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GBG trades in line, but shares tumble

The identity data intelligence specialist is confident in meeting full-year expectations
October 25, 2018

GB Group (GBG) shares fell by a tenth despite a broadly positive first-half update. Revenues rose 9 per cent to £57.2m – or by 11 per cent, adjusting for a material non-recurring revenue item reported in the previous year.

IC TIP: Buy at 483p

Meanwhile, adjusted underlying operating profits rose 7 per cent to £8.7m – although, on a reported basis, these declined 16 per cent. That’s a result of the effects of planned additional technology investments, and sales and marketing costs, which the group says will have a disproportionate impact on first half profitability.

Encouragingly, Peel Hunt notes that GBG can maintain 16 per cent year-on-year cost growth in the second half, and still meet the house broker’s FY2019 operating profit target.  

Just three days prior to this update, GBG announced its acquisition of Vix Verify Global (VVG) – an Australian provider of identity verification and location intelligence software, for A$38.3m (£21.2m). Peel Hunt notes that while this won’t impact FY2019 earnings, it has lifted FY2020-21 earnings estimates by around 4.5 per cent.