Changing technology is a dramatic, painful and expensive exercise particularly if your competitors don’t change as fast and so don’t incur such big costs as quickly. But after three years of tech development, GB Group is winning new customers and seems set to prosper as online databases replace hard copy for money-laundering purposes. But there is a potentially big negative. Because GB generally charges per transaction on perhaps two to three years contracts, its fortunes rest with those of its major customers. They include major revenue recipients including retailers such as Next, mobile phone companies O2 and Vodafone, banker Lloyds TSB and gambling outlets Ladbrokes and William Hill keen to turn in fraudsters.
This said, there’s no doubt that providing online clients with money laundering information is big business. Sources of verification include not only the electoral roll but also the birth register for underage drinkers and gamblers as well as several lists of serial fraudsters. The business is split between identity verification - which has probably become a bit of a commodity business - and identity capture and analysis where clients from hotels, travel agents and other sources such as retailers want to know a lot more about a customer’s spending habits to encourage them to return and spend more. GB may need to keep significant cash balances to satisfy clients but, over time, it should be a continuing growth business. Broker Peel Hunt forecasts adjusted 2009-10 adjusted profits up from £1.8m to £2,1m as comparable earnings rise from 1.7p to 2.1p.
GB (GBG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 23.25p | MARKET VALUE: | £19.8m | |
| TOUCH: | 22.5-24p | 12-MONTH HIGH: | 35.25p | LOW: 16.75p |
| DIVIDEND YIELD: | 5% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 14p | CASH: | £4.50m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£000) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 11.23 | -283 | -0.20 | 0.50 |
| 2006 | 12.84 | -268 | -0.30 | 0.75 |
| 2007 | 14.95 | -1225 | -1.40 | 0.75 |
| 2008 | 19.37 | -438 | -0.50 | 1.00 |
| 2009 | 23.45 | 1389 | 1.80 | 1.15 |
| % change | +21 | - | - | +15 |
Ex-div: 15 July Payment: 13 August Computer services | ||||
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