Half Yearly Report

GB GROUP PLC

("GBG" or the "Group")

Half Yearly Report

GB Group plc (AIM: GBG), the global identity data intelligence specialist, announces its unaudited results for the six months ended 30 September 2015.

Financial Highlights

· Strong trading performance for the six months to 30 September:

o Revenue up 39% to £32.4 million (2014: £23.2 million)

o Adjusted operating profits† increased by 21% to £4.5 million (2014: £3.7 million)

o Adjusted basic earnings per share‡ of 3.4p (2014: 3.3p)

o 18% increase in overall organic revenue growth (2014: 13%)

o Both segments of the Group, Identity Proofing and Identity Solutions, contributing to revenue growth

o 32% increase in profit after tax to £2.3 million (2014: £1.7 million)

· The Group has had a good start to the year and anticipates delivering full year results in line with market expectations.

· Highly cash generative with net cash from operating activities increasing by 61% to £5.7 million (2014: £3.5 million).

· Net cash balances†† of £1.2 million (2014: £8.6 million) after payments for dividends, the acquisition of Loqate and an earn-out relating to DecTech.

Operational Highlights

· Our acquisition strategy, to create truly international services and to support GBG's customers globally, continued with the successful acquisition of Loqate Inc. completed in April 2015. DecTech, based in Melbourne and acquired in April 2014, continues to perform strongly.

· Excellent progress in growing revenues from international clients who now account for 26% of GBG's business with a number of major financial services sector contract wins in the Asia Pacific region secured in the first half.

· GBG products and services have the ability to conduct KYC (Know Your Customer) checks for 40 countries (2014: 31).

· New banking facility arrangements agreed with Barclays and Lloyds to support future acquisition and growth activities.

Richard Law, CEO, commented,

"The Group continues to perform well and this reflects our focus on delivering the Group's Vision, Objectives and Strategies (VOS). As we build upon our market-leading position and the strong differentiation we have against our competitors, I expect this progressive trend of profitable growth to continue."

Notes:

†Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payments, exceptional items, share of associate investment result, interest and tax.

†† Net cash means cash and short-term deposits less borrowings.

‡ Adjusted earnings per share is defined as adjusted operating profit less net finance costs and tax divided by the basic weighted average number of ordinary shares of the Company. In prior periods the Group reported adjusted earnings per share on a pre-tax basis and the comparative numbers have been restated to take in account the change to a post-tax basis.

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About GBG

GBG is a global specialist in Identity Data Intelligence. We help organisations make decisions about the customers they serve and the people they employ.

Through our fundamental belief that the digital economy relies on everyone having access to data they can trust, GBG enables companies and governments to fight fraud and •crime, to improve the customer experience and help to protect the more vulnerable people in our society.

Headquartered in Chester (UK) and with 18 offices across the world, GBG provides solutions to many of the world's biggest organisations, from established brands like Nike and Harrods to disruptive newcomers such as Taskrabbit and Stripe.

Find out more about how we use identity data intelligently by visiting www.gbgplc.com and following us on Twitter: @gbgplc

About GBG's solutions

We provide a number of business solutions aimed at informing decisions about customers or employees in key areas:

Employing people - we provide thorough background checks through the online verification of individuals and key documents such as a driver's licence, enabling organisations to safeguard, recruit and engage with confidence. 

Registering identities - GBG solutions facilitate the registration of identity data, such as name and address, contact information and social network IDs, quickly and with minimum impact on the customer experience.

Verifying identities - we provide more innovative ways of confirming identity than simply relying on credit data. Our solutions check the identities of more than 4 billion people worldwide and also verify citizens of the world's largest economies to the rigorous standards set by the world's financial regulators.

Building relationships - we work collaboratively with clients to make sure they use the data their customers share with them to create personalised customer journeys for each individual, responding to every interaction in real time.

Fighting fraud - our fraud prevention solutions not only check new customer details in real time as they register but monitor and detect application and transaction fraud on an ongoing basis.

Locating people - voted 'Most Innovative Online Product' at the 2015 UK Retail Fraud Awards, GBG technology confirms and locates the people our clients need to connect with. It saves valuable time and resource and ensures that good customers don't incur the cost of inefficient processes.

GBG is listed on the London Stock Exchange (GBG). For more information visit www.gbgplc.com

CHAIRMAN'S STATEMENT

I am pleased to report that GBG has delivered another strong performance in the first half of the year. Revenue has grown year-on-year by 39% and pleasingly almost half of this increase (18%) came from organic growth. We also saw improved adjusted operating profit, up by 21% on last year after investing circa £1.3 million in our product and business development capabilities.

I recently joined the Chief Executive when we visited some of GBG's offices in the Asia Pacific region as well as the West Coast of the USA. During these visits I met with our team members at leadership and operational levels and it is clear from these meetings that the Group is extremely well-positioned to take advantage of growth opportunities in our markets.

Our continuing commitment to the development of our product portfolio has clear attractions to our clients. This provides us with a competitive advantage enabling us to grow sales and secure market share. One of GBG's strongest differentiators is the international nature of our services which access data from some of the largest and most reputable data owners across 40 countries (2014: 31).

The global impact of cybercrime and financial fraud means that businesses and governments need to make increasing investment in technology, software and compliance solutions to match these major threats. This environment offers exciting international opportunities for our data intelligence and fraud prevention solutions and should provide rewarding growth for the Group.

Results

The Group's performance in the first half year is in line with the guidance given in the pre-close trading update statement issued in October 2015. Group revenues increased to £32.4 million (2014: £23.2 million) and our adjusted operating profits† increased to £4.5 million (2014: £3.7 million).

GBG continues to be highly cash generative with net cash from operating activities increasing by 61% to £5.7 million (2014: £3.5 million). At 30 September 2015, the Group had net cash balances of £1.2 million (2014: £8.6 million) after payments for dividends, the acquisition of Loqate and an earn-out relating to DecTech.

We have made excellent progress in growing our revenues from international clients who now account for 26% of GBG's business. It is also encouraging that we have secured a number of important contract wins in the Asia Pacific region including: Bank of New Zealand; Maybank (Malaysia's largest bank); and Ping An Puhui, China's largest consumer lender.

Identity Proofing (IDP)

The Identity Proofing business, which provides the Group's global fraud, risk, compliance, ID verification solutions and employee background checking solutions, continued to make good strategic progress and grew revenues by 36% to £15.4 million (2014: £11.3 million).

GBG's identity verification service for the UK Government's identity assurance scheme, GOV.UK Verify, is expected to be launched early in the fourth quarter of our financial year through our own brand CitizenSafe® and also through our collaboration with Royal Mail on its solution for the same project.

Identity Solutions (IDS)

The Identity Solutions business, which provides domestic and international registration, tracing and engagement solutions also performed well in the first half, seeing revenues grow by 43% to £17.0 million (2014: £11.9 million).

Value Enhancing Acquisition Strategy

Our acquisition strategy is an important factor for the Group's future growth. The Loqate and DecTech transactions have enabled us to acquire the product capability and geographical presence needed to create truly international services and to support our customers globally. Our latest acquisition of San Francisco based Loqate, completed in April 2015, provides specialist location intelligence services. A good strategic fit, it offers exciting opportunities in the US market and internationally through its high quality distribution partners such as IBM and Oracle. DecTech, acquired in April 2014, our Melbourne-based provider of anti-fraud solutions, continues to perform strongly and has now become GBG's platform for expansion in Asia.

We continue to seek further strategic acquisitions that can help develop our markets and enhance our product portfolio. To this end, in November we agreed new banking facility arrangements with Barclays Bank PLC and Lloyds Bank PLC. This comprises a £50 million revolving credit facility (incorporating a £20 million accordion option) and an AUS$7.4 million term loan facility which replaces the existing loan.

Outlook

Our progress to date supports the strategic platform of our international expansion and demonstrates our credentials of investing in attractive growth areas organically and through acquisition. This will strengthen our market-leading position and build shareholder value.

We have had a good start to the year and we anticipate delivering full year results in line with market expectations.

On behalf of the Board I would like to thank the Group's leadership team and employees for their accomplishments.

David Rasche

Chairman

† Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payments, exceptional items, share of associate investment result, interest and tax.

†† Net cash means cash and short-term deposits less borrowings.

1. CORPORATE INFORMATION

The interim condensed consolidated financial statements of GB Group plc ('the Group') for the six months ended 30 September 2015 were authorised for issue in accordance with a resolution of the directors on 1 December 2015. GB Group plc is a public limited company incorporated in the United Kingdom whose shares are publicly traded on the 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 2015 have been prepared in accordance with IAS 34 Interim Financial Reporting. The annual financial statements of the company are prepared in accordance with IFRSs as adopted by the European Union.

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

After making appropriate enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, the Board continues to adopt the going concern basis in preparing the interim report.

The interim condensed consolidated financial statements do not constitute statutory financial statements 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 2015. The financial information for the preceding year is based on the statutory financial statements for the year ended 31 March 2015. These financial statements, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. These financial statements did not require a statement under either section 498(2), or section 498(3) of the Companies Act 2006.

Accounting Policies

The Group applies IFRS 3: Business Combinations and as a consequence of the acquisition of the remaining 73.3% of shares in Loqate, the area of the standard applicable to business combinations achieved in stages became relevant to the Group. If the business combination is achieved in stages, the acquisition date fair value of the Group's previously held investment in the acquiree is remeasured to fair value at the acquisition date with any resultant gain or loss recognised through profit or loss.

The other 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 2015, 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.

3. 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.

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; disaster recovery and business continuity; new product development; and intellectual property risk. These risks and uncertainties facing our business were reported in detail in the 2015 Annual Report and Accounts and all of them are monitored closely by the Group. Following the acquisition of Loqate Inc., based in the USA, the Group has an increased exposure to currency translation and transaction risks and these risks are monitored closely by the Group.

The Group's accounting policy on the acquisition of subsidiaries is to allocate purchase consideration to the fair value of identifiable assets and liabilities with any excess consideration representing goodwill. Determining the fair value of assets and liabilities acquired requires significant estimates and assumptions. The determination of these fair values is based upon management's judgement and includes assumptions on the economic lives of intangible assets, the timing and amount of future cash flows generated by the assets and the selection of appropriate discount rates.

5. EXCEPTIONAL ITEMS

Fair value adjustments to contingent consideration in the six months to 30 September 2015 include a £42,000 downwards adjustment relating to contingent purchase price adjustment relating to Loqate (note 18) along with a £190,000 charge relating to the partial unwinding of discounting relating to the contingent consideration on the acquisition of DecTech Solutions Pty Ltd and CDMS Limited (Note 18). This charge arises because contingent consideration due to be paid at a future date is discounted for the time value of money at the point of initial recognition and over the passage of time, this discount unwinds within the Consolidated Statement of Comprehensive Income. These are non-cash items.

An exceptional fair value gain of £247,000 has been recognised as a consequence of the Group revaluing its previously held equity stake in Loqate at the date of its acquisition of the remaining 73.3% of shares in accordance with IFRS 3. This is a non-cash item.

6. SEGMENTAL INFORMATION

The Group's operating segments are internally reported to the Group's Chief Executive Officer as two operating segments: Identity Proofing Division- which provides ID Verification and ID Employ & Comply services and Identity Solutions Division - which provides ID Registration, ID Engagement and ID Trace & Investigate services. The measure of performance of those segments that is reported to the Group's Chief Executive Officer is adjusted operating profit before amortisation of acquired intangibles as shown below.

Segment results include items directly attributable to either Identity Proofing or Identity Solutions.

Unallocated items for the six months to 30 September 2015 represent Group head office costs £492,000 (2014: £357,000), share of associate investment result £nil (2014: £10,000), exceptional items £21,000 (2014: £809,000), Group finance income £8,000 (2014: £13,000), Group finance costs £117,000 (2014: £145,000), Group income tax expense £311,000 (2014: £323,000 credit) and share-based payments charge £582,000 (2014: £443,000). Unallocated items for the year ended 31 March 2015 represent Group head office costs £591,000, share of associate investment result £10,000, exceptional costs £1,629,000, Group finance income £25,000, Group finance costs £291,000, Group income tax charge £1,127,000 and share-based payments charge £971,000.

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

Loqate, which was acquired during the period, is reported within the Identity Solutions Division.