The restructuring of identity intelligence specialist GB Group’s commercial relationship with BT is significantly impacting revenues for the Group in its current financial year. For the full year, the company expects revenues to be reduced by £3m (FY13 full year revenues were £39.4m). As a result headline growth, including acquisitions, was just 2% in the six months to end Sep 2013. This included a six month contribution from the acquired TMG business (see GB Group acquired criminal records supplier) and a three month contribution from CRD (see GB Group now largest UK DBS umbrella organisation). Looking beyond the impact of the BT relationship, adjusting 2012 revenue to understand like-for-like growth, reveals revenues up 12% to £18.1m. While adjusted organic revenue growth was 3%. Deferred revenues also increased by 18% to £5.8m.
Both divisions – Identity Proofing and Identity Solutions – grew on an adjusted basis; the former by 24% to £7.1m, and the latter by 5% to £11.0m. GB Group has continued to invest in the business, making five acquisitions over the last 26 months, and launching new products and services. Most recently, in mid-September, the first phase of its new ID3Global service launched. Internationally, the company talks about growth as “encouraging” but there is still a way to go to achieve scale. In the half period, international revenues stood at £1.4m.
But GB Group is in a good position to continue investing. Over the six months, adjusted operating profit grew by 70% to £2.6m. Looking ahead, the revised BT arrangement will also be margin enhancing, and GB Group has a good record of improving the profitability of its acquired businesses. Cash balances finished at £6.0m (2012: £5.8m) after a £1.6m dividend and net cash payments of £1.4m for acquisitions. In an increasingly 'online' world, the Group’s confidence in increased organic revenue growth “in H2 and beyond” appears well founded.