TIDMGBG
RNS Number : 4582D
GB Group PLC
20 October 2022
Embargoed until 7.00 a.m. Thursday, 20 October 2022
GB GROUP PLC
("GBG", "Group" or the "Company")
Half-year trading update
-- Growth in revenue and adjusted operating profit, despite
tough H1 comparators driven by cryptocurrency volumes last year
-- Full year expectations remain unchanged despite
macro-economic uncertainty; assisted by FX benefits
-- Continued good progress with Acuant integration, delivering
an acceleration in our solutions alongside planned cost and revenue
synergies
-- Planned new year capital markets event will expand on our
enhanced capabilities and our strategy to capitalise on the
structural opportunity in our markets
GBG, (AIM: GBG) the experts in digital location, identity
verification and fraud software, provides an update on its trading
performance for the six months to 30 September 2022, ahead of
releasing its half-year results on Tuesday, 29 November 2022.
Overview and performance update
The Group expects to report first half revenue of GBP133.8
million(1) (1H FY22: GBP109.2 million), representing growth of
approximately 22.5%. Growth in the half year included contributions
from the recently acquired Acuant and Cloudcheck businesses. This
more than offsets a tough prior period comparative that included a
c.GBP8.8 million benefit from unusually high and non-repeating
transaction volumes driven by the US stimulus project and
cryptocurrency trading.
On a pro forma basis(2) , which for H1 FY22 includes the
pre-acquisition revenue but excludes the non-repeating revenue
noted above, growth in the current period was approximately 10%. H1
FY23 has experienced volatile foreign currency movements,
particularly pound sterling versus the US dollar. This caused a
favourable effect on the translation of GBG's significant US dollar
denominated revenue, contributing approximately 6.5% to the
reported period-on-period pro forma revenue growth.
Our Location and Fraud segments both performed well with
double-digit constant currency growth. In Location, successful
cross-sell/up-sell initiatives and increased pricing compensated
for lower volumes seen from some eCommerce customers. In Fraud we
gained new customers and secured important renewals in APAC and
EMEA. There is good momentum in these segments as we enter the
second half.
Our Identity segment was particularly impacted by the reduction
in activity from cryptocurrency and 'gig-economy' fintech customers
in the Americas. Cryptocurrency revenues normalised from the prior
year's exceptional levels, but at lower volumes than we had
expected, and we anticipate this impact will continue in the second
half. Our wider regions and sectors continued to perform well, and
we are encouraged by the pipeline of opportunities to offset this
impact over the next six months.
We are pleased with our progress to integrate Acuant. Although
revenue comparatives are impacted in the period by its own exposure
to the reduction in cryptocurrency and fintech volumes, Acuant has
enabled cross sell to existing GBG customers and has a good
pipeline of new opportunities to support its growth in H2. Our
teams have worked at pace to realise the anticipated product and
technology benefits throughout the group and as previously
announced we have delivered all planned cost synergies. By
combining our US sales teams, we are now driving efficiency and
accelerating entry into new market segments and expect to see the
early benefits of this approach in the second half. Encouraging
cross sell opportunities for Acuant products are also being pursued
in both APAC and EMEA.
Operating profit
We continue to make disciplined investment in the business to
maintain our market leading position and to capitalise on the
significant long term growth opportunities. The Group's adjusted
operating profit margin in the first half is expected to be
approximately 21%. We expect that the margin will improve in the
second half of the year as revenues are traditionally stronger and
we close some of the significant opportunities in our pipeline.
Balance sheet
GBG has a strong cash generative business model and this has
enabled further repayment against the $210 million of debt drawn to
finance the Acuant acquisition. Total repayments of $45 million
have now been made resulting in an outstanding balance of $165
million. However, on a sterling basis, net debt at 30 September
2022 increased to GBP132.6 million, reflecting a GBP22.2 million
retranslation impact since the year end from the conversion of the
US dollar denominated debt into pound sterling. The first half also
saw the impact of the GBP9.6 million dividend payment and GBP2.5
million used for on-market share purchases related to a newly
created Employee Benefit Trust. We will continue to use our strong
cash generation to paydown debt in the second half of the year.
Outlook
The Board remains positive about the long-term prospects for
GBG. The ongoing digitalisation of global economies continues to
drive demand for digital identity and fraud solutions, despite
periodic softness in subsectors such as fintech and cryptocurrency.
The Group's strategy to create global capability that can be
adapted to localised regulatory environments has been enhanced by
the addition of Acuant's globally relevant products. This model
will allow GBG to deploy products quickly and generate significant
upsell and cross-sell opportunities across the geographies we
operate in.
As we look forward to the second half of the year, which
typically sees a greater revenue weighting, growth is expected to
accelerate as we execute our strong pipeline of new business across
our diverse geographic footprint and customer sectors. Despite the
macroeconomic conditions the Board's expectation for the full year
remains unchanged and, given the long-term structural growth
drivers at work in our markets, the Board remains highly confident
in the long-term opportunities ahead.
Chris Clark, GBG's CEO, commented:
"I am proud of the way that the GBG team have delivered
excellent service and support for our customers despite the
challenging economic backdrop over the past six months.
Good progress has been made against our long-term growth
strategy, which continues to focus on bringing together our
market-leading Location, Identity and Fraud solutions to address
the needs of the digital world. We are pleased with how Acuant has
strengthened our competitive positioning and customer proposition
and remain confident it will make a valuable contribution going
forward.
GBG has evolved as a business over the past eighteen months and
is now one of the world's leading pure-play identity software
providers. Details will be shared at our half year results in
November for a Capital Markets event that will take place early in
2023 for investors and analysts. The event will include an update
on Acuant and further detail on how we are capitalising on the
structural growth opportunities in front of us."
Notes
(1) 1H FY23 reported revenue impacted by a GBP1.1 million
deferred revenue 'haircut', a required acquisition accounting
adjustment related to the purchase of Acuant. (2) 1H FY22 pro forma
underlying revenue of GBP122.2 million consists of GBP109.2 million
reported revenue, GBP21.8 million of net revenue from M&A, less
c.GBP8.8 million of non-repeating revenue which includes GBP1.8
million of exceptional cryptocurrency volume related to Acuant in
the pre-acquisition period.
For further information, please contact:
GBG
Chris Clark, CEO & David Ward, CFO +44 (0) 1244 657333
Richard Foster, Investor Relations +44 (0) 7816 124164
Numis (Nominated Adviser and Corporate
Broker)
Simon Willis & Joshua Hughes +44 (0) 0207 260 1000
-------------------------
Barclays (Corporate Broker)
Stuart Jempson & Anusuya Nayar Gupta +44 (0) 0207 029 8000
-------------------------
Tulchan Communications LLP (Financial +44 (0) 20 7353 4200
PR) GBG@tulchangroup.com
James Macey White & Matt Low
-------------------------
Website www.gbgplc.com/investors
-------------------------
About GBG
We are the experts in digital location, identity and managing
fraud risk and compliance. Helping organisations across the globe
eliminate customer friction and fraud from their digital
experiences. GBG develop and deliver digital identity, address
verification, fraud prevention and compliance software to
businesses globally.
Through the combination of the latest technology, the most
accurate data and our unrivalled expertise, GBG helps organisations
ranging from start-ups to the largest consumer and technology
brands in the world deliver seamless experiences, so their
customers can transact online with greater confidence.
To find out more about how we help our customers establish trust
with their customers visit www.gbgplc.com and follow us on LinkedIn
and Twitter @gbgplc.
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END
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