Gb Group Regulatory News (GBG)

GB Group PLC

("GB Group", "the Group" or "the Company")

Half Yearly Results for the Six Months Ended 30 September 2010

GB Group plc, the identity management specialist, is pleased today to announce its half yearly results for the six months ended 30 September 2010.

Financial Highlights

·; Group revenues increased by 10% to £11.6 million (2009: £10.5 million).

·; Group profit before interest and tax1 increased by 151% to £746,000 (2009: £297,000).

·; Cash balances at 30 September 2010 were stable at £4.64 million (2009: £4.28 million) after the payment of the increased final dividend of 1.2p per share in August 2010.

·; Results were in line with the revised, upgraded market expectations announced in October 2010.

1 Profit before interest and tax is profit before interest, taxation, exceptional costs and share-based payments

Operational Highlights

·; David Rasche to be appointed Chairman.

·; Increasing demand for DataSolutions' services.

·; DataAuthentication benefiting from clients' move to electronic identity verification.

·; New contract wins with Homeserve, National Fraud Intelligence Bureau, the Department of Energy and Climate Change, Creation Finance and FLM Loans.

Richard Law, GB Group's Chief Executive, commented:

"GB Group has delivered a set of strong results underpinned by progressive revenue development, continued investment and strong cash flows. We have enhanced the Group's potential in line with our vision for growth and the positive progress that was seen in the first half has continued during our third quarter to date.

"Both myself and the Board would like to thank John Walker-Haworth for the contribution he has made. His insight and experience have been invaluable to the Company and to the people fortunate enough to work with him. We wish him the best of success with his future endeavours".

-Ends-

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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, Maintenance and Tracing: providing accurate and up-to-date customer information for your contact strategy.

·; Identity-based Marketing: 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 Group is listed on the London Stock Exchange (GBG). For more information, please visit GB Group's website: www.gb.co.uk.

GB Group - because identity matters™

In my statement in the 2010 Annual Report, I referred to GB Group's clear vision and that it would approach opportunities for growth boldly despite difficult market conditions. Excellent progress has been made in this regard and I'm pleased to be able to report a period of increased revenue and substantially increased profitability.

GB Group's Results

As highlighted in our trading update released in October 2010, GB Group's profitability for the six months ending 30 September 2010 was substantially higher than previous expectations. The financial highlights were as follows:

·; Group revenue increased by 10% to £11.6 million (2009: £10.5 million).

·; The Group generated profit before interest, taxation, exceptional costs and share-based payments of £746,000 (2009: £297,000).

·; The Group balance sheet remains strong. Cash balances at 30 September 2010 were £4.64 million (2009: £4.28 million) after the payment of the increased final dividend of 1.2p per share in August 2010 amounting to £1.03 million (2009: £0.98 million).

The positive trend in the first half of the year has continued during our third quarter to date.

DataSolutions

In the six months to 30 September 2010, DataSolutions, the provider of identity-based marketing services, showed good revenue and profit growth. Revenue increased by 20% to £6.5 million (2009: £5.4 million) and profitability improved.

This improved performance reflects DataSolutions' continuing move to develop new and innovative online services which deliver distinctive value to clients such as Homeserve, National Fraud Intelligence Bureau and the Department of Energy and Climate Change, all of whom have become new clients of DataSolutions in the current year.

DataSolutions is continuing to experience good demand for its products and services and we expect this to continue during the second half of the year.

DataAuthentication

In the six months to 30 September 2010, revenue in DataAuthentication, the provider of identity verification services, was £5.1 million (2009: £5.2 million).

Our strategy for the DataAuthentication business continues to be to grow the number of clients using our URU and ID3 Check services, and we are continuing to win new business as clients move from manual to electronic methods of identity verification. New business growth has seen recovery in the last six months which has made up for the recession-linked loss of clients last year. The new clients that have been added are greater in number than those lost and, accordingly, DataAuthentication is less reliant than it was previously on large accounts.

The effect of these new contracts, when combined with the steps taken to control costs, has resulted in improved profitability, and the momentum of new customer contracts such as Creation Finance and FLM Loans should see this continue in the balance of the year. 

Move to Alternative Investment Market (AIM)

The Company successfully moved from the Full List to AIM on 27 August 2010. As expected a number of shareholders who are unable to hold AIM stocks, for instance those whose shares were held in ISA accounts, moved out and the management team has worked with its advisers to introduce new shareholders to the Company. The net impact was to consolidate the number of shareholders overall and the Board's view is that the shareholder base remains of high quality and is less widely dispersed.

Board

For some months I have been discussing with my fellow directors my desire to stand down as Chairman. Accordingly, I am leaving the Board today after 10 very constructive years with GB Group and I am delighted that David Rasche, who joined the Board in September 2010, has accepted the invitation to succeed me as Chairman. David has already brought significant benefit to GB Group and the Board considers that his relevant experience, drive and enthusiasm would be most valuable in the next phase of GB Group's development.

I believe that over recent years the underlying quality of the business and its prospects have been transformed by the efforts of Richard Law and his management team. A relatively small highly motivated company like ours can make a real and successful impact on the markets in which it operates.

Outlook

We continue to invest in product development, new data sources and high calibre people to maintain our position as the UK's leading identity management business.

GB Group has traded well in the first half of this year and we expect this to continue as we move through the second half of the year.

JL Walker-Haworth

Chairman

30 November 2010

1. CORPORATE INFORMATION

The interim condensed consolidated financial statements of GB Group plc ('the Group') for the six months ended 30 September 2010 were authorised for issue in accordance with a resolution of the directors on 30 November 2010. GB Group plc is a public limited company incorporated in the United Kingdom whose shares are publicly traded on Alternative Investment Market (AIM) of 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 2010 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 2010. The financial information for the preceding year is based on the statutory accounts for the year ended 31 March 2010. 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 2010, 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.

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:

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.

3. EXCEPTIONAL ITEMS

Exceptional costs of £151,000 in the six months ended 30 September 2010 were costs principally associated with the Company's move to AIM on 27 August 2010. Exceptional costs for the year ended 31 March 2010 were reorganisation costs relating to redundancy payments following a staff reorganisation.

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

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 2010 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.

5. 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 the six months to 30 September 2010 represent Group head office costs (£155,000), exceptional costs (£151,000), Group finance income (£14,000), Group income tax (£3,000) and share-based payments (£30,000). Unallocated items for the six months to 30 September 2009 represent Group head office costs (£204,000), Group finance income (£96,000), Group income tax credit (£27,000) and share-based payments (£52,000). Unallocated items for the year ended 31 March 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)

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

6. TAXATION

Taxation on profit on ordinary activities

In his budget of 22 June 2010, the Chancellor of the Exchequer announced Budget tax changes which will have an effect on the company's future tax position. The budget proposed a decrease in the rate of UK corporation tax from 28% to 24% by 1% each year from April 2011, which will be enacted annually.

The reduction of the main rate of corporation tax from 28% to 27% from April 2011 has now been substantively enacted, on 27 July 2010. In accordance with Accounting Standards, this change has been reflected in the interim Financial Statements as at 30 September 2010.

Further effect of the reduction of the corporation tax rate to 24% on the company's deferred tax asset (recognised and not recognised) would be to reduce the deferred tax asset by approximately £677,000. The rate change would also impact the amount of future cash tax payments to be made by the company. The effect on the company of the proposed changes to the UK tax system will be reflected in the company's Financial Statements in future years, as appropriate, once the proposals have been substantively enacted.

7. 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.

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.

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.

9. DIVIDENDS PAID AND PROPOSED