Gb Group Regulatory News (GBG)

25 Nov 2009 07:00



Embargoed until 7.00 a.m.

25 November 2009

GB GROUP PLC 

("GB" or the "Group")

Half Year Results Announcement for the six months ended 30 September 2009

GB Group plc, the identity management specialist, is pleased today to announce its half year results for the six months ended 30 September 2009.

Highlights

The Group continued to be profitable and cash-generative in the first half.

Like-for-like* operating profit before tax was £245,000 (2008: £73,000). Like-for-like revenues were 7% down at £10.5 million (2008: £11.3 million). 

DataAuthentication experienced a difficult first half, with two major clients changing their business model over the course of the year. This was offset by a particularly strong performance by DataSolutions.

During the first half the number of live DataAuthentication clients rose to 269 from 258 and it has recently added a number of new clients: Click and Buy; Europe's largest independent motor dealer; and a number of the UK's largest independent retailers of mobile phones.

DataSolutions benefited from the consolidation of its traditional marketing services businesses and the acceleration of its move online. It recently won a seven year contract with the world's fourth largest privately-owned water company to supply identity-based address management services.

Continued strong focus on business efficiencies.

GB's balance sheet remains strong. Cash balances at 30 September 2009 were £4.3 million (2008: £4.2 million) 

* Like-for-like revenues in 2008 exclude revenue of £0.35 million from a one-off settlement for licence arrears. The profit associated with this settlement was £0.33 million. 

Commenting, John Walker-Haworth (GB's non-executive Chairman) said: 

"Given current market conditions we expect that the remainder of the year will continue to be difficult for the DataAuthentication business and that its revenue performance will remain broadly similar for the balance of the year with full year earnings now anticipated to be below our earlier expectations.

"Although this is less positive than anticipated, we continue to grow our client base, the Group's operations continue to be profitable and we remain well placed to address successfully the markets in which we operate."

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

During the first half of the financial year the Group continued to be profitable and cash generative. Operating profit, on a like-for-like basis, was marginally ahead of the same period last year at £245,000 (2008: £73,000*). This pleasing performance was despite a reduction in revenue on a like-for-like basis of 7% and reflects continued strong focus on business efficiencies.

Our DataAuthentication business, which provides electronic identity verification solutions to help businesses to register new customers, avoid fraud and comply with age and ID regulations, had a difficult first half which was offset by a particularly strong performance from our DataSolutions business.

During the early part of the year we took the decision to recruit a new Managing Director for our DataAuthentication business to focus on its growth in these more difficult and competitive market conditions. Consequently, John Lord joined us in July bringing with him significant relevant experience.

To date in the second half we have seen a steady improvement in the value of our pipeline of new opportunities and the closure of some significant contracts with new clients, such as Click and Buy. There remains, however, significant uncertainty regarding second half volumes from a small number of important clients and accordingly, we now expect to see revenue growth in the DataAuthentication business come through later in the year than originally anticipated.

The Group has continued to be profitable in the third quarter of the year to date, although at a lower level than for the same period last year. Cash balances remain strong and, despite the current trading environment, we remain confident in the long-term growth prospects of the business.

GB's Results

GB's performance for the six months ending 30 September 2009 was broadly in line with expectations as follows:

The Group generated a like-for-like* operating profit of £245,000 (2008: £73,000).

Like-for-like* revenue decreased by 7% to £10.5 million (2008:11.3 million).

GB's balance sheet remains strong. Cash balances at 30 September 2009 were £4.3 million (2008: £4.2 million) after the payment of GB's increased final dividend of 1.15p per share in August 2009, amounting to £0.98 million.

* Like-for-like revenues in 2008 exclude revenue of £0.35 million from a one-off settlement for licence arrears. The profit associated with this settlement was £0.33 million.

DataAuthentication

In the six months to 30 September 2009, revenue in our DataAuthentication business fell by 19% to £5.2 million (2008: £6.4 million). Over the course of the year, two of our major clients changed their business models in response to market conditions leading to lower volumes of full identity checks. One client moved away from direct customer acquisition with the result that they no longer performed customer verifications and the other, for economic reasons, chose to reduce the proportion of new customers on which it performed a full identity check. This accounted for the majority of the net fall in revenue. Our experience is that market conditions are becoming more competitive.

The number of live clients has risen to 269 from 258 at the start of the financial year and we have recently added Europe's largest independent motor dealer along with a number of the UK's largest independent retailers of mobile phones as new clients.

The transaction volumes of existing and new clients will take time to recover and build and, accordingly, full year revenue expectations for this side of the business, which had assumed growth, are now unlikely to be met.

In response to GB's view of the long-term potential, and in the anticipation of a tougher sales environment, the Group reorganised its management in July.

In our DataAuthentication business, John Lord, formerly of LBM and Dunn & Bradstreet, became Managing Director of DataAuthentication, replacing Rob Laurence who had run that area of the business since its inception in 2004. John was recruited into the role for his strong sales credentials both in the UK and internationally and he will focus on the growth of DataAuthentication into the evolving Electronic Identity Verification ("EIDV") market.

Rob Laurence moved into a business development role to step up GB's development of new and evolving markets in Identity Management.

In addition to these management changes, GB continued to invest in feature and data rich software products and services using its innovative software development methodology to increase integration speed, improve flexibility and focus on client return on investment. These products and services will be released early next year. 

We have actively recruited new high calibre sales people, although costs have, and will, continue to be controlled and performance managed.

DataSolutions

GB continues to see benefits from the consolidation of its traditional marketing services businesses and the acceleration of their move online. The impact of these changes was seen at the end of last year when GB's DataSolutions and DataIntegrity businesses came together under the name of DataSolutions to enable them to achieve strategic and operational synergies. The impact of this combination in the first half has seen underlying like-for-like revenue increase by 8% and underlying operating profits in DataSolutions increase by 30%, or £0.4 million compared to the same period last year.

We continue to develop our online software products and services in dynamic markets, such as in the tracing of individuals, and during the first half of this year we launched version 3 of our successful e-Trace product which contains the UK's largest residential and business database and helps our clients, according to recent analysis, to improve the chances of reaching individuals and recovering outstanding monies by more than 150%(1).

GB also recently won a seven year contract with the world's fourth largest privately-owned water company to supply identity-based address management services. GB's solution utilises address data and advanced geo-locational identification techniques and will feature in their new SAP-based IT platform.

Our strategy for the DataSolutions business is to integrate increasingly its identity-based marketing services with the identity verification services provided by DataAuthentication. This will enable our clients to make informed business decisions based on a thorough knowledge of their customers' identity and behaviours, leading to more effective communication, improved interaction and their increased profitability.

Source: (1) Based on matching results across 20 Debt Collection clients.

Outlook

Given current market conditions we expect that the remainder of the year will continue to be difficult for the DataAuthentication business and that its revenue performance will remain broadly similar for the balance of the year with full year earnings now anticipated to be below our earlier expectations. Although this is less positive than anticipated, we continue to grow our client base, the Group's operations continue to be profitable and we remain well placed to address successfully the markets in which we operate.

JL Walker-Haworth

Chairman

25 November 2009

Interim Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2009

	Note		Unaudited 6 months to 30 September		Unaudited 6 months to 30 September			Audited Year to 31 March
			2009		2008			2009
			£'000		£'000			£'000
Revenue
- excluding exceptional item			10,509		11,334			23,449
- exceptional item	3		-		350			350
			10,509		11,684			23,799
Cost of sales			(4,939)		(5,966)			(11,768)
Gross profit			5,570		5,718			12,031
Other operating expenses			(5,325)		(5,312)			(10,732)
Exceptional items	3		-		-			(94)
Operating profit			245		406			1,205
Finance revenue - excluding exceptional item			22		115			184
Finance revenue - exceptional item	3		74		-			-
Profit before tax			341		521			1,389
Income tax (expense)/credit			(27)		(32)			111
Profit for the period attributable to equity holders of the parent and total comprehensive income for the year			314		489			1,500
Earnings per share	7
- basic earnings per share for the period			0.4p		0.6p			1.8p
- diluted earnings per share for the period			0.4p		0.6p			1.8p

  

Interim Consolidated Statement of Changes in Equity For the six months ended 30 September 2009

	Note		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			-		-		-		489			489
Total comprehensive income for the period			-		-		-		489			489
Exercise of options			179		-		-		-			179
Cost of share-based payments			-		-		-		141			141
Equity dividend	8		-		-		-		(845)			(845)
Balance at 30 September 2008			5,862		6,575		3		(1,243)			11,197
Profit for the period			-		-		-		1,011			1,011
Total comprehensive income for the period			-		-		-		1,011			1,011
Exercise of options			5		-		-		-			5
Cost of share-based payments			-		-		-		133			133
Balance at 1 April 2009			5,867		6,575		3		(99)			12,346
Profit for the period			-		-		-		314			314
Total comprehensive income for the period			-		-		-		314			314
Exercise of options			40		-		-		-			40
Recovery of VAT on share issue fees	3		114		-		-		-			114
Cost of share-based payments			-		-		-		52			52
Equity dividend	8		-		-		-		(984)			(984)
Balance at 30 September 2009			6,021		6,575		3		(717)			11,882

  

Interim Consolidated Balance Sheet

As at 30 September 2009

	Note		Unaudited As At 30 September		Unaudited As At 30 September		Audited As At 31 March
			2009		2008		2009
			£'000		£'000		£'000
ASSETS
Non-current assets
Property, plant and equipment	9		1,047		948		983
Intangible assets			6,579		6,604		6,600
Deferred tax asset			563		400		563
			8,189		7,952		8,146
Current assets
Trade and other receivables			4,851		4,870		6,145
Cash and short-term deposits			4,275		4,220		4,504
			9,126		9,090		10,649
TOTAL ASSETS			17,315		17,042		18,795
EQUITY AND LIABILITIES
Capital and reserves
Equity share capital			6,021		5,862		5,867
Merger reserve			6,575		6,575		6,575
Capital redemption reserve			3		3		3
Retained earnings			(717)		(1,243)		(99)
Total equity attributable to equity holders of the parent			11,882		11,197		12,346
Current liabilities
Trade and other payables			5,302		5,813		6,345
Current tax			79		32		52
Provision			52		-		52
TOTAL LIABILITIES			5,433		5,845		6,449
TOTAL EQUITY AND LIABILITIES			17,315		17,042		18,795

  

Interim Consolidated Cash Flow Statement  For the six months ended 30 September 2009

			Unaudited 6 months to 30 September 2009		Unaudited 6 months to 30 September 2008		Audited Year to 31 March 2009
			£'000		£'000		£'000
Group profit before tax			341		521		1,389
Adjustments to reconcile Group profit/ before tax to net cash flows
Interest income			(96)		(115)		(184)
Depreciation of property, plant and equipment			199		173		357
Amortisation of intangible assets			21		38		69
Share-based payments			52		141		274
Decrease/(increase) in receivables			1,294		481		(794)
Decrease in payables			(1,043)		(643)		(111)
Increase in provisions					-		52
Net cash generated from operating activities			768		596		1,052
Cash flows from investing activities
Purchase of property, plant and equipment			(263)		(134)		(353)
Expenditure on product development			-		0		(27)
Interest received			96		115		184
Net cash flows from investing activities			(167)		(19)		(196)
Cash flows from financing activities
Proceeds from issue of shares			40		179		184
VAT reclaim on share issue costs			114		-		-
Dividends paid to equity shareholders			(984)		(845)		(845)
Net cash flows from financing activities			(830)		(666)		(661)
Net (decrease)/increase in cash and cash equivalents			(229)		(89)		195
Cash and cash equivalents at the beginning of period			4,504		4,309		4,309
Cash and cash equivalents at the end of period			4,275		4,220		4,504

 

Notes to the Interim Report

1. CORPORATE INFORMATION

The interim condensed consolidated financial statements of GB Group plc ('the Group') for the six months ended 30 September 2009 were authorised for issue in accordance with a resolution of the directors on 25 November 2009. GB Group plc is a public limited company incorporated in the United Kingdom whose shares are publicly traded on the London Stock Exchange.

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

Basis of Preparation

These interim condensed consolidated financial statements for the six months ended 30 September 2009 have been prepared in accordance with IAS 34 Interim Financial Reporting.

The interim condensed consolidated financial statements are presented in sterling and all values are rounded to the nearest thousand (£'000) except when otherwise indicated.

The interim condensed consolidated financial statements do not constitute statutory accounts as defined in section 435 of the Companies Act 2006 and therefore do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 March 2009. The financial information for the preceding year is based on the statutory accounts for the year ended 31 March 2009. These accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. These accounts did not require a statement under either section 498(2), or section 498(3) of the Companies Act 2006.

Accounting Policies

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

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 six months ended 30 September 2008 and the twelve months ended 31 March 2009 have been re-presented on a comparable basis in note 5.

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 income statement.

3. EXCEPTIONAL ITEMS

The £350,000 exceptional revenue item in the year ended 31 March 2009 was related to back-dated revenues which resulted from a licence dispute that was settled on 28 May 2008.

Exceptional costs in the year ended 31 March 2009 were reorganisation costs relating to final salary payments following a staff reorganisation.

The £74,000 finance revenue item in the six months ended 30 September 2009 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.

4. RISKS & UNCERTAINTIES

Management identifies and assesses risks to the business using an established control model. The Group has a number of exposures which can be summarised as follows: regulatory risk resulting from regulatory developments; changes in the Group's competitive position; non-supply by a major supplier; and disaster recovery and business continuity. These risks and uncertainties facing our business were reported in detail in the 2009 Annual Report and Accounts and all of them are monitored closely by the Group. There have been no significant changes in the Group's risk and uncertainty factors during the review period, nor are any expected to for the remainder of the year. 

 

Notes to the Interim Report

5. SEGMENTAL INFORMATION

The Group's operating segments were internally reported to the chief operating decision maker 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.

Segment results include items directly attributable to either DataAuthentication or DataSolutions. Unallocated items represent Group head office costs, Group finance income, Group income tax and share-based payments.

Net assets attributed to each business segment represent the net external operating assets of the respective businesses. Head office costs, fixed assets, bank balances, VAT, corporation tax and items unable to be directly attributable to either segment are shown as unallocated amounts.

	Data Authentication		Data Solutions		Unallocated		Total Unaudited 6 months to 30 September 2009
Six months ended 30 September 2009	£'000		£'000		£'000		£'000
Revenue	5,152		5,356		-		10,509
Operating profit before depreciation	290		431		(204)		518
Depreciation and amortisation	(46)		(175)		-		(221)
Operating profit before finance revenue and income tax	244		256		(204)		297
Finance revenue					96		96
Share-based payments					(55)		(55)
Income tax					(27)		(27)
Profit for the period							311
Assets	4,879		5,844		6,592		17,315
Liabilities	(1,791)		(1,739)		(1,903)		(5,433)
Net assets	3,088		4,105		4,689		11,882

	Data Authentication		Data Solutions		Unallocated		Total Unaudited 6 months to 30 September 2008
Six months ended 30 September 2008	£'000		£'000		£'000		£'000
Revenue from operating activities	6,376		4,958		-		11,334
Exceptional revenue	-		350		-		350
Total revenue	6,376		5,308		-		11,684
Operating profit before depreciation	702		332		(276)		758
Depreciation and amortisation	(54)		(157)		-		211
Operating profit before finance revenue and income tax	648		175		(276)		547
Finance revenue					115		115
Share-based payments					(141)		(141)
Income tax					(32)		(32)
Profit for the period							489
Assets	5,612		5,645		5,785		17,042
Liabilities	(2,732)		(1,666)		(1,446)		(5,845)
Net assets	2,880		3,979		4,339		11,197

  

Notes to the Interim Report

5. SEGMENTAL INFORMATION (continued)

	Data Authentication		Data Solutions		Unallocated		Total Audited Year to 31 March 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
Assets	5,501		6,976		6,318		18,795
Liabilities	(2,141)		(2,873)		(1,435)		(6,449)
Net assets	3,360		4,103		4,883		12,346

6. CYCLICALITY

Due to the cyclicality of our software renewal business, higher renewals in the second half traditionally result in the Group's performance being biased towards the second half of the year. 

7. EARNINGS PER ORDINARY SHARE

Basic

Basic earning 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 period.

Unaudited 6 months to 30 September 2009

Unaudited 6 months to 30 September 2008

Audited Year to 31 March 2009

pence per share

£'000

pence per share

£'000

pence per share

£'000

Profit attributable to equity holders of the parent

0.4

314

0.6

489

1.8

1,500

Diluted

Diluted earnings per share amounts are calculated by dividing the profit for the period attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period 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. 

Unaudited 6 months to 30 September 2009

Unaudited 6 months to 30 September 2008

Audited Year to 31 March 2009

pence per share

£'000

pence per share

£'000

pence per share

£'000

Profit attributable to equity holders of the parent

0.4

314

0.6

489

1.8

1,500

Notes to the Interim Report

7. EARNINGS PER ORDINARY SHARE (continued)

		30 Sept 2009		30 Sept 2008		31 March 2009
		No.		No.		No.
Basic weighted average number of shares in issue		85,439,080		84,647,183		84,979,900
Dilutive effect of share options		220,525		1,316,703		780,546
Diluted weighted average number of shares in issue		85,659,605		85,963,886		85,760,446

8. DIVIDENDS PAID AND PROPOSED

		Unaudited 6 months to 30 Sept 2009		Unaudited 6 months to 30 Sept 2008		Audited Year to 31 March 2009
		£'000		£'000		£'000
Declared and paid during the period
Final dividend for 2009: 1.15p per share (2008: 1.00p per share)		984		845		845
Proposed for approval at AGM (not recognised as a liability at 31 March 2009)
Final dividend for 2009: 1.15p per share		-		-		981

9. PROPERTY, PLANT AND EQUIPMENT & INTANGIBLE ASSETS

During the six months ended 30 September 2009, the Group acquired property, plant and equipment with a cost of £263,000 (2008: £134,000). There was no expenditure on product development for the six months ended 30 September 2009 (2008: £Nil).

No disposals were made in the six months ended 30 September 2009 (2008: £Nil).

10. SHARE-BASED PAYMENT

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.

  

Notes to the Interim Report

10. SHARE-BASED PAYMENT (continued)

During the six months ended 30 September 2009, the following share options were granted to executive directors, managers and staff of the Company.

Scheme		Date		No. of options		Exercise price
Executive Share Option Scheme		10 June 2009		200,000		23.00p
Executive Share Option Scheme - Section C		10 June 2009		200,000		23.00p

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 six months ended 30 September 2009.

Dividend yield (%)				5.00
Expected share price volatility (%)				45.00
Risk-free interest rate (%)				2.60
Lapse rate (%)				5.00
Expected exercise behaviour				See below
Market-based condition adjustment (%)				48.00
Expected life of option (years)				3.00

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".

11. RELATED PARTY TRANSACTIONS

Compensation of key management personnel (including directors)

		Unaudited 6 months to 30 Sept 2009		Unaudited 6 months to 30 Sept 2008		Audited Year to 31 March 2009
		£'000		£'000		£'000
Short-term employee benefits		115		140		416
Post-employment benefits		18		19		38
Share-based payments		-		11		11
		133		170		465

12. SHARE CAPITAL

During the period 210,000 (2008: 848,364) ordinary shares of 2.5p were allotted on the exercise of share options for an aggregate cash consideration of £40,000 (2008: £179,000). 

  

Responsibility Statement by Management

We confirm that to the best of our knowledge: 

a) The condensed set of financial statements have been prepared in accordance with IAS 34;

b) The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

c) The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein). 

By order of the Board

R A Law

Director

D J Wilson

Director

  Independent Review Report to GB Group plc

Introduction 

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2009 which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement, and the related explanatory notes 1 to 12. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

This report is made solely to the Company in accordance with guidance contained in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities 

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. 

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union. 

Our Responsibility 

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. 

Scope of Review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 

Conclusion 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. 

Ernst & Young LLPManchester

25 November 2009 

 

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