Gb Group Regulatory News (GBG)

27 Apr 2006 11:27

GB Group PLC27 April 2006 For immediate release 27 April 2006 GB GROUP ("GB Group" or "the Company") TRADING UPDATE WITH RESPECT TO THE FINANCIAL YEAR ENDED 31 MARCH 2006 The Group made excellent progress in exploiting the opportunities in the growingmarket for electronic age and identity verification and has also achieved goodresults in its traditional areas of operation. The main highlights are as follows: • Invoiced sales for URU(TM) of £2.4 million (2005: £0.6 million) show a fourfold increase compared to last year. • The number of URU(TM) customers is now 101 (31 May 2005: 59). • Good progress in the Financial Services sector with the signing of a number of major retail banks for URU(TM). • GB plans to exploit international opportunities during the coming year. • Traditional operations had a positive year with turnover and profitability ahead of last year. • Cash balances remain strong at £6.7 million (2005: £6.7m). • Under International Accounting Standards, revenue recognition for URU(TM) changes to spread revenues. DataAuthentication - Electronic Age and Identity Verification URU(TM) is an electronic solution addressing the problems of identity theft andfraud, anti-money laundering and age verification. It is underpinned by GB'stechnology, delivered via BT's high capacity web and is marketed jointly withBT. The number of URU(TM) clients has increased in line with expectations and nowstands at 101 compared to 82 in November 2005 and new customers are growing insize and strategic importance. Accordingly, invoiced sales for URU(TM) for the year ended 31 March 2006 areexpected to be substantially in advance of last year at around £2.4 million(2005: £0.6m) following higher upfront payments and strong growth in transactionvolumes. GB is targeting three core sectors of the identity verification market:Financial Services, Online Gaming and Mobile Telecommunications. Progress withinthese sectors is as follows: Financial Services The Financial Services sector represents a significant opportunity for URU(TM)through the automation of regulated processes, such as money laundering, andenabling innovative new Financial Services businesses to become establishedquickly in the market. A number of major retail banks are now URU(TM) clientsutilising the solution in niche applications and ACL (trading as BlueCornerCards), the leading provider of prepaid card programmes, has recently become aURU(TM) client. URU(TM) now has 48 clients in the Financial Services sector. Mobile Telecommunications and On-line Gaming Good progress in the Mobile Telecommunications and Online Gaming sectors hasbeen achieved. In the Online Gaming sector, URU(TM) continues to dominate themarket and new clients include Power Leisure Bookmaker Ltd (Paddy Power),Trafalgar Betting and Gaming Limited (32Red) and Tombola (Alderney) Limited.Additionally, Skybet (an existing URU(TM) client) has extended its agreement tothree years with a significant upfront commitment. URU(TM) now has 45 clients inOnline Gaming and Mobile Telecommunications with a further 8 in other sectors. Traditional Operations DataIntegrity and DataSolutions, GB's traditional operations, have also had apositive year despite their respective markets remaining challenging andcompetitive. Our innovative approach to new product development in ourtraditional businesses, utilising technology and experience developed in ourDataAuthentication business, is helping us to create differentiation in theseareas. As a result, turnover and profitability is expected to be ahead of lastyear. Cash In June 2005 we said that cash would not fall below £5.5 million during thecourse of the year. The Group's cash balances at 31 March 2006 weresubstantially in advance of this at £6.7 million (31 March 2005: £6.7 million)after taking account of the investment to develop our market position inDataAuthentication and the dividend payment of £0.4 million in July 2005. International Financial Reporting Standards (IFRS) During the year ended 31 March 2006, the number of URU(TM) contracts increasedsignificantly and towards the end of the period, the number of clientscommitting to contracts with substantial upfront payments increased. As these types of contracts are expected to increase and, combined with theadoption of International Accounting Standards ("IAS") for the first time in theMarch 2006 accounts, we, together with our auditors, have reviewed the moredetailed revenue recognition principles connected with the new URU(TM)contracts. The conclusion drawn is that, whilst the initial set up fees are non-refundable and are all received on signing of a contract, they contain an element of pre-paid transactions which can be used by the client over the contract term. It would, therefore, be more prudent to spread this revenue overthe initial contract term. This change in accounting policy will result in the deferral to future years ofboth revenue and costs which previously would have been recognised in the yearto 31 March 2006 and accordingly the creation of deferred revenue and costs inthe March balance sheet. The effect in the year to 31 March 2006 is thatapproximately £500,000 of non-refundable URU(TM) invoiced sales are expected to be spread forward together with related costs. The effect on the Group performance for previous years under IFRS and UK GAAP is not considered to bematerial. Prospects The Directors continue to view the prospects for the Group as very positive. GB Group expects to announce its preliminary results and statements for thefinancial year ended 31 March 2006 at the beginning of June 2006. - Ends - For further information, please contact: GB Group plcRichard Law, Chief Executive 01244 657333Mona Navin-Mealey, Finance Director Weber Shandwick Square Mile 020 7067 0700Richard HewsHelen Thomas Website www.gb.co.uk Notes to Editors About URU(TM) The URU(TM) service, the DataAuthentication division's principle offering, hasbeen developed jointly with BT. It combines GB's Authenticator(TM) search engineand decision making software, access to GB's comprehensive range of identitydata and BT's high capacity web delivery. It helps organisations to protectthemselves from the growing problem of identity theft and fraud, which isestimated to cost the UK economy over £1.7 billion per annum. URU(TM) enablescompanies subscribing to the service to make an instant decision whether toaccept the identity claimed by any given individual and confirm their age inseconds. URU(TM) works by cross checking personal information provided by an individual at the point of acquisition against a comprehensive range of datasources to confirm that an individual is who they claim to be, live where they claim to live and meet certain minimum legal age requirements. No personal data is disclosed by the reference databases and as a result URU(TM)is compliant with the Data Protection Act. URU(TM) also provides a valuable audit trail demonstrating that the necessarychecks have taken place, thereby helping companies comply with legislation,including the 2nd European Money Laundering Directive, Proceeds of Crime Act andMinimum Legal Age requirements of certain industry sectors. The addition of data from CallCredit also enables users of URU(TM) to incorporate credit reference data. The market for identity verification checking continues to grow. Researchpublished in February 2005 showed a 45% increase in the number of individualsaccessing gaming sites compared to the previous year. In addition, it ispredicted that around 10% of potential revenue is lost by MobileTelecommunications operators as a result of fraud and furthermore, the BritishBankers Association reported in March 2005 that losses of its membersattributable to fraud had increased by 11% compared to the previous year. GB is working closely with organisations such as Gamcare, the charity promotingresponsible gambling, and RGA (Remote Gambling Association), formerly ARGO, tohelp promote better understanding by gambling companies of the requirements ofgood social responsibility processes. We are also working closely with some ofour clients to help them develop their social responsibility policies andpractices thereby ensuring they are well placed to address any issues in thisarea as they arise and to adopt "best practice" behaviour. About GB Group plc GB Group plc provides a range of products and services to enable organisationsto capitalise on one of their greatest assets - customer data. The Company hasexpertise across a range of sectors and is able to transform customer data intovaluable information, enabling clients to make better, more informed decisions. The development of innovative software and services, through to the provision ofthe UK's most comprehensive consumer business databases - The National Register(R) and the National Authentication Register - positions GB Group as a widelyacknowledged industry leader in its specialist markets. GB Group plc has three complementary business areas: • The DataAuthentication division helps businesses validate personal identity information and provides anti-fraud solutions to fight crime. • The DataIntegrity division helps companies capture and maintain accurate customer contact data, an essential foundation for any profitable customer relationship. • The DataSolutions division empowers companies to consolidate and analyse customer data from various sources, enabling them to make better, more informed decisions. Established since 1989, GB's core competencies combined with industry sectorknowledge have enabled the company to deliver significant value to organisationssuch as Standard Life, Scottish Power and TD Waterhouse in helping them derivemaximum value from their customer data and sustain real advantage over theircompetition. GB Group is supported by its key relationships with major organisations withwhom it works with on major initiatives (an example being British Telecom),together with a team of highly talented and motivated staff successfullydelivering business solutions. GB Group plc is listed on the London Stock Exchange (www.gb.co.uk). This information is provided by RNS The company news service from the London Stock Exchange