Merger reserve			6,575		6,575
Capital redemption reserve			3		3
Retained earnings			466		(99)
Total equity attributable to equity holders of the parent			13,065		12,346
Current liabilities
Trade and other payables			7,215		6,345
Current tax			22		52
Provisions			52		52
			7,289		6,449
TOTAL LIABILITIES			7,289		6,449
TOTAL EQUITY AND LIABILITIES			20,354		18,795

Approved by the Board on 25 May 2010

 

R A Law- Director

Registered in England number 2415211

Company Balance Sheet

As at 31 March 2010

 

	Note		2010		2009
			£'000		£'000
ASSETS
Non-current assets
Property, plant and equipment	8		1,023		983
Intangible assets	9		98		94
Investments			9,317		9,317
Deferred tax asset			815		563
			11,253		10,957
Current assets
Trade and other receivables			6,165		6,145
Cash and short-term deposits			5,747		4,504
			11,912		10,649
TOTAL ASSETS			23,165		21,606
EQUITY AND LIABILITIES
Capital and reserves
Equity share capital	10		6,021		5,867
Merger reserve			6,575		6,575
Capital redemption reserve			3		3
Retained earnings			2,765		2,200
Total equity			15,364		14,645
Current liabilities
Trade and other payables			7,727		6,857
Current tax			22		52
Provisions			52		52
			7,801		6,961
TOTAL LIABILITIES			7,801		6,961
TOTAL EQUITY AND LIABILITIES			23,165		21,606

 

 

Approved by the Board on 25 May 2010

R A Law- Director

 

Consolidated Cash Flow Statement Year ended 31 March 2010

 

	Note		2010		2009
			£'000		£'000
Group profit before tax			1,263		1,389
Adjustments to reconcile Group profit before tax to net cash flows
Interest income			(106)		(184)
Depreciation of property, plant and equipment			422		357
Amortisation of intangible fixed assets			47		69
Share-based payments			43		274
Increase in trade and other receivables			(20)		(794)
Increase/(decrease) in trade and other payables			870		(111)
Increase in provisions			-		52
Cash generated from operations			2,519		1,052
Income tax paid			(39)		-
Net cash generated from operating activities			2,480		1,052
Cash flows from investing activities
Purchase of property, plant and equipment			(462)		(353)
Expenditure on product development			(51)		(27)
Interest received			106		184
Net cash flows used in investing activities			(407)		(196)
Cash flows from financing activities
Proceeds from issue of shares			40		184
VAT reclaim on share issue costs			114		-
Dividends paid to equity shareholders			(984)		(845)
Net cash flows used in financing activities			(830)		(661)
Net increase in cash and cash equivalents			1,243		195
Cash and cash equivalents at the beginning of the period			4,504		4,309
Cash and cash equivalents at the end of the period			5,747		4,504

 

 

 

 

Company Cash Flow Statement Year ended 31 March 2010

 

	Note		2010		2009
			£'000		£'000
Company profit before tax			1,263		1,372
Adjustments to reconcile Group loss before tax to net cash flows
Interest income			(106)		(184)
Depreciation of property, plant and equipment			422		357
Amortisation of intangible fixed assets			47		69
Share-based payments			43		274
Increase in trade and other receivables			(20)		(778)
Increase/(decrease) in trade and other payables			870		(110)
Increase in provisions			-		52
Cash generated from operations			2,519		1,052
Income tax paid			(39)		-
Net cash generated from operating activities			2,480		1,052
Cash flows from investing activities
Purchase of property, plant and equipment			(462)		(353)
Expenditure on product development			(51)		(27)
Interest received			106		184
Net cash flows used in investing activities			(407)		(196)
Cash flows from financing activities
Proceeds from issue of shares			40		184
VAT reclaim on share issue costs			114		-
Dividends paid to equity shareholders			(984)		(845)
Net cash flows used in financing activities			(830)		(661)
Net increase in cash and cash equivalents			1,243		195
Cash and cash equivalents at the beginning of the period			4,504		4,309
Cash and cash equivalents at the end of the period			5,747		4,504

 

 

 

 

 

1. AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRSs

 

The Group and Company financial statements of GB Group plc (the 'Company') for the year ended 31 March 2010 were authorised for issue by the Board of Directors on 25 May 2010 and the balance sheets were signed on the Board's behalf by R A Law. GB Group plc is a public limited company incorporated and domiciled in England & Wales. The Company's ordinary shares are traded on the London Stock Exchange.

 

The Group and Company's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union as they apply to the financial statements of the Group and Company for the year ended 31 March 2010.

 

The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual Statement of Comprehensive Income and related notes.

 

2. ACCOUNTING POLICIES

 

Basis of Preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. A summary of the significant accounting policies is set out below.

 

The accounting policies that follow set out those policies that apply in preparing the financial statements for the year ended 31 March 2010. The Group and Company have applied the same policies throughout the year.

 

The Group and Company financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.

 

Basis of Consolidation

The Group financial statements consolidate the financial statements of GB Group plc and its subsidiary undertakings drawn up to 31 March each year.

 

Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights; currently exercisable or convertible potential voting rights; or by way of contractual agreement. The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All intragroup balances and transactions, including unrealised profits arising from them, are eliminated.

 

The Company's Investments in Subsidiaries

In its separate financial statements the Company recognises its investments in subsidiaries at cost.

 

Property, Plant and Equipment

Plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated to write off cost less estimated residual value based on prices prevailing at the balance sheet date on a straight-line basis over the estimated useful life of each asset as follows:

 

Plant and equipment - over 4 to 10 years

 

The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount.

 

An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the Statement of Comprehensive Income in the year the item is derecognised.

 

Residual values and estimated remaining lives are reviewed annually.

 

Goodwill

Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill already carried in the balance sheet at 1 April 2004 or relating to acquisitions after that date is not amortised. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

 

For the purpose of impairment testing, goodwill is allocated to the cash-generating unit expected to benefit from the synergies. Impairment is determined by assessing the recoverable amount of the cash-generating unit, including the related goodwill. Where the recoverable amount of the cash-generating unit is less than the carrying amount, including goodwill, an impairment loss is recognised in the Statement of Comprehensive Income. The carrying amount of goodwill allocated to a cash-generating unit is taken into account when determining the gain or loss on disposal of the unit, or an operation within it. Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.

 

Business Combinations

GB Group has applied the business combinations exemption in IFRS 1. It has not restated business combinations that took place prior to the 1 April 2004 transition date.

 

Impairment of Assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are recognised in the Statement of Comprehensive Income in those expense categories consistent with the function of the impaired asset.

 

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only on assets other than goodwill if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

 

Intangible Assets

 

Research and development costs

Research costs are expensed as incurred. An intangible asset arising from development expenditure on an individual project is recognised only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete and the availability to measure reliably the expenditure during the development. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Any expenditure capitalised is amortised on a straight line basis over 2 to 4 years.

 

Trade and Other Receivables

Trade receivables, which generally have 30-60 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectable amounts. A provision is made against a trade receivable only when there is objective evidence that the Group may not be able to recover the entire amount due under the original terms of the invoice. The carrying amount of the receivable is reduced through the use of a provision for doubtful debts account. Impaired debts are derecognised when they are assessed as uncollectible.

 

Cash and Short-Term Deposits

Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity date of three months or less.

 

For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of any outstanding bank overdrafts.

 

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the Statement of Comprehensive Income net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

 

Pensions

The Group does not have a contributory pension scheme. Payments are made to individual private defined contribution pension arrangements. Contributions are charged in the Statement of Comprehensive Income as they become payable.

 

Exceptional Items

The Group presents as exceptional items on the face of the Statement of Comprehensive Income, those material 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.

 

Dividends

Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders.

 

Share-Based Payment Transactions

Employees (including directors) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares ('equity-settled transactions').

 

The Group has taken advantage of the exemption in IFRS 1 in respect of equity settled awards so as to apply IFRS 2 only to those equity settled awards granted after 7 November 2002 that had not vested on or before 1 January 2005.

 

Equity-Settled Transactions

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted. The fair value is determined by an external valuer using a binomial model. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of GB Group plc ('market conditions') and non-vesting conditions, if applicable.

 

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ('the vesting date'). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The Statement of Comprehensive Income charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

 

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting conditions were satisfied, provided that all other vesting conditions are satisfied.

 

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised over the remainder of the new vesting period for any modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.

 

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it was granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

 

The dilutive effect of outstanding options is reflected in the computation of earnings per share (see note 7).

 

Revenue Recognition

Revenue is measured at the fair value of the consideration received from the sale of software and rendering of services, net of value-added tax, rebates and discounts and after the elimination of inter-company transactions within the Group. Revenue is recognised as follows:

 

(a) Sale of software licences

Revenue in respect of software licences where the Group has no further obligations and the contract is non cancellable is recognised at time of sale. Revenue in respect of software licences where there are further contractual obligations, in the form of additional services provided by the Group, is recognised over the duration of the licence in line with when the costs are incurred.

 

(b) Rendering of services

Revenue from the rendering of services is recognised by reference to the stage of completion. Stage of completion of the specific transaction is assessed on the basis of the actual services provided as a proportion of the total services to be provided.

 

(c) Interest income

Revenue is recognised as interest accrues using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to its net carrying amount.

 

Operating Leases

Payments made under operating leases (net of any incentives received from the lessor) are charged to the Statement of Comprehensive Income on a straight-line basis over the period of the lease.

 

Deferred Income Tax

Deferred tax is recognised in respect of all temporary differences between the carrying amounts of assets and liabilities included in the financial statements and the amounts used for tax purposes, that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exceptions:

 

No provision is made where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction which is not a business combination that at the time of the transaction affect neither accounting nor taxable profit.

 

No provision is made for deferred tax that would arise on all taxable temporary differences associated with investments in subsidiaries and interests in joint ventures, where the timing of the reversal of temporary differences can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

 

Deferred tax assets are recognised only to the extent that the directors consider that it is probable that there will be suitable taxable profits from which the future reversal of the underlying temporary differences and unused tax losses and credits can be deducted.

 

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which the asset is realised or liability settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

 

 

 

Foreign currencies

The Company's functional currency and presentation currency is pounds sterling. Transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the Statement of Comprehensive Income.

 

New Accounting Standards and Interpretations Applied

The accounting policies adopted in the preparation of these financial statements are consistent with those followed in the preparation of the financial statements for the year ended 31 March 2009, except for the adoption of new Standards and Interpretations noted below. Adoption of these Standards and Interpretations did not have any effect on the financial position or performance of the Group and the Company.

 

International Financial Reporting Interpretations Committee (IFRIC)

Adoption date

 

IFRIC 13	Customer Loyalty Programmes	1 July 2008
IFRIC 15	Agreements for the Construction of Real Estate	1 January 2009
IFRIC 16	Hedges of a Net Investment in a Foreign Operation	1 October 2008

 

 

International Accounting Standards (IAS / IFRS)		Adoption date
IFRS 2	Amendment to IFRS 2 - Vesting Conditions and Cancellations	1 January 2009
IFRS 7	Amendment to IFRS 7 - Reclassification of Financial Assets	1 July 2008
IFRS 7	Amendment to IFRS 7 - Improving Disclosures about Financial Instruments	1 January 2009
IFRS 8	Operating Segments	1 January 2009
IAS 1	Presentation of Financial Statements (revised September 2007)	1 January 2009
IAS 1	Amendment to IAS 1 - Puttable Financial Instruments and Obligations Arising on Liquidation	1 January 2009
IAS 1	Amendment to IAS 1 - Cost of Investment in Separate Financial Statements	1 January 2009
IAS 23	Borrowing Costs (revised March 2007)	1 January 2009
IAS 27	Amendment to IAS 27 - Cost of Investment in Separate Financial Statements	1 January 2009
IAS 32	Amendment to IAS 32 - Puttable Financial Instruments and Obligations Arising on Liquidation	1 January 2009
IAS 39	Amendment to IAS 39 - Reclassification of Financial Assets	1 July 2008

IFRS 8 replaces IAS 14 'Segment Reporting' and requires the segment information presented in the financial statements to be that which management uses internally for evaluating segment performance and deciding how to allocate resources to operating segments. Segment information for the year ended 31 March 2010 and the year ended 31 March 2009 have been re-presented on a comparable basis in note 4.

 

IAS 1 (revised) introduces the statement of comprehensive income, presenting all items of recognised income and expense, either in one single statement, or in two linked statements. The Group has elected to present a single statement but there are no additional disclosures above what was previously reported in the Statement of Comprehensive Income.

 

 

New Accounting Standards and Interpretations not Applied

 

During the year, the IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of these financial statements:

 

International Accounting Standards (IAS / IFRS)		Effective date
IFRS 1	Amendment to IFRS 1 - Additional Exemptions for First-time Adopters	1 January 2010
IFRS 1	Amendment to IFRS 1 - Limited Exemption from Comparative IFRS 7 disclosures	1 July 2010
IFRS 2	Amendment to IFRS 2 - Group Cash-Settled Share-based Payment Transactions	1 January 2010
IFRS 3	Business Combinations (revised January 2008)	1 July 2009
IFRS 9	Financial Instruments: Classification & Measurement	1 January 2013
IAS 24	Related Party Disclosures (revised)	1 January 2011
IAS 27	Consolidated and Separate Financial Statements (revised January 2008)	1 July 2009
IAS 32	Amendment to IAS 32 - Classification of Rights Issues	1 February 2010
IAS 39	Amendment to IAS 39 - Eligible Hedged Items	1 July 2009
	Improvements to IFRS (issued April 2009)	Various dates

 

International Financial Reporting Interpretations Committee (IFRIC)		Effective date
IFRIC 14	Amendment: Prepayments of a Minimum Funding Requirement	1 January 2011
IFRIC 17	Distribution of Non-Cash Assets to Owners	1 July 2009
IFRIC 18	Transfers of Assets from Customers	1 July 2009
IFRIC 19	Extinguishing Financial Liabilities with Equity Instruments	1 July 2010

 

The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group's or the Company's financial statements in the period of initial application.

 

Judgements and key sources of estimation uncertainty

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates.

 

In the process of applying the Group's accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

 

Impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy detailed at note 2 above. An analysis of the Group's goodwill and the assumptions used to test for impairment are set out in the Annual report and Accounts.

 

Impairment of other assets

The Group reviews the carrying value of all assets for indications of impairment at each balance sheet date. If indicators of impairment exist the carrying value of the asset is subject to further testing to determine whether its carrying value exceeds its recoverable amount. The recoverable amount represents the higher of the asset's fair value less costs to sell and its value in use, which is determined by measuring the discounted cash flows arising from the asset (including ultimate realisation on disposal).

 

Deferred tax assets

Management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with an assessment of the effect of future tax planning strategies. The carrying value of the deferred tax asset on recognised tax losses at 31 March 2010 was £815,000 (2009: £563,000) and the unrecognised tax losses at 31 March 2010 were £5,332,000 (2009: £5,988,000). Further details are contained in the Annual report and Accounts.

 

Share-based payments

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Judgement is required in determining the most appropriate valuation model for a grant of equity instruments, depending on the terms and conditions of the grant. Management are also required to use judgement in determining the most appropriate inputs to the valuation model including expected life of the option, volatility and dividend yield. The assumptions and models used are disclosed in the Annual report and Accounts.

 

 

3. REVENUE

 

Revenue disclosed in the Statement of Comprehensive Income is analysed as follows:

	2010		2009
	£'000		£'000
Sale of goods	6,833		6,277
Rendering of services	15,365		17,172
Exceptional item	-		350
Revenue	22,208		23,799
Finance revenue	106		184
Total revenue	22,314		23,983

 

The £350,000 exceptional item in 2009 was related to back-dated revenues which resulted from a licence dispute that was settled on 28 May 2008.

 

 

4. SEGMENTAL INFORMATION

 

The Group's operating segments are internally reported to the Group's Chief Executive Officer based on two separable areas grouped into two operating segments: DataAuthentication - which provides electronic identity verification services and DataSolutions - which provides identity capture, maintenance and analysis services. The Directors believe that the best measure of performance of those segments is operating profit before finance revenue and income tax as shown below.

 

All revenues and all non-current assets are derived from UK operations. Segment results include items directly attributable to either DataAuthentication or DataSolutions. Unallocated items for 2010 represent Group head office costs (£333,000), exceptional costs (£94,000), Group finance income (£106,000), Group income tax credit (£243,000) and share-based payments (£43,000). Unallocated items for 2009 represent Group head office costs (£381,000), exceptional costs (£94,000), Group finance income (£184,000), Group income tax credit (£111,000) and share-based payments (£274,000).

 

Information on segment assets and liabilities is not regularly provided to the Group's Chief Executive Officer and is therefore not disclosed below.

 

	Data Authentication		Data Solutions		Unallocated		2010
Year ended 31 March 2010	£'000		£'000		£'000		£'000
Revenue	9,694		12,514		-		22,208
Operating profit before depreciation	221		1,875		-		1,669
Depreciation and amortisation	(97)		(372)		-		(469)
Operating profit before finance revenue and income tax	124		1,503		(427)		1,200
Finance revenue							106
Share-based payments							(43)
Income tax							243
Profit for the period							1,506

 

 

 

 

	Data Authentication		Data Solutions		Unallocated		2009
Year ended 31 March 2009	£'000		£'000		£'000		£'000
Revenue from operating activities	11,692		11,757		-		23,449
Exceptional revenue	-		350		-		350
Total revenue	11,692		12,107		-		23,799
Operating profit before depreciation	980		1,400		(475)		1,905
Depreciation and amortisation	(115)		(311)		-		(426)
Operating profit before finance revenue and income tax	865		1,089		(475)		1,479
Finance revenue					184		184
Share-based payments					(274)		(274)
Income tax					111		111
Profit for the period							1,500

 

 

 

Information about major customers

Annual revenue from one customer amounted to £3,138,000 (2009: £3,418,000) arising from sales reported in the DataAuthentication segment.

 

5. EXCEPTIONAL ITEMS

Exceptional costs in the year ended 31 March 2010 and 2009 were reorganisation costs relating to redundancy payments following staff reorganisations.

 

The £74,000 finance revenue item in year ended 31 March 2010 relates to interest received from HM Revenue and Customs following a reclaim of VAT associated with fees for share issues in 1993, 1995 and 1996. The total amount of VAT recovered was £114,000 which has been credited to the share premium account.

 

 

6. DIVIDENDS PAID AND PROPOSED

 

						2010 £'000		2009 £'000
Declared and paid during the year
Final dividend for 2009: 1.15p (2008: 1.00p)						984		845
Proposed for approval at AGM (not recognised as a liability at 31 March)
Final dividend for 2010: 1.20p (2009: 1.15p)						1,026		981

 

 

 

7. EARNINGS PER ORDINARY SHARE

 

Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the basic weighted average number of ordinary shares in issue during the year.

 

		2010 pence per share		2010 £'000		2009 pence per share		2009 £'000
Profit attributable to equity holders of the parent		1.8		1,506		1.8		1,500

 

 

Diluted

Diluted earnings/(loss) per share amounts are calculated by dividing the profit/(loss) for the year attributable to ordinary equity holders 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.

 

		2010		2009
		No.		No.
Basic weighted average number of shares in issue		85,487,254		84,979,900
Dilutive effect of share options		280,177		780,546
Diluted weighted average number of shares in issue		85,767,431		85,760,446

 

 

		2010 pence per share		2010 £'000		2009 pence per share		2009 £'000
Profit attributable to equity holders of the Company		1.8		1,506		1.8		1,500

 

 

8. PROPERTY, PLANT AND EQUIPMENT

 

Group and Company
							Plant and equipment
							£'000
Cost
At 1 April 2008							2,196
Additions							353
Disposals							(7)
At 31 March 2009							2,542
Additions							462
At 31 March 2010							3,004
Depreciation and impairment
At 1 April 2008							1,209
Provided during the year							357
At 31 March 2009							1,559
Provided during the year							422
At 31 March 2010							1,981
Net book value
At 31 March 2010							1,023
At 31 March 2009							983
At 1 April 2008							987

 

The net book value in respect of assets held under finance leases and hire purchase agreements is £nil (2009: £nil).

 

 

9. INTANGIBLE ASSETS

 

Group	Development costs £'000		Goodwill   £'000		Total   £'000
Cost
At 1 April 2008	215		6,506		6,721
Additions - product development	27		-		27
At 31 March 2009	242		6,506		6,748
Additions - product development	51		-		51
At 31 March 2010	293		6,506		6,799
Amortisation and impairment
At 1 April 2008	79		-		79
Amortisation during the year	69		-		69
At 31 March 2009	148		-		148
Amortisation during the year	47		-		47
At 31 March 2010	195		-		195
Net book value
At 31 March 2010	98		6,506		6,604
At 31 March 2009	94		6,506		6,600
At 1 April 2008	136		6,506		6,642

 

Goodwill arose on the acquisition of GB Mailing Systems Limited and e-Ware Interactive Limited. Under IFRS, goodwill is no longer amortised and is annually tested for impairment.

 

 

Company	Development costs £'000			Total   £'000
Cost
At 1 April 2008		215		215
Additions - product development		27		27
At 31 March 2009		242		242
Additions - product development		51		51
At 31 March 2010		293		293
Amortisation and impairment
At 1 April 2008		79		79
Amortisation during the year		69		69
At 31 March 2009		148		148
Amortisation during the year		47		47
At 31 March 2010		195		195
Net book value
At 31 March 2010		98		98
At 31 March 2009		94		94
At 1 April 2008		136		136

 

 

10.	EQUITY SHARE CAPITAL
					2010		2009
					£'000		£'000
	Authorised
	93,609,520 (2009: 93,609,520) ordinary shares of 2.5p each				2,340		2,340
	Issued and fully paid
	Allotted, called up and fully paid				2,138		2,133
	Share premium				3,883		3,734
					6,021		5,867
					2010		2009
					No.		No.
	Number of shares in issue at 1 April				85,314,242		84,451,382
	Issued on exercise of share options				221,000		862,860
	Number of shares in issue at 31 March				85,535,242		85,314,242

 

During the year, the Company received £40,000 (2009: £184,000) on the issue of shares in respect of the exercise of options awarded under various share option plans. The nominal value of these shares was £5,000 (2009: £21,000).

 

During the year the Company recovered £114,000 of VAT from HM Revenue and Customs following a reclaim of VAT associated with fees for share issues in 1993, 1995 and 1996. This was credited to the share premium account.

 

11. SHARE-BASED PAYMENTS

 

Group and Company

 

The Group operates Executive Share Option Schemes under which executive directors, managers and staff of the Company are granted options over shares.

 

Executive Share Option Scheme

Options are granted to executive directors and employees on the basis of their performance. Options are granted at the full market value of the Company's shares at the time of grant and are exercisable between three and ten years from the date of grant. The options vest when the Company's earnings per share growth is greater than the growth of the Retail Prices Index (RPI) over a 3 year period prior to the exercise date. There are no cash settlement alternatives.

 

Executive Share Option Scheme (Section C Scheme)

Options are granted to executive directors and employees on the basis of their performance. Options are granted at the full market value of the Company's shares at the time of grant and are exercisable between three and ten years from the date of grant. The percentage of an option that will vest and be capable of exercise will depend on the performance of the Company. A minimum of 50 per cent. of the options will vest when the Total Shareholder Return (TSR) performance of the Company, as compared to the TSR of the FTSE Computer and CPU Services Sub-Sector over a three-year period, matches or exceeds the median company. The percentage of shares subject to an option in respect of which that option becomes capable of exercise will then increase on a sliding scale so that the option will become exercisable in full if top quartile performance is achieved.

 

GB Sharesave Scheme

The Group has a savings-related share option plan, under which employees save on a monthly basis, over a three or five year period, towards the purchase of shares at a fixed price determined when the option is granted. This price is usually set at a 20% discount to the market price at the time of grant. The option must be exercised within six months of maturity of the savings contract, otherwise it lapses.

 

The expense recognised from equity-settled share-based payments in respect of employee services received during the year is £43,000 (2009: £274,000).

 

The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year.

 

	2010 No.		2010 WAEP		2009 No.		2009 WAEP
Outstanding as at 1 April	9,239,935		29.61p		8,744,601		28.62p
Granted during the year	1,050,000		20.99p		1,999,931		31.13p
Forfeited during the year	(1,246,087)		28.19p		(438,647)		33.55p
Cancelled during the year	(452,830)		27.14p		(117,640)		26.54p
Exercised during the year	(221,000)		18.26p2		(863,310)		21.28p3
Expired during the year	(191,176)		100.50p		(85,000)		31.50p
Outstanding at 31 March	8,178,842		27.51p		9,239,935		29.61p
Exercisable at 31 March					4,313,166		28.50p

 

1Included within this balance are options over 360,000 (2009: 551,176) shares that have not been recognised in accordance with IFRS 2 as the options were granted on or before 7 November 2002. These options have not been subsequently modified and therefore do not need to be accounted for in accordance with IFRS 2.

 

2 The weighted average share price at the date of exercise for the options exercised is 24.25p

 

3 The weighted average share price at the date of exercise for the options exercised is 32.36p

 

For the shares outstanding as at 31 March 2010, the weighted average remaining contractual life is 5.5 years (2009: 5.3 years).

The weighted average fair value of options granted during the year was 4.13p (2009: 10.23p). The range of exercise prices for options outstanding at the end of the year was 11.75p - 49.50p (2009: 11.75p - 100.50p).

 

The fair value of equity-settled share options granted is estimated as at the date of grant using a binomial model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model for the years ended 31 March 2010 and 31 March 2009.

 

		2010		2009
Dividend yield (%)		5.0 - 5.8		2.9 - 3.0
Expected share price volatility (%)		45		45
Risk-free interest rate (%)		2.4 - 2.6		4.4 - 5.1
Lapse rate (%)		5.0		5.0
Expected exercise behaviour		See below		See below
Market-based condition adjustment (%)		48.00		48.00
Expected life of option (years)		3.0 - 5.0		3.0 - 5.0
Weighted average share price (p)		20.99p		32.36p

 

It is assumed that 50% of options will be exercised by participants as soon as they are 20% or more "in-the-money" (i.e. 120% of the exercise price) and the remaining 50% of options will be exercised gradually at the rate of 20% per annum for each year they remain at or above 20% "in-the-money".

 

The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not necessarily be the actual outcome.

 

The market-based condition adjustment takes into account the likelihood of achieving market conditions, and allows for the fact if a Section C option vests it does not always vest at 100%.

 

No other features of options granted were incorporated into the measurement of fair value.

 

 

12. RELATED PARTY TRANSACTIONS

 

Compensation of key management personnel (including directors)

 

Group & Company

 

			2010		2009
			£'000		£'000
Short-term employee benefits			470		416
Post-employment benefits			47		38
Share-based payments			1		11
			518		465

 

 

 

OTHER INFORMATION

 

(i)	The above financial information, which is unaudited, does not constitute statutory accounts as defined in section 435 (1) and (2) of the Companies Act 2006. The financial information for the year ended 31 March 2010 has been extracted from the draft statutory accounts on which an unqualified audit opinion has been issued. Statutory accounts for the year ended 31 March 2010 will be delivered to the Registrar in due course. The annual results 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.
(ii)	The annual results announcement was approved by the Board of Directors of GB Group plc on 25 May 2010.
(iii)	The ex-dividend date is 14 July 2010; the record date is 16 July 2010; the payment date is 12 August 2010.
(iv)	The AGM will take place on 29 July 2010.
(v)	The 2010 interim results announcement is expected to be on 30 November 2010.
(vi)	This report will also be available on the GB Group web site: www.gb.co.uk from 26 May 2010.
(vii)	The Company intends to dispatch to shareholders printed copies of the full annual report and accounts for the year to 31 March 2010 by 7 July 2010.