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GB Group forges global identity

GB Group launched new products, made several acquisitions and attracted multiple blue-chip clients in the year to March.
June 2, 2015

Fraudsters, money launderers and identity thieves have received a new lease on life with the rise of online commerce and communication. Growing numbers of businesses - including Microsoft, Barclays and Betfair - rely on GB Group (GBG) to verify customers' identities, screen potential employees and root out criminals. That helped the identity intelligence group deliver a 51 per cent rise in adjusted operating profit to almost £11m.

IC TIP: Hold at 207p

Organic sales jumped a fifth at GB's identity solutions segment, which allows clients to register, trace and engage with customers, as it signed up John Lewis and the UK's Serious Fraud Office. The smaller identity proofing division, which helps companies crack down on identity fraud, underage gambling and other illicit activities, grew revenues by two-thirds to just over £25m. That reflected both the acquisition of DecTech, which verifies online credit card and loan applications, and the continued roll out of GBG-ID3 Global, a software tool that can verify the identities of over 4bn people worldwide.

Management believe GB has "just scratched the surface" of the identity intelligence market. They plan to more than triple headcount to 1,500 by 2020. Recently acquired Loqate - a location-based software group whose clients include IBM and Oracle - should also underpin further growth.

Broker Peel Hunt expects pre-tax profit of £11.7m in the current financial year, giving EPS of 7.4p (FY 2015: £10.6m and 7p).

GB GROUP (GBG)
ORD PRICE:207pMARKET VALUE:£250m
TOUCH:204-207p12-MONTH HIGH:208pLOW: 136p
DIVIDEND YIELD:0.9%PE RATIO:52
NET ASSET VALUE:38p*NET CASH:£11.4m

Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201124.21.52.21.28
201231.82.53.81.38
201339.43.54.01.50
201441.84.03.21.65
201557.35.94.01.85
% change+37+49+25+12

Ex-div: 23 Jul

Payment: 28 Aug

*Includes intangible assets of £45.3m, or 38p a share