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30 November 2005  |  1987 views  |  0 Source: GB Group

Interim results for the six months ended 30 September 2005.

Highlights

Group revenue increased by 14% to £5.9m (2004: £5.2m) due entirely to strong growth in DataAuthentication which provides the technology behind URU, the electronic age and ID verification service provided jointly with BT.

The market for electronic age and ID verification continues to grow. Revenue from URU at £862,000 (2004: £150,000), was more than five times higher than last year and double that of the preceding six months.

URU has shown strong growth in Mobile Telecommunications, is the clear market leader in Online Gaming and the Financial Services sector represents a major future opportunity.

The number of URU customers has risen to 82 and usage of the service is expected to increase substantially during the second half of the year.

GB's traditional operations, DataIntegrity and DataSolutions remain profitable and cash generative, delivering an improved profit performance in the first half.

The Group's loss before tax was £183,000 (2004: £20,000 loss) due to increased investment to develop GB's DataAuthentication business, which was partially offset by improved profitability in DataIntegrity and DataSolutions.

Cash balances at 30 September remained strong at £6.4m (2004: £6.3m).

John Walker-Haworth, Chairman, commented: "The Group performed well during the first half of the year with the DataAuthentication business now contributing significantly towards growth. GB's investment in this business has increased as planned, and this has enabled its technology, through its principal offering of URU, to establish a strategic position in this new and exciting market.

Cash flows from the Group's DataIntegrity and DataSolutions operations are continuing to fund technical and commercial development in these businesses and in the DataAuthentication business. We are therefore able to reaffirm our guidance issued in our preliminary announcement in May 2005 that cash balances for the remainder of the year are not expected to fall below £5.5 million.

The Board views the second half of the financial year, and the continuing development of the business, with confidence."

Chairmans half year statement

Overview

Group revenue overall increased by 14% compared to the same period last year due entirely to strong growth in turnover from GB's DataAuthentication division which provides the technology behind URU, the electronic age and ID verification service provided jointly with BT.

The Group's loss before tax was £183,000. This was £163,000 greater than in the previous year as a result of increased investment to develop GB's DataAuthentication business, which was partially offset by improved profitability in GB's traditional operations. Cash balances at 30 September remained strong at £6.4 million (2004: £6.3 million) giving the Group the ability to invest further in DataAuthentication as necessary.

DataAuthentication

GB's DataAuthentication business develops technology that automates and improves the effectiveness of age and identity verification, a fundamental component of identity fraud prevention. GB has developed a suite of software products and processes, which collectively comprise GBAuthenticator technology. To date, the principal application of this technology has been GB's joint project with BT to develop and market URU.

URU was launched in January 2004 and has quickly become established in its three principal markets of Online Gaming, Mobile Telecommunications and Financial Services. Revenue from URU grew strongly during the first half of the year. At £862,000, the revenue was more than 5 times higher than that for the same period last year and almost double that of the preceding six months. Revenue growth has been driven by the increase in the number of URU clients, now totalling 82, and usage of the service is expected to increase substantially during the second half of the year in line with the increase in client numbers. Recent new clients include; in Online Gaming, Littlewoods betdirect and Skybet; in Mobile Telecommunications, The Link (DSG international plc); and in Financial Services, Abbey Stockbrokers and Cattles.

The market for electronic age and identity verification continues to grow apace. GB estimates that the number of age and identity checks performed annually in the UK exceeds half a billion and that this number continues to increase rapidly. Furthermore, GB estimates that over 95% of these checks are performed using paper based, manual methods. These manual methods of verification are becoming ineffective and obsolete as the sophistication of fraudsters increases and fake documents become ever more readily available over the internet. Electronic verification processes, such as URU, which check the underlying data sources relating to a person's age or identity, rather than paper documents, are therefore much less susceptible to fraud and are also considerably more cost effective.

Our experience is that the rate of adoption of electronic methods of age and identity verification is increasing across all of our target sectors. This is particularly so in the Online Gaming and Mobile Telecommunications sectors, where the requirement to verify the age or identity of individuals, either for regulatory purposes or to combat rising fraud, is relatively new. In these sectors few legacy systems or processes existed, and in open competition, URU has consistently been selected. Accordingly, URU has quickly established a strong presence in both of these sectors and in Online Gaming it is the clear market leader.

The largest target sector for electronic age and identity verification is the Financial Services sector which, according to Credit Today, accounts for 50% of all identity verification checks conducted in the UK. The pace of adoption of electronic methods of identity verification in this sector to date has been slower than in GB's other target sectors. This is because this sector is subject to embedded and established systems, and implementing change is therefore more complex and time consuming. As a result, the Financial Services sector represents a major future opportunity for URU. Indications to date are positive and we expect to see more financial institutions using URU(TM) in the second half of the year.

Work is continuing to take electronic age and identity verification into international markets, however, as previously indicated, the UK market will remain our principal focus. Consequently, revenue expectations from international usage in the current year remain modest.

In summary, we are very pleased with the progress made both in the 6 months to 30 September 2005 and in the continuing period to the end of November 2005. The future rate of growth of revenue from the DataAuthentication business continues to be dependent on the rate at which the electronic age and identity verification technology is adopted and our current view of prospects is most encouraging.

Other Operations

GB's traditional operations, DataIntegrity and DataSolutions, delivered an improved profit performance in the first half of the year principally as a result of cost saving measures taken in the last financial year. The markets served by these operations are increasingly mature and challenging, particularly those served by GB's DataIntegrity business. During October and November, new sales in this business declined compared to the same period last year and revenue to the end of November was 10% behind last year. In order to address the keen competition in these markets and strengthen GB's differentiators in its traditional business areas, we have embarked on a programme of investment to enhance a number of our major product and service offerings over the next 12 months. Despite the current competitive environment, these operations remain profitable and cash generative and are expected to continue to fund the majority of our investment in DataAuthentication in the current year.

Prospects

The Group performed well during the first half of the year with the DataAuthentication business now contributing significantly towards growth. GB's investment in this business has increased as planned, and this has enabled its technology, through its principal offering of URU, to establish a strategic position in this new and exciting market.

Cash flows from the Group's DataIntegrity and DataSolutions operations are continuing to fund technical and commercial development in these businesses and in the DataAuthentication business. We are therefore able to reaffirm our guidance issued in our preliminary announcement in June 2005 that cash balances for the remainder of the year are not expected to fall below £5.5 million.

The Board views the second half of the financial year, and the continuing development of the business, with confidence.

John Walker-Haworth
Chairman
30 November 2005» Download the document now 38.6 kb (Adobe Acrobat Document)

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