ID verification group forecasts better annual figures ahead of consensus

Chris Clark

Chester-based identity data intelligence specialist, GB Group has forecast better annual figures for the year to March 31.

In a trading update this morning, GBG said total revenue for the year is expected to grow by 38.7% at £199m, ahead of market consensus, which was for £196.3m.

The group said it expects to report adjusted operating profit of approximately £47m, a 46.7% increase on last year, and also ahead of market consensus of £44.6m.

Net debt balance at March 31, was £35m, compared with £66m a year ago.

Chief executive Chris Clark said: “GBG has delivered a strong set of results which are ahead of market expectations despite some, albeit limited, financial impact from COVID-19 in the final quarter.

“I would like to thank everyone at GBG for their hard work and professionalism in such a challenging and uncertain environment.

“Their commitment has been the one constant in a time when everything else is so variable.

“We have acted decisively to prioritise our teams’ wellbeing and safety, the service to our customers and the strength of our business.”

He added: “Looking further forward, I take much confidence from FY20 being a record revenue and profit outcome with the business delivering good organic growth across our product solutions and geographies.

“Although it is yet to become clear on what a post COVID-19 world will look like, this recent performance will provide a good foundation to weather this crisis and leaves us well-positioned when it is over.”

Referring to the COVID-19 pandemic, the group said it operates in global markets for location, identity and fraud solutions but has not been immune to the current crisis.

It saw some modest impact to revenues in the period starting in China in January and more broadly in Asia Pacific from February. Of note, its Chinese operation is now coming back out of the shutdown.

The full effect on the business is still unfolding and it is seeing different levels of impact depending on the customer vertical, product solution and geography.

While it remains early in the COVID-19 crisis, some business areas are still experiencing growth while others are seeing reduced demand.

GBG said it has been quick to adapt to the changing environment.

“Our team members globally are already used to working remotely, which has largely mitigated the operational impact from COVID-19. We continue to work very closely with and support our customers through these times.

“Where suitable and appropriate, our teams are selling remotely to customer verticals, which are most resilient to the crisis and/or where there is additional demand from our customers.”

Financially, the board supports the prudent and decisive action taken by management to reduce discretionary costs and preserve liquidity.

These actions include an immediate group-wide pay freeze and a pausing of all non-essential recruitment.

Project spend is being carefully assessed and restricted to those critical to the long-term success of GBG. Executive directors’ bonus payments accrued for FY20 have been suspended.

In addition to the prompt actions taken by management to conserve cash, the board said it does not intend to declare a final dividend in respect of financial year 2020.

This helps both preserve short term liquidity and also provides additional financial flexibility to support and invest as GBG comes out of the pandemic.

While the uncertainty surrounding the duration of the crisis continues, the board has concluded that it is also prudent to withdraw guidance from the market.

It added that it should be emphasised that GBG has a strong balance sheet with intact bank draw down facilities, good liquidity and a high proportion of annual recurring licence revenue.

The group has significant financial headroom of £75m, in addition to an unused but available accordion option of £30m.

GBG said: “Our strong financial position, diversified, global blue-chip client list and market leading products gives the board confidence that the group is well positioned to withstand the pandemic and that GBG’s long-term prospects in a post-COVID-19 environment remain attractive.”