Hargreaves Lansdown

GB Group revenue narrows in first half

Tue 28 November 2023 14:51 | A A A

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(Sharecast News) - Location, identity and fraud software company GB Group reported first-half revenue of £132.4m on Tuesday - a slight decrease from £133.8m year-on-year.

The AIM-traded firm said that when considering constant currency revenue, there was a 1.8% increase from £130m in the first six months of the 2023 financial year.

Adjusted operating profit for the same period amounted to £23.9m, excluding foreign exchange gains, representing a 7.9% increase on the year.

GB Group reported an operating loss of £52.6m for the six months ended 30 September, swinging from a profit of £2.5m in the prior year.

It attributed the loss to an exceptional non-cash goodwill impairment charge of £54.7m, which resulted from a higher discount rate due to significant central bank interest rate increases since March.

Adjusted diluted earnings per share fell to 5.1p from 7.3p year-on-year.

Despite the challenges, GB Group reported resilience in core business areas, with the Location and Fraud segments seeing solid performances, with Location up 8.1% and Fraud up 10.5%.

The Identity segment met expectations, experiencing a 2.8% decline, primarily due to cryptocurrency customer revenue reductions.

Excluding those reductions, growth remained stable, and monthly transaction volumes stabilised.

GB Group emphasised its strategic focus on efficiency, which led to a £6.1m reduction in adjusted operating expenses compared to the prior year, despite inflationary pressures.

Additionally, the firm reported a robust year-to-date cash conversion rate of 102%, reflecting historical levels.

Net debt as of 30 September totalled £104.8m, with the company anticipating a reduction to around £95m and a leverage reduction to 1.3x by the end of the year through cash generation.

Looking ahead, GB Group's board said it was optimistic about the strategic progress and financial performance in the first half despite challenging macroeconomic conditions.

The company anticipated more substantial margins in the second half, supporting profit expectations for the 2024 financial year.

It added that it was confident in achieving year-on-year growth in the Identity segment in the latter part of the year.

In addition to its financial results, GB Group noted its CEO succession after Chris Clark announced his intention earlier in the month to retire and step down from the board at the end of January.

Dev Dhiman, managing director of GB Group's Asia-Pacific business, had been appointed CEO designate and would assume the CEO role following an orderly transition and handover from Clark.

"We are pleased with the first-half performance; Location and Fraud delivered good growth and transaction volumes within Identity have stabilised," said chief executive officer Chris Clark.

"At the same time, our continued focus on structural efficiency savings has already achieved an annualised run-rate reduction in operating expenditure of £10m while maintaining investment in our differentiated product portfolio.

"While the subdued macroeconomic environment may persist, we continue to expect some year-on-year Identity revenue growth in the latter part of the current year, and I am confident that our strong discipline on cost, good momentum with customer wins and high retention leave GBG very well positioned to deliver our 2024 profit expectations."

Clark added that he was "particularly pleased" that Dev Dhiman would become GB Group's next CEO after his January retirement.

"His understanding of our business, markets and culture has delivered excellent results leading our business in Asia-Pacific and he is the right person to guide GBG through the next phase of its evolution."

At 1432 GMT, shares in GB Group were down 3.59% at 246.8p.

Reporting by Josh White for Sharecast.com.

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