Annual Report
and Accounts
2021
Contents
Overview
1. Overview
Investment Case
At a Glance
Covid-19 Statement
Chairman’s Statement
2. Strategic Report
Market Review
Business Model
Strategy
Key Performance Indicators
Chief Executive’s Review
Finance Review
Principal Risks and Uncertainties
Non-Financial Statement
Environmental, Social and Governance Statement
3. Governance
Directors & Officers
Letter from the Chairman
Corporate Governance Statement
Audit & Risk Committee Report
Remuneration Committee Report
Nomination Committee Report
Directors’ Report
Section 172 Statement
Statement of Responsibilities
4. Financial Statements
Independent Auditor’s Report
Consolidated Statement of Profit or Loss
02
04
06
08
11
14
16
18
20
24
28
41
42
58
62
64
72
78
92
94
99
104
105
115
Consolidated Statement of Comprehensive Income 116
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Balance Sheet
Company Balance Sheet
Consolidated Cash Flow Statement
Company Cash Flow Statement
Notes to the Accounts
Useful Information
117
118
119
120
121
122
123
190
www.gbgplc.com
We are GBG, global
FY21
specialists in digital identity
highlights
We are in business to build trust in a digital world. By
Achieved record revenues of £218m (up by 9% on FY20)
doing this we help create a world where everyone can
and adjusted operating profit of £58m (up by 21%)
transact online with confidence.
We enable fast, simple and compliant customer
onboarding with reduced risk of fraud for many of the
world’s leading organisations.
Working with the best data, the best technology and the
best people, we make it possible to balance the growing
need for a frictionless digital customer experience with
the increasing risk of fraud and financial crime.
Excellent response globally from our team to the Covid-19
pandemic, supporting our customers and minimising
impact on the business
Delivered record team member engagement scores,
driven by putting our team members first during the
Safe and simple experiences mean consumers love
pandemic
working with our customers. And our customers love the
confidence and control they get from working with us.
As a result, we are leaders in one of the world’s most
dynamic growth industries. The significant increase in
digital commerce during the Covid-19 pandemic has
accelerated the trends driving our long-term growth and
as a result the global opportunity facing us is greater than
ever before.
Record customer satisfaction and advocacy scores
Continuous innovation and strategic expansion with new
solution launches including the IDology decision builder,
our multi-bureau identity product, the new anti-fraud suite
in Australia and GBG Investigate with the acquisition of
HooYu
“Our purpose is to build trust
in a digital world. Our vision is
to help create a world where
everyone can transact online
with confidence.”
Annual Report and Accounts 2021
1
OverviewStrategic ReportGovernanceFinancial Statements Investment Case
We help organisations grow faster – managing their
existing customers more effectively and adding new
ones simply, safely and securely.
Companies that deliver a great customer experience
The same is true for GBG. We are at the forefront of the
are increasingly the winners on the all important digital
fast moving digital identity sector simply because we
battleground. This has never been as important as today,
have long understood that our customers need protection
with fast increasing digital commerce generating more
without compromising on quality or compliance.
and more customers to welcome and manage and to
identify and repel unrelenting fraudsters.
It is why our business model (see pages 14 and 15) has
sustainable growth at its core. It is why our strategy (page
Our customers know this. They also know that delivering
16) is focused on clear structural growth opportunities
great customer and onboarding experiences with
sustained by the increasing demands of a global digital
protection against fraud will differentiate them over the
economy. This is why we believe that by simultaneously
long-term.
eliminating customer friction and fraud we can help
everyone transact online with confidence.
Our vision – and our ability to realise it – is based on the
strengths that set us apart:
A diversified offering across three core solutions,
Multiple routes to market, to suit every customer
that are increasingly converging, presenting clear
in every situation:
structural growth:
n
Location: powered by the world’s most accurate
n
Self-service: we provide customers the capabilities
location data, our address verification capability
and guidance to start, manage and upgrade our
delivers exceptional experiences to every customer,
services
wherever they are
n
Direct: face to face or remote, as our customers
n
Identity: we can verify the identity of much of the
prefer, our experts across the world are there to
world’s population anywhere in the world, to help
inform, respond, manage and upsell
businesses welcome good customers and root out
fraudsters
n
Channel: we have close relationships with trusted
intermediaries across the globe, where we and our
n
Fraud: our cutting edge technical expertise protects
customers, upholds reputations and stems losses
customers operate
from financial crime
Our technology approach, ensuring we can always
Powerful in-house development capacity and great
respond to the growing scale and complexity of our
partnerships with innovators across the world:
customers’ needs, thanks to our:
n
n
n
Cloud native strategy: complemented by our
n
Constant data improvement: continuously
innovative approach to multi-tenancy
accelerating our decision making capacity drives
Use of standards: working with REST, Kubernetes,
rapid entry into new and adjacent markets
OAUTH and more enables simple integration
n
Innovation labs: our continuous focus on new
Research agenda: includes Digital Tampering,
Anti-Fake methods and bot detection
technologies like artificial intelligence, machine
learning and Blockchain fuels product improvement,
enabling us to respond fast to market developments
n
Rapid scale up: our commitment to customer led
innovation means we can meet emerging needs faster
than any competitor
These strengths have combined over the years to give GBG an outstanding global reputation. This drives a consistently
strong financial performance that is underpinned by our excellent relationships with 19,000+ customers in more than 70
countries worldwide.
These relationships continue to improve, accelerating business growth among our existing customers, which is
evidenced by ever better customer satisfaction scores.
One key factor feeds and sustains all these advantages: the collective strength of our amazing global team. This strength
is self-perpetuating: our existing talent acts as a magnet for yet more exceptional talent as our business grows. Our focus
is on providing the environment and opportunity for our people to always be at their very best, through alignment with our
goals, excellent professional development and of course, a total commitment to their health and wellbeing.
This approach continues to pay off, with record team member engagement scores set in the unprecedented operating
environment of 2020.
Today, GBG has successfully built the competitive differentiation that makes it hard for any competitor to challenge our
leading position in our fast growing core market.
This is what makes our growth opportunity so significant and our investment case so compelling.
2
Annual Report and Accounts 2021
Annual Report and Accounts 2021
3
OverviewStrategic ReportGovernanceFinancial Statements
At A Glance
Who we are
Where we do it
Driven by organic growth and strategic acquisition, we
have a direct presence in 15 countries. But what is really
important is where our customers are: in more than
70 countries across Europe, North America, and Asia
Pacific. Collectively, they account for our technology
being used 210 million times every day – that is over 76
billion transactions a year. More than that, we can validate
address information in more than 245 countries and
territories.
Who we do it for
Our 19,000+ customers range from start-ups to many
of the world’s biggest and fastest growing brands. From
We are global specialists in digital identity, leading the
global banks to tech giants, automotive manufacturers
world in location intelligence, identity verification and
fraud detection technologies. We have been operating for
over 30 years, we have team office hubs in core locations
globally, including Europe, North America and Asia Pacific,
and we work for many thousands of customers across the
world.
What we do
Organisations across multiple sectors and geographies
use our solutions to make sure good customers do not
drop out during registration while fraudsters are quickly
identified and blocked. The key to success is getting
the balance right between a great user experience,
to fast fashion retailers they are the players setting the
agenda for the future of business.
Who we work with
Our 160+ hand-picked expert partners are carefully
chosen to help us excel at the things that matter most:
R&D and innovation; continuous improvement and growing
our business through providing better solutions for new
and existing customers across the world.
What makes us so good
continuous compliance with multiple regulatory regimes
Quite simply, our people. At every level, we aim to only
and the rigour needed to prevent financial crime. That
ever work with the best talent in our global industry. It is
is exactly what our solutions deliver, bringing together
an approach that works for us, with the market leading
location, identity and anti-fraud functionality into a single,
technical capabilities, unrivalled experience, deep
user friendly experience.
Why we do it
knowledge and committed leadership that combine to
make us a trusted partner and supplier to so many great
organisations around the world.
The global growth of digital commerce, while empowering
customers, also has a significant negative side effect: fast
What the future looks like
increasing fraud revenues for criminals across the world.
Our long-term opportunity is outstanding. We are in
Businesses simply cannot afford to deter good customers
the right sector, meeting real needs head on in a global
when protecting themselves, making our highly effective
growth market. We have the right talent, an excellent
and easy to integrate services mission critical for
reputation and the trust of customers across the
organisations everywhere.
world. We have the maturity to have already achieved
scale and are well placed to leverage a healthy mix of
organic structural growth drivers. We have clear vision,
objectives, business model and strategy to deliver the
sustainable long-term growth that we anticipate and our
investors deserve.
4
Annual Report and Accounts 2021
Annual Report and Accounts 2021
5
OverviewStrategic ReportGovernanceFinancial Statements Covid-19 Statement
The following statement covers the actions and responses taken by GBG, its Board and Management during the year
in response to the challenges presented by the Covid-19 pandemic. Over the past 12 months, we have taken decisive
actions to make sure our business remains strong and that we are able to execute on our long term growth strategy,
which will benefit all of our stakeholders.
Financial Health
The Group’s Audit & Risk Committee and Board has considered and continues to consider, the potential impact of
the Covid-19 pandemic on the financial position, cashflows and liquidity of the Group, particularly in relation to the
preparation of the Group’s financial statements on a going concern basis as well as ensuring that banking covenants
Our priorities were and continue to be to: protect our team members and support their health and wellbeing; look after
are maintained. The review process included rigorous stress testing against a range of potential and extreme scenarios
our customers and make our business secure, both financially and operationally.
Governance
At the start of the crisis we established a Covid Team, chaired by the CEO and supported by members of the Group’s
Executive Team. The Covid Team established a number of work streams, each headed by a team leader, to help us
coordinate our response to the impact of Covid-19 across our business. The work streams covered include: Team
Members, Customers, Financial Health, Operations, Governance and Opportunities.
The Covid Team meet weekly to discuss issues and concerns, to receive updates from work stream team leaders and
to support the critical assessment of the business. In addition, the Group’s other Covid-19 risk assessment activities
covering its operations, people, customer and information security areas have also been reviewed and challenged by
the Audit & Risk Committee and the Board.
We took prudent and decisive action early in the process to preserve liquidity and reduce discretionary costs. This
included: an immediate Group-wide pay freeze, as well as pausing all non-essential recruitment; carefully assessing
project spend and restricting it to those areas critical to the long term success of GBG; deferring the payment of the
FY2020 accrued bonus for GBG’s Executive Directors and not declaring a final dividend in respect of the 2020 financial
year. This approach enabled GBG to consider its activities and outlook, which resulted in the positive cash performance
in FY21 and the payment of an interim dividend in January 2021. In addition, the Board also paid the Executive Directors’
where required, to quickly approve decisions. These meetings include: status updates on our people by region; financial
bonuses accrued in FY20.
reports on cash; usage volumes and trends and updates on network service availability.
The Board continues to receive updates and briefings on our response to Covid-19 so that they can assess the business
issues and make critical decisions quickly. At the start of the pandemic, Board meetings were held weekly and then
The Group offered voluntary ‘carer furlough’ to those team members who felt that they needed additional personal
support. 13 team members elected for this support and whilst the duration varied the average period was 12 weeks.
UK Government funding in respect of this furlough support was repaid in full in November 2020 following a strong first
moved to bi-weekly from August to October. Meetings are now back to their regular monthly timetable with the option
half performance.
to increase the frequency should matters need to be escalated or other circumstances require it. The fixed agenda for
these updates reflects the work streams of the Covid Team to ensure that all matters are covered.
Team Members & Operations
The Covid Team’s work has included planning for the relaxation of the lockdown restrictions around the world and to
ensure the business is prepared, as fully as possible, to support our team members, customers and other stakeholders.
We have conducted thorough assessments of the potential impact of Covid-19 on the Group’s principal risks from a
strategic, commercial and operational perspective. This has ensured that the business can provide the appropriate
Customers, Suppliers & Other Stakeholders
Throughout the pandemic, we have been in contact with our customers to offer support and also to understand their
particular requirements and challenges. We have made sure that our products can continue to support them as their
needs change as a result of Covid-19 and market developments.
We have engaged with our suppliers to verify that their business continuity plans are robust so that they can and will
continue to provide us with the products and services we need. We pay our suppliers in accordance with agreed terms
and have not sought to delay or refuse payment of valid invoices. In FY21 we achieved our highest net promoter scores
response to our team members and customers in order to support our plans to position ourselves regarding our longer
from customers reflecting the positive impact our focus, approach and support has had.
term sustainability and viability.
We continue to employ special measures to support our people and their wellbeing. All of our team members have the
ability to work from and be supported at home. Where local guidance has allowed we have reopened offices on an
entirely voluntary basis for our teams and in doing so we have ensured that Covid-19 risk assessments and protocols are
in place that reflect local guidance and best practice.
We have proactively engaged with our institutional shareholders and bankers to keep them informed of the actions we
have taken in response to the pandemic and to answer questions they have about GBG.
Opportunities
We have maintained a strong emphasis on communications to keep our team members connected and informed. This
We also remained focused on competitors and market position which has resulted in the acquisition of HooYu
included: a regular CEO webinar update (initially this was weekly but moved to bi-weekly from August 2020; maintaining
Investigate and our 11% stake in Credolab Pte Limited. Our strategic focus on our core global capabilities in Location
our annual kick-off events, albeit virtually; employing innovative tools and methods to promote inclusion and
Intelligence, Identity Verification and Fraud Prevention resulted in the decision to divest certain parts of the business
participation; and ensuring that managers kept in touch with their teams by video and conference calls. Team member
which were not part of those core global capabilities. This resulted in the sale of GBG’s Marketing Services and Employ
performance reviews and feedback were also maintained and our Group intranet was used to provide a wide range of
& Comply businesses.
support and information, including encouraging team members globally to share their experiences.
Our attention and focus on our team members wellbeing has been reflected in our satisfaction surveys. We continued
to conduct team member satisfaction surveys during the financial year. Responses were received from over 93% of our
team members globally for both surveys (September 2020 and March 2021) and each time over 90% of team members
indicated they would recommend GBG as a great place to work.
Outlook
We are cautious about predicting the future beyond this pandemic, but it is already clear that over and above its impact
on human lives it will affect the global economy.
We remain focused on making the right decisions for our people, our customers and all of our stakeholder groups. We
are a strong and innovative business, we will continue to watch the evolving global situation and we are well equipped to
adapt and adjust as necessary.
6
Annual Report and Accounts 2021
Annual Report and Accounts 2021
7
OverviewStrategic ReportGovernanceFinancial Statements Chairman’s Statement
We are reporting another year of record
financial performance but most pleasingly this
has been delivered alongside our best ever
customer and team engagement scores.
The last year has been the most testing time for business
The success of our approach shows in our employee
anyone can remember and I am pleased to report that on
engagement survey in Q4 which recorded our best-ever
every level GBG rose to the challenge. We are reporting
results and record high customer advocacy scores.
another year of record financial performance but most
pleasingly this has been delivered alongside our best ever
customer and team engagement scores. The GBG team
has focused relentlessly on supporting our customers
and each other and this effort underpins our success.
Our ability to achieve such results, in some of the most
adverse economic and social conditions that we have
seen for decades, demonstrates the strength of GBG’s
team and business model. On behalf of our customers
and shareholders my heartfelt thanks go to the whole
GBG team.
The pace at which we adapted to virtual working meant
that we were able to support our customers through the
challenges they faced. As we reported during the year
we saw the impact of the pandemic vary according to
geography, customer vertical and product. Our solutions
helped our customers by playing a key role in the digital
transformation that the pandemic accelerated. We have
been able to contribute to the success of many customers
who have traded successfully through the crisis. However,
many customers were impacted, some severely. We
took steps to support these customers by suspending
contracts, extending credit and maintaining services - in
Covid-19, team members and customers
sectors as diverse as online sports betting, hospitality
At the start of the pandemic GBG acted decisively. We
took steps to ensure the safety and wellbeing of our
people, to support our customers and to protect our
business from the then-unknown impact of Covid-19.
I was impressed but not surprised at the pace and
professionalism shown by colleagues as we rapidly
transitioned to working from home. We helped our team
members adjust to the change with technology and
created a communications programme and virtual culture
that helped unite us all. We sometimes shared meetings
with our colleagues’ families as home-schooling and
home-working competed across kitchen tables and we
thank our customers for their patience and good humour.
and leisure, travel and sports-related associations.
We were also pleased and proud to directly help with
pandemic relief efforts. This included enabling the rollout
of emergency funds in the USA; improving data quality
for the vaccine rollout in the UK and supporting the
Health & Safety Executive to ensure that businesses took
appropriate steps to protect employees.
Although our results demonstrate overall revenue growth,
some areas of our business did see a decline. This
was particularly true where there was a need to deploy
services onsite or where solutions were focused on
challenged sectors, which accounted for around 14%
of our total revenues before Covid-19. In response we
adapted our sales and marketing efforts to align with
changing demand, win new business and accelerate our
AGM and dividend
share of many customers’ investments.
The Board intends to uphold its progressive dividend
At the time of writing, while restrictions are easing and
policy and remains committed to delivering increased
vaccination programmes are well underway in some
returns to shareholders. The Board will propose a final
countries, the pandemic is not yet over. This means we
dividend of 3.40 pence per share to shareholders at the
must remain vigilant to the longer term impact of the
Annual General Meeting (“AGM”) in July. If approved, this
pandemic on our global customer base. However, GBG’s
will be our thirteenth year of growth in dividends.
solutions address key requirements of modern economies,
especially the need to verify digital identities, fight fraud
and understand locations. This means we are well-
positioned to take advantage of these opportunities as
economies reopen.
Board changes
At the end of June we will say a sad farewell to Dave
Wilson, our current CFO and COO, who has decided to
This year GBG’s AGM will be held as a hybrid meeting.
Shareholders will be encouraged to attend virtually
although there will be limited availability for those that
would like to attend in person. The meeting will be held at
our Chester office using a live audio link and shareholders
can participate by being able to listen live to the meeting,
ask questions and vote. Further details can be found in
the Notice of AGM.
retire. Dave has been instrumental in GBG’s success over
Progress and strategy
the last 12 years, helping transform us from a £14.2m
market cap business when he joined, into one of the UK’s
largest technology companies. He leaves with all of our
best wishes.
GBG took action to conserve cash in the early phases of
the pandemic. These actions contributed to the higher
than expected net margins this year. We have now
returned to our strategy of re-investing cash into product
On behalf of the Board I was delighted to welcome
development and go-to-market resources, making sure
David Ward to GBG early in May. He will bring highly
that GBG has the products it needs to capture the global
complementary experience to the Board and following a
market opportunity in front of us.
decade at Aveva, he offers very relevant experience to
the next stages of GBG’s growth. David will be formally
appointed to the Board from July 1st on Dave’s retirement.
Our strategy is to invest in building innovative solutions
which can scale and where we can achieve competitive
differentiation. We reviewed our portfolio with this in mind
Charmaine Carmichael also resigned from the Board
and identified that our Marketing Services and Employ
this year when she started a new full-time executive role
& Comply businesses were not aligned to this strategy.
and had to step down from her external Non-Executive
During the year we have been able to find high-quality
board appointments. The Board is currently conducting a
acquirers for these businesses with the market expertise
search for a new Non-Executive Director to support GBG
to provide a great experience for our customers and team
as it broadens its technology capability and international
members who have transferred to new ownership. We
reach.
wish them well for the future.
Financial performance
GBG’s financial performance in the year was again ahead
of original market expectations. Revenues increased
by 9.3% to £217.7 million (2020: £199.1 million), with
organic revenue growth at constant currency of 12.1%.
Adjusted operating profit increased by 20.8% to £57.9
We also added capability to the Group in the year by
acquiring HooYu Investigate and by taking an investment
in Credolab, both of which enhance our fraud portfolio.
We continue to monitor the market for high-quality
acquisitions that will accelerate our product development
and geographic reach, supporting our promise to make
quality investment decisions and innovate at pace.
million (2020: £49.7 million) and adjusted earnings per
Commitment to innovation remains at the core of GBG’s
share rose 15.6% to 25.2 pence (2020: 21.8 pence).
success and our strategies for product evolution retain
Cash generation remained strong allowing GBG to clear
its net debt position of £35 million at the start of the year
to a cash positive level of £21.1 million. This significant
improvement and robust financial position means we
enter FY22 in very good shape with a strong balance
sheet, a cash generative business model and access to
liquidity.
this focus. However, as digital transformation accelerates,
we are also investing in the security of our solutions
and systems as well as continuing to add breadth to our
data assets. Our use of these assets does though need
to respect the privacy requirements of the territories in
which we operate. We will, of course, continue to invest in
our team members who make GBG so successful.
8
Annual Report and Accounts 2021
Annual Report and Accounts 2021
9
OverviewStrategic ReportGovernanceFinancial Statements
Chairman’s Statement continued
Market Review
GBG’s people are also active in helping support the
communities in which we live and work and they support
and contribute to the Group’s ESG strategy. The Board is
dedicated to ensuring that GBG uses its resources and
skills to the broader benefit of the economies we operate
in, as well as taking a socially responsible approach to the
decisions and investments the Group makes.
As previously indicated, in November 2018, The
Information Commissioner’s Office (ICO), the data
industry regulator in the UK, announced that it was
conducting audits on a number of companies to
understand the use of data in their services. GBG was
included in this review and continues to positively engage
with the Commissioner as part of that review. We will keep
the market informed of any material developments.
The year overall and outlook
We have a lot to be proud of this year. We have been sure-
footed in navigating the ramifications of the pandemic,
made strategic investments and disposals, enhanced our
products, provided a safe and motivational environment
for our people and contributed to the success of our
customers. We believe all of these components position
us well for the coming year. With market momentum, we
expect to maintain good progress in FY22 and into the
future.
On behalf of the Board, I want to thank our team members
for their hard work and dedication that underpins GBG’s
success, as well as our shareholders and customers for
their continued support.
David Rasche
Chairman
14 June 2021
Key drivers
Impact on us and our industry
GBG’s response
As demand grows, our Cloud native strategy
will support all scale and performance needs.
Our innovative approach to multi-tenancy
will drive the creation of advanced future
products, enabling us to meet increasingly
complex customer needs.
Our partnerships with key technology
partners, including AWS, GCP, Azure and
Ping, will keep us at the cutting edge of R&D
and innovation.
Our products will continue to be flexible and
intuitive to use and upgrade, using SaaS and
PaaS principles and meeting all OEM and
partners requirements.
Growth in digital
commerce –
driving borderless
business across
the planet
Nearly half of all shoppers (47%) opened a
new digital shopping account in 20201 and
half said they were more likely to go cashless
due to Covid-19.2 This has driven significant
growth in online transactions, creating
greater need for digital identity insight.
In some sectors we saw increases in demand
for our services during the year:
n We saw huge growth in the use of our
Loqate service, with usage growing by
89% over the previous year on the first
day of the UK’s lockdown
n Use of our software on Black Friday 2020
was 47% higher than a year earlier, with a
record 413 million server requests.3
n In the US, we authenticated over 30.5m
consumers applying for US Government’s
small business stimulus packages.
We anticipate continued high usage from
some sectors, whilst others may well see
some moderation and challenges.
The key
As more and more people run their lives
Businesses that work with us, reduce the
importance of User
online, self-enablement has never been more
risk of fraud while improving their customers’
Experience (UX) –
important for digital businesses. Increasingly,
experience, particularly at the key onboarding
getting the balance
simple integration with extensibility is
stage.
right
essential.
But it is not everything. Consumers,
We include the SME market in our product
strategy, offering new enhancements like
increasingly from multiple generations, are
API centricity and URL based One Click
demanding more and more from their user
invocation.
experience: more ease of use; more speed
and less complexity. In fact, our research
shows that 38% of consumers have
abandoned a sign up process due the time it
took.4
At the same time, however, 63% say they
would be more likely to use a service that
uses advanced fraud prevention methods.5
This means businesses need to get the
balance right between speed and rigour. And
that’s where GBG outperforms.
Our use of standards including REST,
Kubernetes, OAUTH and more enables simple
integration and interoperability ensuring that
the developer user experience is seamless
too.
And our close working relationships with all
customers mean we understand exactly what
they want from our products and can advise
on the best integration for their needs and
risk profile. We undertake regular product
workshops, design sprints and journey
mapping sessions to ensure we are capturing
and then applying this customer insight into
our product development.
1
2
3
4
5
GBG State of Digital Identity Report 2020
Ibid
GBG Loqate
GBG State of Digital Identity Report 2020
Ibid
10
Annual Report and Accounts 2021
Annual Report and Accounts 2021
11
OverviewStrategic ReportGovernanceFinancial Statements
Market Review continued
Key drivers
Impact on us and our industry
GBG’s response
Key drivers
Impact on us and our industry
GBG’s response
Growth in fraud:
With more people coming online all the time,
We continuously invest to develop and bring
Rapid
Easy access to powerful new technologies,
We continue to embrace and gain expertise
countering a global
opportunities for fraudsters are growing fast.
to market products that help everybody
technological
often enabled by the Cloud, is lowering
in emerging new technologies, such as
advancement –
barriers to entry for competitors and placing
Kubernetes, Scala, machine learning and
working at the
dynamic tech weaponry in the hands of
Istio.
leading edge
potential fraudsters.
With our progression@GBG programme, we
As the range of available technologies grows,
ensure our people are always at the cutting
choice and confusion are increasing at the
edge of new knowledge.
same rate. Artificial intelligence, machine
learning, Blockchain and other fast evolving
technologies continue to disrupt the market.
We use our close relationships with expert
partners across the world both to augment
our own capabilities and to provide new
With growing competition, identifying and
routes to market.
attracting the best talent is increasingly
important.
We are keen, whenever possible, to run
proof of concept projects using emergent
technologies.
Inclusion &
Diversity
Increasing global awareness towards
Board level sponsorship underpins our global
inclusion and diversity related matters, such
focus on Inclusion and Diversity issues.
as, anti-bias and anti-exclusion means that
new products and technologies have the
opportunity to support a more inclusive
society, in which it is essential to enable
access for all.
This is increasingly a legal requirement,
driven by legislation including the UK’s
Disability Discrimination Act and Sector 508
in the US.
Our Design System, embracing initiatives
such as a11y and standards like W3C, ensures
accessibility is integral to all of our solutions.
In addition, our use of multiple data sources
can improve financial inclusion for people with
a limited credit history.
We also focus on bias as a key research
topic at our Global Centre for Excellence
in machine learning. This is helping us
to increase understanding and embrace
algorithmic transparency.
6
7
8
9
Statista
IDology Eighth Annual Fraud Report
Ibid
Ibid
threat
Attacks such as deep fakes are growing in
sophistication and attestation is becoming
increasingly difficult.
2020, heavily influenced by the Covid-19
pandemic, featured record levels of
attempted and successful fraud:
n In the UK, fraudsters stole close to £1.2
billion6
transact online with confidence. Our research
agenda and technology strategy addresses
issues including Digital Tampering, anti-fake
methods and Bot detection.
Our current line up includes fraud solutions
that:
n Tackle financial crime at the point of
origination
n Screen out and reduce fraudulent
n Fraud attempts increased by 53% over
transactions
20207
n 56 million Americans had an account
opened without their authorisation8
n Leverage artificial intelligence and
machine learning at our Global Centres of
Excellence to detect and tackle complex
n 84 million Americans received a phishing
financial crime
attempt during the pandemic.9
n Enable businesses and public
Businesses across the world are forming
consortia to combat fraud and competition is
growing in the fraud prevention market.
organisations to identify suspect
individuals and support complex
investigations
n Empower organisations to share fraud
intelligence to learn from and support one
another.
Evolving regulation
Our global marketplace is made up of multiple
Customers use our solutions to meet local and
– responding to
territories and sectors, all with different
industry regulations. For example, our identity
change across a
regulatory agendas and timetables. Our
products enable customers to meet Anti-Money
global landscape
solutions must therefore take differences into
Laundering (AML) and Know Your Customer
account.
Increasingly, customers demand privacy and
security to be considered from the outset
(KYC) regulations relevant to their industry,
while Loqate enables them to keep their
customer data accurate and up to date.
and regulation is responding to the need for
Our Privacy by design and Security by design
change. (Gartner predicts that by 2023 65%
of the world’s population will be covered by
modern privacy regulations, up from 10% in
2020.)
Other key considerations include:
approach ensures that every new product
design is private and secure from the outset.
We are also continuously expanding our
Global Secure Operations Centre (GSoc) and
improving our cyber defences.
n The future of digital identity, including the
introduction of trust frameworks in markets
such as the UK, Australia and Canada.
We work with customers to ensure that their
solutions always meet their needs, keep them
compliant and match their risk profile.
n Tighter anti-money laundering legislation,
extending across crypto currencies and
other areas.
n Increasing emphasis on Know Your
Customer ("KYC").
n Changes to gambling legislation.
We are working with relevant policy makers
and industry groups to understand and shape
the impact of developing digital identity
frameworks.
12
Annual Report and Accounts 2021
Annual Report and Accounts 2021
13
OverviewStrategic ReportGovernanceFinancial Statements Business Model
Customer and Consumer Needs
Our Offer
We support businesses and consumers through the
Using leading technology to bring together and enhance
entire journey, enabling delivery of excellent customer
consumer data, we offer our customers global, flexible
experience whilst managing fraud, risk and compliance.
and long-term solutions.
Stakeholder Outcomes
Delivering for our customers and
their consumers enables us to create
value that we reinvest and share with
B2C Clients
our stakeholders.
Proprietary Software/
Algorithms
Validate and verify to let customers
quickly and safely register, and buy
products and services
IN BRANCH
External Datasets
Location
Identity
Fraud
Customers
We help:
n Spot potential problems
n
Increase revenues through more
effective use of technology and
n
n
consumer data
Digitise traditional, manual
processes
Scale businesses to take
advantage of international growth
Team Members
We offer:
n
Interesting and diverse career
paths
n
Opportunity for
cross-cultural exchange
n
Recognition of talent and
personal achievement
Shareholders
We provide high-value return through:
n
n
n
Profitable, cash-generative growth
High proportion of
recurring revenue
8 year adjusted EPS CAGR of 24%
19,000
customers across over 70 countries
integrating our technology into their
services and operations.
AT HOME
ON THE MOVE
Enhance and cleanse
customer data to
deliver a better
customer experience
Monitor
customer
behaviour to
identify fraud
Reconnect with
customers, locate
people, and
investigate fraud
and crime
CONTINUALLY
REVERIFY CUSTOMERS
(where required for compliance)
Resources and Capabilities
Our success is underpinned by our core resources
and capabilities
n
Global data reach, resulting from partnerships
with public and private sector data partners –
over 160+ partnerships
n
These partnerships provide compliant access to
diverse datasets, for example, credit reference
agencies, electoral rolls, passport and national ID
registrars, postal services, retail consumer data and
social media
n
n
n
International identity document verification including
passports, driving licences and national ID cards
Global address validation confirming the address
really exists – 245+ countries and territories
Highly skilled and motivated team that actively
promote GBG
14
Annual Report and Accounts 2021
Annual Report and Accounts 2021
15
OverviewStrategic ReportGovernanceFinancial Statements Strategy
Our strategy, designed to deliver long-term
sustainable growth and clear benefits for all
stakeholders, is built around five pillars:
Customers
Our goal is to be a trusted partner for all our customers, no matter their size, value or location. We
are obsessed with hearing what our customers have to say and we rely on this insight to fuel our
future decisions.
n
n
n
n
n
We help our customers establish trust, using our unique combination of Location, Identity and Fraud
capabilities that engage consumers and streamlines onboarding
We maintain open, two way and continuously improving conversations with existing and prospective
customers, ensuring we understand their requirements and they recognise what makes us a trusted strategic
partner
Through our Voice of the Customer programme, we ask our customers for feedback, as they use our
products, as they interact with our people and as we grow our relationship. We use this feedback to learn and
to improve our products and our support
We make sure our propositions are value focused and clearly understood by our core audiences so we can
deliver innovative solutions that solve real customer problems
We keep on top of the ever evolving regulatory, technology and social landscape that drives constantly
changing customer needs
People
Our team members are the heart of our business. We strive to have the best and most engaged
team, using our expertise in all areas to drive the business forward.
n
n
n
n
n
n
n
Through our be@gbg program, we ensure all global team members have the best ways to interact and
collaborate with the business and each other
be/yourself, underpins our team member experience. We are committed to ensuring our people are
comfortable to be themselves all of the time. We actively encourage this through our inclusion and diversity
and wellbeing programme
be/hired: we always seek and recruit the best talent, working with our people to maximise their capabilities
and improve our subject matter expertise
be/connected: is our internal communications philosophy, with the goal of ensuring no matter where you are
in the world, we are all connected to each other and the business
be/organised: making sure the important but sometimes mundane tasks can be completed with ease, freeing
up time to support our business goals
be/developed: is our professional development program, which encompasses development and guidance at
all levels, encouraging all team members to actively engage in learning opportunities
be/rewarded: we create flexibility and personalisation of reward packages which are always distributed
based on contribution
Technology
Technology is what we do. As well as powering the products that our customers love, our
technology enables operational excellence, is secure & trusted and empowers our people to do
what they do best.
n
n
n
n
n
n
We continuously invest in data and technology to drive ever faster, more accurate and simpler customer
decision making, based on emergent technologies such as Machine Learning
Our Cloud native technology is extensible, highly available and performant so that our customers can deliver
the best possible user experience to their customers at scale
We work with best in class technology partners to co innovate and deliver solutions that meet market needs
We focus on security and privacy by design in all that we deliver to ensure our technology is secure & trusted
and we work to industry standards like ISO27001, NIST and OWASP
We support collaborative remote working for all team members to draw effectively on the collective
capability of our global workforce
Our ‘Innovation Lab’ ensures we fully understand and can rapidly implement the capabilities of new
technologies ahead of any competitor
n We ensure our technology is easy to integrate and interoperable
Product
Our goal is to provide innovative products that solve real customer problems in our chosen global
markets. Our product roadmap is fuelled by customer and market insight to ensure our product
and technology teams deliver value for customers and outperform in the competitive landscape.
n
n
n
n
We work with a growing number of data and technology partners, to create unique offerings that
differentiate us
We start with User Experience to ensure our products are easy to use, easy to integrate and reduce friction
for the customer
We build upon our growing international customer experience and flexible technology to meet emerging
needs in new and adjacent markets
Our products are designed with privacy and security first, to ensure that we are a trusted and reliable partner
for businesses and that we protect individuals
Brand
Our goal is to build our global reputation as a leading technology business focussed on our core
value propositions. Having a strong brand profile helps drive growth throughout all regions.
n
n
n
n
We have refreshed the GBG brand, making it easier for our customers, people, investors and regulators to
understand who we are, what we do and what value we add
Through our global marketing team which spans from San Francisco to Singapore, from Atlanta to Australia,
we are 100% aligned to our business units and core solution areas to help drive growth
Making use of our internal subject matter experts and combined with external influencers, we produce
engaging content which is aimed at inspiring decisions for our audiences
Using customer, market and competitor insight, combined with our marketing management information, we
continually optimise our activity to be more effective and efficient, all leading towards greater impact
16
Annual Report and Accounts 2021
Annual Report and Accounts 2021
17
OverviewStrategic ReportGovernanceFinancial Statements Key Performance Indicators
The Board monitors the Group’s progress against its strategic objectives and the financial performance of the Group’s
n
International Revenue as a Percentage of Total Revenue
operations on a regular basis. Performance is assessed against the strategy and forecasts using financial and non-
financial measures. Due to the uncertainty of the impact of Covid-19 at the start of the year, there was no formal budget
and therefore the assessment was made against rolling forecasts which were updated as the impact of Covid-19
became clearer.
The following details the principal Key Performance Indicators (‘KPIs’) used by the Group, giving the basis of calculation
and the source of the underlying data. A summary of performance against these KPIs is given below. Non-Statutory
measures are defined within note 37.
The Group uses the following primary measures to assess the performance of the Group.
Financial
n Revenue and Organic Revenue Growth at Constant Currency
Revenue and revenue growth are used for internal performance analysis to assess the execution of our strategies.
Organic growth is also measured, although the term ‘organic’ is not a defined term under IFRS and may not,
therefore, be comparable with similarly titled measures reported by other companies. Organic growth is defined by
the Group as year-on-year continuing revenue growth, excluding acquisitions (until the date of their anniversary)
and disposed businesses that will be reported at each reporting interval. Organic growth is measured on a constant
currency basis to remove the impact of changes in exchange rates.
n Adjusted Operating Profit
This is used for internal performance analysis and to assess the execution of our strategies. Management believe
that this adjusted measure is an appropriate metric to understand the underlying performance of the Group.
n Adjusted EBITDA
This is used for internal performance analysis to assess the execution of our strategies. Management believe that
this adjusted measure is an appropriate metric to understand the underlying performance of the Group.
n Earnings per Share
Earnings per share is calculated as basic earnings per share from continuing operations on both an adjusted and
unadjusted basis.
n Earnings per Share growth
This is calculated as the growth in year on year earnings per share on both an adjusted and unadjusted basis.
n Net Cash/Debt
This is calculated as cash and cash equivalent balances less outstanding external loans. Unamortised loan
arrangement fees are netted against the loan balance in the financial statements but are excluded from the
calculation of net cash/debt.
n Cash Conversion
This is calculated as cash generated from operations in the Consolidated Cash Flow Statement, adjusted to exclude
cash payments for exceptional items, as a percentage of Adjusted EBITDA.
n Deferred Income
Deferred income, which is included in our Consolidated Balance Sheet within Trade and Other Payables, is the
amount of invoiced business in excess of the amount recognised as revenue. This is an important internal measure
for the business and represents the amount that we will record as revenue in our Consolidated Statement of Profit or
Loss in future periods. Trends may vary as business conditions change.
This is an important internal measure for the Group to assess progress towards expanding our international
operations and reducing risk concentration.
Non-Financial
n Employee Engagement
Team member engagement is a key focus area for the business in order to retain and grow what we believe is some
of the best talent in our industry. This is measured twice a year through a group wide employee survey conducted
through an external provider.
Performance against KPIs
A summary of the Group’s progress in achieving its objectives, as measured against KPIs, is set out below. Non-
Statutory measures are defined within note 37.
Revenue Growth
Organic Revenue Growth at Constant Currency
Organic Revenue Growth
Fraud Organic Growth at Constant Currency
Identity Organic Growth at Constant Currency
Location Organic Growth at Constant Currency
Adjusted Operating Profit (£’000)
Adjusted Operating Profit %
Adjusted EBITDA (£’000)
Adjusted EBITDA %
Earnings per Share – Basic
Earnings per Share – Adjusted Basic
Earnings per Share Growth - Basic
Earnings per Share Growth – Adjusted basic
Net Cash/(Debt) (£’000)
Cash Conversion %
Deferred Income (£’000)
Year ended 31 March
2021
9.3%
12.1%
12.1%
(27.4%)
28.5%
10.5%
57,896
26.6%
61,410
28.2%
13.8p
25.2p
56.8%
15.6%
21,135
119.5%
2020
38.7%
10.7%
10.3%
24.3%
11.5%
6.8%
47,945
24.1%
51,739
26.0%
8.8p
21.8p
14.3%
19.8%
(35,001)
95.2%
42,843
38,414
International Revenue as a Percentage of Total Revenue
64.4%
55.9%
Employee Engagement
>90%
> 90%
18
Annual Report and Accounts 2021
Annual Report and Accounts 2021
19
OverviewStrategic ReportGovernanceFinancial Statements
Chief Executive’s Review
I am pleased with our strategic progress and
we plan to continue to make investments in
the coming year to enable us to capture the
medium-term opportunity.
As described by the Chairman, the GBG team
Our new purpose is to help build trust in a digital world,
successfully navigated the challenges posed by the
while our updated vision is to create a world where
pandemic this year. We took immediate action to protect
everyone can transact online with confidence.
the wellbeing of our people and to make sure that we
were able to provide strong support for our customers.
We acted decisively in terms of the way we used our
resources, making sure that we could meet our customers’
new requirements as they too transitioned to remote
working and accelerated the digitalisation of their
businesses.
The short-term impact of Covid-19 varied significantly by
geography and from sector to sector. We experienced
increases and reductions in transactions from customers
depending on the demands of their end consumers.
However, we are clear that in the medium and longer term
the impact has been to accelerate the existing drivers of
growth for GBG. Consumer adoption of technology has
I am very pleased that these actions were successful.
increased and changes in their behaviour made through
While one result was record revenue and profit
necessity during the pandemic are becoming permanent
performance, I am even more pleased that this was
preferences. For businesses the changes in the last
achieved alongside our best ever team engagement and
customer advocacy scores.
Strategic focus
Strategic progress in the year was not restricted to
reacting to Covid-19. We made meaningful strides in a
number of areas, including: strengthening our global
management team; extending into new markets and
winning new customers; delivering innovative product
enhancements; focussing our business with a mix of
non-core divestments; investment in a strategic partner
and making an acquisition. We have also refreshed our
vision and purpose as we take the opportunity presented
by the acceleration of digital business to enhance our
brand, making sure that GBG becomes better known and
more respected by our core audiences and markets.
year have sustained consequences, with accelerated
digitalisation driving more transactions online. Without
face-to-face transactions, new types of fraud are
emerging. Consumers need to assert their identity to
access services and businesses need to react within an
increasingly complex privacy and regulatory environment.
Our customers are recognising that simple single
products do not provide a complete solution to these
challenges. This is where our products, services and -
perhaps critically - our experience comes to play. We have
been addressing these themes for more than 30 years
and have the expertise to balance consumer expectations
for simple online journeys with the needs of businesses
to reduce fraud and trade in compliant ways. This is a
challenging but exciting journey for our customers and
we are an essential partner at their side, helping them
establish trust in their growing digital operations.
We have aligned our core capabilities in location,
them through our absolute commitment to reducing
identity and fraud to drive growth globally. Although
inequalities, broadening diversity and facilitating
each capability area can meet standalone customer
inclusion within GBG, our markets and society. We have
requirements, the expertise we have can also come
and will continue to invest and develop initiatives to help
together. The experience we have built with proving
us improve in this critical area, including our ‘be/yourself’
digital identities provides GBG a unique capability in
programme and supporting family friendly policies at
identifying online fraud. We expect to see increasing
work. I believe our focus on this has created our very
convergence of our products and services in the
positive team environment where over 90% of our team
coming years, providing new cross-sell opportunities
members would recommend GBG as a great place to
and developing new use cases for our customers. We
work.
are meeting these challenges by adding new data and
new services, including decision-builder capability in
ExpectID in the USA, multi-bureau data feeds in identity
Europe and service orchestration across our fraud
products in APAC. In addition to our organic investments,
we enhanced our EMEA anti-fraud portfolio with the
acquisition of HooYu Investigate, one of the UK’s leading
investigation software solutions.
We also exited two businesses that served adjacent
but non-core markets. Marketing Services moved to
HH Global in January 2021, while Employ & Comply
This culture has enabled us to attract new talent to the
business, including senior hires to support our growth.
In addition to David Ward, who joins us as CFO, Dev
Dhiman now leads our APAC business, Boris Huard
joined to lead EMEA and Lara Clark leads our legal and
risk management group. These hires join 160 new team
members in the GBG family this year.
Customers and growth
GBG maintained its track record of organic growth, but
joined First Advantage Inc, an international background
the source of growth shifted in the year as a direct result
screening provider, at the end of March 2021. We were
of the impact of the pandemic. Although we continued to
pleased that in both cases the new owners were global
win new business, often with global brands, the majority
specialists in their field, creating opportunities for
of our revenue growth came from within our existing
long-standing customers and the employees of those
customer base.
businesses, while helping us to simplify GBG.
Strategically we have three primary channels to market:
We look forward to continued progress in FY22 in each
direct, self-serve and through partnerships. All channels
of our core solutions and in our three core geographies.
performed well. In the period we saw significant demand
We will continue our strategy of organic and inorganic
from existing customers who were experiencing
investment to drive product and market expansion.
Team
increased usage in their digital channels. We were able to
mobilise quickly to address these additional requirements
and make a real difference to their ability to respond to
these new digital needs. We were also delighted to have
We have exceptional talent within our global team
played our part in supporting organisations delivering
of approximately 1,000 people, each committed to
services to people and businesses directly impacted
delivering the best products and experiences for our
by the pandemic. In the USA, we helped support the
customers. We understand that our people are at the
distribution of stimulus payments to businesses and roll
heart of our success – whether that’s winning new
out verification services to Covid-19 testing facilities.
customers, developing the technologies that deliver first-
We also played a small part in England enabling vaccine
class solutions, or supporting our team members to be
distribution.
the very best they can be.
Not all sectors and customers proved to be resilient. Our
I have been so impressed by our team members’
ability to win new customers and in new markets offset
continued dedication and commitment to GBG in light of
the impact of lower demand in hospitality, travel and
the challenging conditions we are all facing, as a result
leisure, as well as in situations where customers deferred
of the Covid-19 pandemic. Our teams have remained
decisions due to Covid-19 related priorities or where
cohesive and collaborative despite the challenges
on-site product deployment was a constraint.
of remote working conditions. In particular, I want to
thank our People Team and managers who rose to the
challenge by increasing their efforts in communicating
and engaging with all our team members and prioritising
wellbeing programmes, training and development.
New business came from initiatives in new sectors and
by expanding geographically. In the USA we grew identity
revenues in the financial services and online gaming
markets, as well as winning new customers in insurance
and healthcare sectors. EMEA saw good growth for
We support our team members by providing a safe
Loqate in the online retail and food distribution sectors.
and rewarding working environment. We also support
In APAC, despite challenges with onsite deployments,
20
Annual Report and Accounts 2021
Annual Report and Accounts 2021
21
OverviewStrategic ReportGovernanceFinancial Statements
Chief Executive’s Review continued
we have won new business and achieved significant
decision to divest two businesses that served adjacent
upsells across the region, including a major project in the
but non-core markets in the period: Marketing Services in
Philippines and new Loqate sales in China, positioning us
January 2021 and Employ and Comply in March 2021.
well for future sales in the territory.
Our financial position at the year-end, together with the
As we enter the new financial year, the sales and
steps we have taken to conserve our cash resources and
marketing teams are well placed to continue to focus
protect access to debt financing, means that we continue
on growth sectors, geographic expansion and further
to have the means and ability to consider acquisitions
customer development. Although there is always a short-
and investments when they arise. This gives us the option
term risk of further contract delays where the pandemic
to increase the pace of our go-to-market initiatives and
is still causing significant impact, the overall acceleration
broaden our geographic reach and product capabilities.
of digital commerce will be of net benefit to GBG’s
customers. We intend to continue to invest in extending
our sales reach to maximise this opportunity.
Product and technology update
Current trading and outlook
What is clear is the pandemic has accelerated company
digitalisation initiatives and permanently shifted
consumer activity online, creating a long-term demand
Our product and technology teams have delivered a
environment for all three of our solution sets. The
strong set of new features through the year. These
services we offer have proven to be mission critical to
include Decision Builder in our IDology business,
customers within both traditional and new industries and
integration of our IDScan technology with GreenID in
I am excited by the prospect of continuing to broaden our
Australia and a multi-bureau data integration in EMEA.
customer base geographically and across sectors.
We also established a number of Global Centres of
Excellence, one being focussed on Artificial Intelligence,
which has benefitted a number of our products.
We are pleased to report that the new financial year
has got off to a good start, in line with the Board’s
expectations. We have continued to see strong
When we are confident it is an efficient use of resources,
transactional volumes in identity, driven in part by
we can also supplement our development resource
increases in transactions in crypto currency trading,
by acquiring technology. This year, this included the
which has smoothed some of the impact of the high
acquisition of HooYu Investigate, which accelerates the
transaction volumes from stimulus activity in the USA
development of our Connexus products.
last year. While this is unlikely to continue in the long
We have invested in our technology to deliver the
scale, agility and compliance requirements at the
increasing pace demanded by our international customer
base, which also helps us improve the maturity of our
operational capabilities. We have underpinned product
releases with major upgrades to infrastructure and
term, it gives us good momentum and we continue to be
encouraged by the vaccine-driven relaxing of lockdowns
in some of our key geographies. However, the situation
in other countries offers a timely reminder that the
pandemic is not over and due to elevated pandemic
uncertainties a wide range of outcomes remains possible.
security - and of course, successfully supported the shift
I am pleased with our strategic progress and we plan
to remote working.
Corporate transactions
As noted above, we completed several transactions this
year. This included, an 11% stake in Credolab Pte Ltd in
August 2020. Credolab Pte Ltd is a developer of bank-
grade digital scorecards headquartered in Singapore. The
company’s AI-based proprietary technology complements
our existing offering but also provides critical behavioural
risk reference data from good customers who are
financially excluded. We also acquired HooYu Investigate
in December 2020 to further enhance our leading
position in fraud investigation solutions in the UK. HooYu
Investigate automates fraud investigations and will
broaden the services GBG provides. Finally, we made the
to continue to make investments in the coming year to
enable us to capture the medium-term opportunity.
Chris Clark
Chief Executive Officer
14 June 2021
22
Annual Report and Accounts 2021
Annual Report and Accounts 2021
23
OverviewStrategic ReportGovernanceFinancial Statements
Finance Review
As the year progressed the underlying trends of
how Covid-19 would impact the business became
clearer and allowed the focus to shift back to
driving sustainable organic growth.
Principal Activities and Business Review
The principal activity of GB Group plc (‘GBG’) and its subsidiaries (together ‘the Group’) is the provision of identity data
intelligence services. GBG helps organisations simply, safely and securely transact with their customers. Through the
application of our proprietary technology, our vision is to help create a world where everyone can transact online with
confidence and build trust in a digital world.
The performance of the Group is reported by segment, reflecting how we run the business and the economic
characteristics of each segment. There are three reportable segments, Location, Identity and Fraud.
The Group results are set out in the Consolidated Statement of Profit or Loss and explained in this Finance Review. A
review of the Group’s business and future development is contained in the Chairman’s Statement, the Chief Executive’s
Statement and this Finance Review.
Review of the Business
The Group uses adjusted figures as key performance indicators in addition to those reported under IFRS, as adopted
by the European Union and IFRIC. Adjusted figures exclude certain non-operational or exceptional items, which is
consistent with prior year treatments. Adjusted measures are marked as such when used and are explained in note 37.
The primary focus at the beginning of the year was to protect the business in light of the uncertainty of how Covid-19
would impact our customers, people and operations. This resulted in a number of cash preservation measures being
taken such as not paying a final dividend, a non-essential recruitment and pay freeze and deferral of director bonus
payments.
Revenue
Adjusted operating profit
Adjusted operating profit margin
Share-based payments charge
Amortisation of acquired intangibles
Adjusted operating profit before exceptional items
Exceptional items
Operating profit
Net finance costs
Profit before tax
Total tax charge
Profit for the year
Final dividend per share
Adjusted earnings
Basic weighted average number of shares ('000)
Basic earnings per share (pence)
Adjusted basic earnings per share (pence)
2021
£’000
217,659
57,896
26.6%
(5,170)
(17,671)
35,055
448
35,503
(1,240)
34,263
(7,385)
26,878
3.40
49,271
195,225
13.8
25.2
2020
£’000
199,101
47,945
24.1%
(4,541)
(19,008)
24,396
(1,552)
22,844
(2,218)
20,626
(3,562)
17,064
–
42,165
193,631
8.8
21.8
Change
£’000
18,558
9,951
2.5%
(629)
1,337
10,659
2,000
12,659
978
13,637
(3,823)
9,814
–
7,106
1,594
5.0
3.4
Change
%
9.3%
20.8%
10.5%
13.9%
(7.0%)
43.7%
–
55.4%
(44.1%)
66.1%
107.3%
57.5%
–
16.9%
0.8%
56.8%
15.6%
As the year progressed the underlying trends of how Covid-19 would impact the business became clearer and allowed
the focus to shift back to driving sustainable organic growth. Whilst the level of revenue growth was influenced by non-
recurring revenue linked to the US Government’s Covid-19 stimulus package, the underlying growth was still ahead of
expectations at the start of the year.
The level of profitability, combined with strong cash generation, has allowed full repayment of the Group’s loan facility
by the year-end. This will enable cash generated in the coming year to be invested back into the business to support our
organic growth plans, in addition to providing funding for acquisitions.
Adjusted EBITDA
Adjusted EBITDA was £61.4 million (2020: £51.7 million), consisting of adjusted operating profit of £57.9 million (2020:
£47.9 million), depreciation (including right-of-use assets) of £3.3 million (2020: £3.6 million) and amortisation of
purchased software and internally developed software of £0.2 million (2020: £0.2 million).
Amortisation of Acquired Intangibles
The charge for the year of £17.7 million (2020: £19.0 million) represents the non-cash cost of amortising separately
identifiable intangible assets including technology-based assets and customer relationships that were acquired through
business combinations.
Exceptional Items
Exceptional income of £0.4 million (2020: exceptional costs of £1.6 million) was generated/incurred by the Group in the
year and have been detailed in note 7 to the accounts.
Net Finance Costs
The Group has incurred net finance costs for the year of £1.2 million (2020: £2.2 million). The significant reduction was
due to the loan repayments made during the year reducing the level of interest paid.
Taxation
The total tax charge of £7.4 million (2020: £3.6 million) includes £12.4 million of current tax payable on the Group’s
profits in the year (2020: £4.8 million), offset by a deferred tax credit of £5.0 million (2020: £1.2 million).
24
Annual Report and Accounts 2021
Annual Report and Accounts 2021
25
OverviewStrategic ReportGovernanceFinancial Statements
Finance Review continued
The effective tax rate for the group has increased from 17.3% in 2020 to 21.6% in 2021. The principal reason for
In January 2021 the £110 million Revolving Credit Facility was extended by a further year. The facility now expires in
this change is that included within the prior year total tax charge was a credit of £0.8 million related to the increase
February 2023.
in the deferred tax asset for pre-acquisition losses within IDology. The benefit of this asset is payable to the former
shareholders of IDology and so there was a corresponding cost within exceptional items to reflect the increase in the
contingent consideration liability. Excluding this one-off the prior year effective tax rate would have been 21%.
Acquisitions
Deferred Income
Deferred income at the end of the year increased by 11.5% to £42.8 million (2020: £38.4 million). This balance
principally consists of contracted licence revenues and profits that are payable up front but recognised over time as the
Group’s revenue recognition criteria are met.
The deferred income balance does not represent the total contract value of any future unbilled annual or multi-year,
non-cancellable agreements as the Group more typically invoices customers in annual or quarterly instalments.
Deferred income is determined by several factors, including seasonality, the compounding effects of renewals, invoice
duration, invoice timing and new business linearity within a reporting period.
Dividend
In order to preserve short term liquidity no final dividend was declared in respect of the year ended 31 March 2020.
Following strong trading performance in the first half of the year the Board of Directors declared an interim dividend of
3.00 pence per share which was paid in January 2021 at a cash cost of £5.9 million.
With respect to the year ended 31 March 2021, the Board of Directors will propose a final ordinary dividend of 3.40
pence per share (2020: nil), amounting to £6.7 million (2020: £nil). If approved, this will be paid on 3 August 2021 to
ordinary shareholders whose names were on the register on 25 June 2021. The Group continues to operate a Dividend
Reinvestment Plan, allowing eligible shareholders to reinvest their dividends into GBG shares.
Earnings per Share
The earnings per share analysis in note 13 cover four measures:
n Basic earnings per share (profit attributable to equity holders)
n Diluted earnings per share (adjusting for the dilutive effect of share options)
n Adjusted basic earnings per share (adjusted operating profit less net finance costs and tax)
n
Adjusted diluted earnings per share (adjusted operating profit less net finance costs and tax adjusting for the
dilutive effect of share options)
During the year, an investment was made into CredoLabs Pte Ltd, acquiring 10.53% of the share capital of the
company. The investment, based in Singapore, has been designated as a financial instrument and as such will be held
at fair value through other comprehensive income. This investment was funded by the issue of new GBG shares with a
value of USD $3 million (£2.3 million).
In December 2020, the Group acquired 100% of the share capital of Investigate 2020 Ltd (HooYu Investigate)
immediately following a transfer of assets from HooYu Limited. HooYu Investigate uses leading database and UX
technologies to improve the productivity of an investigation process. The Investigate product complements GBG’s
existing Connexus portfolio. This acquisition was funded by the issue of new GBG shares with a value of £4.0 million.
The purchase price allocation has attributed the majority of the value to the technology acquired, with remaining
goodwill of £0.1 million.
Further information regarding the acquisition has been detailed in note 35.
Disposals
In the second half of the year the Group disposed of two businesses which were not part of our core global capabilities
in location intelligence, identity verification and fraud prevention.
In January 2021, the Group disposed of its Marketing Services business to HH Global Interactive Limited and in March
2021 the Employ and Comply business was sold to First Advantage Europe Limited. The net cash proceeds from the
disposals was £5.3 million.
Further information regarding the disposals has been detailed in note 35.
Treasury Policy and Financial Risk
The Group’s treasury operation is managed by a Treasury Committee within formally defined policies and reviewed
by the Board. The Treasury Committee meets on a regular basis to review cash flow forecasts, covenant compliance,
exposure to interest rate and foreign currency movements and make recommendations to the Board based on these
reviews.
During the pandemic the Treasury Committee received weekly cash information to monitor liquidity across the Group
and ensure that significant cash outflows, such as the interim dividend and loan repayments, could be made without
Basic earnings per share increased by 56.8% from 8.8 pence to 13.8 pence reflecting the higher operating profit
exposing the Group to undue risk.
although offset by higher number of shares in issue. Adjusted earnings (adjusted operating profit less net finance costs
and tax) was £49.3 million (2020: £42.2 million) resulting in a 15.6% increase in adjusted basic earnings per share from
21.8 pence to 25.2 pence.
The basic weighted average number of shares at 31 March 2021 increased to 195.2 million (2020: 193.6 million), partly
due to the issue of 0.8 million shares to fund the investment in CredoLabs and acquisition of HooYu.
Cash Flows
Group operating activities before tax payments and exceptional items generated £73.4 million of cash and cash
equivalents (2020: £49.3 million) representing Adjusted EBITDA to cash conversion ratio of 119.5% (2020: 95.2%).
The increase in the cash conversion was partly attributable to cash receipts in the first half of the year related to
large multi-year deals where the profit was recognised at the end of the previous financial year. Notwithstanding this,
operating cash flows continued to be strong and the Group continually monitors its measures of cash generation and
collection.
The cash generated from operations, in addition to the disposal proceeds from the Employ and Comply business
disposal, enabled debt repayments of £62.5 million to be made during the year to clear the outstanding loan balance.
Further detailed analysis of this movement is included in the Consolidated Cash Flow Statement.
The Group finances its activities principally with cash, short-term deposits and borrowings but has the ability to draw
down up to £110 million of further funding from a revolving credit facility that is in place. Other financial assets and
liabilities, such as trade receivables and trade payables, arise directly from the Group’s operating activities. Surplus
funds of the Group are invested through the use of short-term deposits, with the objective of reasonable interest rate
returns while still providing the flexibility to fund ongoing operations when required. It is not the Group’s policy to
engage in speculative activity or to use complex financial instruments.
The Group is exposed to a variety of financial risks including: market risk (including foreign currency risk and cash flow
interest rate risk), credit risk and liquidity risk which are described in note 27 to the accounts.
Approved by the Board on 14 June 2021.
Dave Wilson
CFO & COO
14 June 2021
26
Annual Report and Accounts 2021
Annual Report and Accounts 2021
27
OverviewStrategic ReportGovernanceFinancial Statements Principal Risks And Uncertainties
Risk Management - Identifying and Managing Risk
GBG’s approach to identifying and managing risk is key to how we run the business. We consider it to be fundamental
to achieving our strategic objectives and it supports us in delivering long-term stakeholder value whilst protecting our
business, people, assets, capital and reputation.
We have established an ongoing process to identify, evaluate and manage the significant risks that we face and the
effectiveness of the related controls. The Audit & Risk Committee formally reviews this process every six months, then
report their findings to the Board. These half-year updates to the Audit Committee members and the Board have been
further supplemented by risk updates from the Executive Directors at each Board meeting held during the year.
I am pleased to report that the skillset of GBG’s management team has been supplemented during the year by the
appointment of a Chief Regulation Officer (“CRO”) in August 2020 with specific risk management experience. The
CRO will be responsible for implementing the improvements and developments to our risk management processes
as identified through our internal audit review by BDO LLP. She has also briefed the Audit & Risk Committee on risk
matters on a number of occasions since her appointment.
Coronavirus (Covid-19)
At the start of the pandemic we correctly anticipated that the key risk themes described in our risk profile (see below)
would continue to be a focus in 2021. The pace and impact of the pandemic, along with the potential for unexpected
financial and operational implications, were also carefully considered and addressed as part of the Group’s risk
management activities. We consider that this approach has contributed positively to GBG’s present financial and
operational status, as well as maintaining high levels of engagement and productivity among team members.
Further details of the actions and strategies that GBG undertook in response to the pandemic are set out in our Covid-19
statement on pages 6 to 7. The following summarises the responses and actions that the Committee has overseen
during the year.
At an early stage of the pandemic it was agreed by the Audit & Risk Committee and the Board that there was a
heightened perception of exposure to all of GBG’s material risk areas due to the unknown and dynamic nature of the
Covid-19 pandemic and how it would develop. As reported last year, at the start of the crisis we established a sub
committee of the Internal Controls Team, chaired by the CEO and supported by members of the Group’s Executive
Team, to deal specifically with the impact of the Covid-19 pandemic and its impact on the business (known as the
“Covid Team”). The Covid Team established a number of risk assessment work streams, each headed by a team leader,
to help us coordinate our response to the impact of Covid-19 across our business. These work streams covered: Team
Members, Customers, Financial Health, Operations, Governance and Opportunities.
GBG conducted thorough assessments of the potential impact of Covid-19 on the Group’s principal risks from a
strategic, commercial and operational perspective. This ensured that the business could provide the appropriate
response to our team members and customers in order to support our plans regarding GBG’s longer-term sustainability
and viability for the benefit of all our stakeholders. This approach continues to be the case in response to the ongoing
effects of the pandemic.
Specifically, in relation to Covid-19, the risk management process operating before the pandemic allowed the GBG
team to respond quickly and with confidence to the challenges and demands raised by Covid-19. The key aspects of the
Group’s risk management process that were identified at that time and remain so, are:
n
The continued operation of the Group’s Covid Team
n The health and wellbeing of our team members
n Careful consideration of costs and cash expenditure
n Supporting our customers and continuing to offer excellent, high quality services
n Going concern reviews and regular assessments of debtor, bad debt and cash positions
n Maintaining high quality controls in our global finance functions whilst team members work remotely
n Supplier viability assessments through detailed audit reviews
n High levels of vigilance to potential cyber threats and improvements to our cyber defences
n
Continuous improvement of GBG’s business continuity planning (“BCP”) processes, having greater visibility of key
systems and suppliers and updating actions to mitigate challenges
A summary of the focus areas that have been addressed during the year include:
n
n
n
n
Prioritising the health and wellbeing of our team members with special consideration to the challenges posed by
continued and prolonged periods of remote working
Robust going concern reviews which consider a range of potential impact scenarios on GBG’s operations and
investment activities
Greater awareness and consideration of the potential negative effects on global economies as financial stimuli from
national governments for businesses and citizens were implemented and varied
Monitoring the potential of increased competition from major/niche players who have been able to leverage their
position and/or raise additional funding during the pandemic
n Considering actions for access to markets and customers whilst international/local travel restrictions continue
n
n
n
Maintaining the pace of retiring legacy systems where there were increased commercial challenges due to Covid-19
Loss of key staff to competitors, or inability to attract new employees, if we become unable to provide appropriate
incentives and conditions to retain team members
Reviewing the Group’s portfolio of property leases to consider the potential effects of flexible working arrangements
of team members post-pandemic
Before the pandemic, our business model already had a number of features that worked to GBG’s ongoing benefit.
These included the ability of all of our team members to work remotely and securely; a diverse commercial portfolio
that is not overly reliant on, or exposed to, a particular customer, market or geography together with providing market-
leading products and services that support organisations during upturns and downturns. These features, combined with
taking immediate and appropriate steps to preserve GBG’s cash position, has meant that we have been able to respond
positively to the challenges presented by the pandemic. The longer-term effects on international economies and
therefore on GBG’s business, remains uncertain but we continue to be vigilant in monitoring the situation and potential
exposures as matters develop. In turn, we have a range of further plans to put into action should this be required.
Framework – Risk and Control Structure
The Board
GBG’s Board has overall responsibility for the Group’s risk management framework. The framework is not designed
to eliminate risk but define, mitigate and manage the type of risk and level of exposure we are prepared to take in
pursuit of our strategic objectives to ensure decisions taken align with the Group’s risk appetite. The Board reviews the
recommendations made to it by the Audit & Risk Committee.
Audit & Risk Committee
The Committee regularly monitors the principal risks and uncertainties identified by our risk assessment processes,
along with the strategies developed and the actions we have taken to mitigate them. Our risk identification, assessment
and reporting is supported by GBG’s Executive Management, through the Executive Team, who continually review the
effectiveness of our system of risk management and internal controls.
Internal Controls Team
The Group’s Internal Controls Team assesses current risks, reviews and monitors the controls that mitigate those risks
and identifies potential new risks to the Group. It reports to the CEO and the Chair of the Audit & Risk Committee
on matters of internal control and risk assessment. As stated above, as we navigate through the pandemic the risk
assessment and mitigation work of the Internal Controls Team has been included within the scope of work of the GBG
Covid Team.
28
Annual Report and Accounts 2021
Annual Report and Accounts 2021
29
OverviewStrategic ReportGovernanceFinancial Statements
n
Financial Reporting Process – GBG’s management team and our Finance Team are responsible for ensuring the
appropriate maintenance of financial records, controls and processes to ensure that all information is relevant,
reliable and compliant with the applicable laws and regulations. They are also responsible for ensuring that the
Board and GBG’s advisors receive such information in a timely manner. The financial statements are reviewed by our
management team to ensure that the Group’s results and financial position is appropriately reflected. Our Audit &
Risk Committee challenges, reviews and approves the release of all financial information published.
n
Strategic and Financial Planning – we have established a budgeting and strategic planning process, whereby we
assess our competitive position and goals, taking account of the strategic risks faced. This strategy is translated
into financial plans with clear milestones and performance indicators and these are regularly reviewed and assessed
by the Board.
n
Performance Management – our performance against the strategic plan is closely monitored by a formal monthly
reporting process and by the attendance of the relevant Executive Directors at monthly Executive Team meetings
and at scheduled Board meetings.
n
Capital Investment – we have in place a clear process for the approval of capital expenditure, which includes a
detailed appraisal of the benefits of the proposed investment and any associated key risks. Board approval is
required on material capital expenditure matters and the process is detailed in a formal set of matters reserved for
the Board approval.
n
Health and Safety – we have established health and safety standards and benchmarks, our performance against
these standards is closely monitored. In light of the evolving requirements flowing from the Covid-19 pandemic, the
focus of our activities in this area will be in relation to creating and maintaining a safe working environment for all our
team members.
Principal Risks And Uncertainties continued
With the appointment of the CRO, the risk management framework is currently being strengthened to make further
enhancements as a result of the recommendations made by BDO LLP, following its review of GBG’s risk management
and internal controls processes. This includes refinements to ensure that everyone at GBG understands their role in
identifying, assessing, managing and monitoring risk; that we have the most effective set of key controls to mitigate our
principal risks; and that a thorough assessment of our principal risks is conducted by each line of defence. Quarterly
progress reports will be presented to the Audit & Risk Committee until this work is completed in the first quarter of
FY23.
The Executive Team
Each member of our Executive Team is responsible for managing the specific risks within their own business unit or
function. Collectively the Executive Team will, where necessary, establish crisis response teams to address and manage
emerging material risks – seconding key team members from across the Group to support its activities and ensuring the
crisis teams have access to the necessary resources, management and advisors to operate effectively and at pace.
Internal and External Auditors
The Group’s internal and external auditors have responsibility to review and assess the Group’s risk management and
internal controls process and to report their findings and recommendations to the Audit & Risk Committee.
BDO LLP were appointed to provide GBG with an outsourced internal audit arrangement. BDO’s initial scope of work
included conducting a strategic report of the Group’s risk management and internal controls process and also the
Group’s cyber security controls. The work was conducted and completed during the final quarter of FY20 (just as the
full effects of the Covid-19 pandemic were being experienced) and the recommendations were incorporated into our
ongoing risk review process and cyber strategy. During the current financial year, BDO’s work was extended to cover a
strategic report of the Group’s procurement and financial controls processes.
Key Elements of the Control Framework
The Board is responsible for maintaining and reviewing the effectiveness of our risk management activities from a
strategic, financial and operational perspective. These activities are designed to identify, assess, manage and mitigate,
rather than eliminate, the risk of failure to achieve business objectives or to successfully deliver our business strategy.
As part of this process both external and internal risks across the Group’s operations are considered in addition to the
likelihood, financial impact and reputational impact of identified risk areas.
Risks are owned and managed within the business and reviewed formally by our first and second lines of defence
function at least every six months. They review risks and controls, including those relating to information security,
regulatory compliance and business continuity. The results of these reviews feed into our reporting cycle. During the
pandemic, reviews have been conducted more regularly and are monitored through the regular weekly meeting of the
Covid Team.
The key elements of the risk control framework are as follows:
n
n
Internal Controls – our internal controls system facilitates the management of risks that could impact upon our ability
to meet our strategic objectives. We acknowledge that the system is a means to mitigate, rather than eliminate risk.
Risk Management – the Internal Controls Coordinator (the Company Secretary) presents the results of the Group’s
risk reviews and the risk register to the Audit & Risk Committee. Presently, the Internal Control Coordinator (but
in future the Chief Regulation Officer) is responsible for regularly monitoring and assessing our risk management
processes and reporting directly to the CEO on all matters of internal control and risk assessment. The Audit &
Risk Committee of the Board monitors and provides robust challenge on the reports it receives, the controls which
are in force and any perceived gaps in the control environment. The Audit & Risk Committee also considers and
determines relevant action in respect of any control issues raised by the Internal Controls Co-ordinator or the
External or the Internal Auditor. The Committee also sets the audit programme for the Internal Auditor.
30
Annual Report and Accounts 2021
Annual Report and Accounts 2021
31
OverviewStrategic ReportGovernanceFinancial Statements Principal Risks And Uncertainties continued
Our Risk Profile
Our risk identification process has two main strands:
n
n
A bottom-up approach at a business unit and central services unit level. This identifies the risks that threaten a unit
which the business manages. To give us visibility of issues across the business, we consolidate these risks at the
regional and global level and escalate to the Internal Controls Team
A top-down approach at a Group level. This identifies the principal risks that threaten the delivery of our strategy
The diagram on this page summarises our principal risk profile and threat levels since the last reporting period.
Compared to last year, the principal risks remain the same.
Principal Risk Profile
Impact
Key
Inability to Meet New Product
Development and Scalability
Challenges
Covid-19
Likelihood
Ineffective Succession Planning and
Skills Retention
Failure to Comply with Regulations and
Laws and/or Changes in Regulatory
Environment & Enforcement
Loss of Intellectual Property
Increasing Competition and Global
Reach
Cyber Attack
Loss of Data and Systems through
Ineffective Disaster Recovery &
Business Continuity Plans
Non-supply by Major Supplier
Risk Appetite and Principal Risks
The Board is responsible for setting the level of risk and our associated risk appetite to ensure we focus appropriately
on the risks we face. We identify and assess the impact of risks to the business under four key headings – financial,
strategic, operational and knowledge. For each risk, we identify the likelihood and assess the impact using quantitative
and qualitative information. As a result of the exceptional circumstances presented by Covid-19 and the unexpected
consequences that have affected economies and organisations globally, GBG suspended the periodic scoring of risks.
We focussed on the more immediate and dynamic nature of the risks and implementing and monitoring the mitigation
actions that were implemented.
The significant risks and uncertainties we face are set out below together with a summary of the control measures
and mitigations employed. Notwithstanding these actions, due to the pace and nature at which risks evolve, we remain
vigilant in addressing these areas of concern and developing our control measures.
As a public company, reputational damage is an omni-present risk and as such is a key area of concern for the Board.
The potential effects on our good name and reputation are not under-estimated by the Board. Whilst the following
commentary is not specific in detailing reputational damage, as an identified risk, its impact is a major, over-arching
consideration across our risk portfolio.
In addition to updates on GBG’s internal audit reviews, during the year the Board has been appraised regularly on
a range of risk matters and actions taken. These have included: overall Group strategy; Covid-19 matters; detailed
going concern reviews; new product and technology strategy updates; information security matters; people initiatives;
relationships with investors; remuneration matters; succession planning; Brexit; governance developments; and
regulatory matters.
Risk
Description
Mitigation
Failure to Comply with
Regulation continues to increase
We have dedicated Legal, Governance, Health
Regulations and Laws
within the markets we operate.
and Safety, Privacy & Information Security Teams
and/or Changes in
Legislation changes on a regular
who are collectively responsible for monitoring
Regulatory Environment &
basis and the interpretation of
changes to legislation and ensuring compliance
Enforcement
existing laws can also change,
in each area. We continue to invest and have
creating ever-tightening
increased the number and skills levels of the
standards. This will often require
respective teams in the past year. The strength
additional human and financial
of the management team has been augmented
resources and the provision of
by the appointment, during the year, of a Chief
new assets and systems.
Regulation Officer (“CRO”) with risk management
We are committed to responding
positively to regulatory change to
ensure compliance, as this could
affect the pricing for, or adversely
affect the revenue from, the
services the Group offers or cause
reputational issues.
experience.
We have established procedures which we
invoke when presented by material issues and
changes (such as Covid-19, Brexit and regulatory
challenge), which involves: bringing together a
senior team; assessing the issue and scoping a
plan of action; assigning activities and monitoring
We also acknowledge that we are
progress and developments. There is also an
required to maintain a number of
established process for keeping the Board
accreditations and registrations to
informed and escalating matters.
meet a number of contractual and
statutory obligations.
We are aware of increasing
international regulation for data
processing and privacy in the
geographies in which we operate.
We have access to an extensive and global range
of external professional advisors.
32
Annual Report and Accounts 2021
Annual Report and Accounts 2021
33
OverviewStrategic ReportGovernanceFinancial Statements Principal Risks And Uncertainties continued
Risk
Description
Mitigation
Risk
Description
Mitigation
We have a Group-wide intranet through which we
Increasing Competition
Our markets continue to be
Our business development and product functions
advise, train and provide ongoing development
to all of our team members, globally, about our
policies. This provides us with the means to
ensure (and demonstrate) ongoing compliance
with regulatory obligations including those
required under data protection and privacy
legislation. Our monitoring processes allow us
to ensure that all team members undertake
the necessary training and we can present the
evidence to regulators and customers where
needed.
GBG is committed to continued investment
in training team members in relation to data
handling and privacy best practices.
During this pandemic our priorities have been to
protect our team members and to support their
health and wellbeing, to look after our customers
and to secure our business both financially and
operationally.
Covid-19 has led to additional legislation in
the jurisdictions in which we operate, covering
health and safety, finance and governance.
There are various work streams within our Covid
Team which consider changes in legislation and
guidance, in conjunction with our professional
advisors. This ensures that we have assimilated
information to understand and comply with the
requirements. This focus will be maintained as
lockdown restrictions are eased globally and
governments implement further initiatives to
support their citizens and economies.
As reported in previous periods, in November
2018 The Information Commissioner’s Office,
the data industry regulator in the UK, announced
that it was conducting audits on a number
of companies to understand the use of data
in their services. GBG was included in this
review and continues to engage positively with
the Commissioner as part of that review. We
will keep the market informed of any material
developments.
We work closely with our tax advisors to ensure
we comply with international regulations that
are appropriate for the Group but not to take
positions that are open to challenge and/or
misinterpretation.
increasingly competitive and
track the activities of both our long established
intensified competition could lead
and market disruptor competitors. This insight is
to pricing pressures.
used by management to quickly adapt our go-to-
A reduction in the rate at
market strategy.
which we add, grow and retain
We always seek to differentiate ourselves from
customers may decrease the size
the competition and have increased our focus
of our market share if customers
on data sourcing, product innovations, product
choose to receive services from
marketing and pricing to support this.
other providers.
We continue to enhance our product portfolio
and focus on innovation through a mix of internal
development; partnering; acquisition and
investment; and strategic recruitment.
We maintain a strong focus on our core target
markets within Europe, North America and APAC
and work with partners to extend our reach in our
chosen verticals.
Our acquisition strategy has opened up new
markets and territories enabling cross selling,
as well as leveraging opportunities to increase
the size of our customer base within established
markets. We remain vigilant to future acquisition
opportunities to further develop our strategic
aims.
We have increased focus on our core strengths
of location, identity and fraud and have exited
businesses (such as marketing services and
employee onboarding) that do not add to these
strengths. In our core business we have increased
focus on product development, both organically
and inorganically, such as with the acquisition of
HooYu Investigate in December 2020.
Non-supply by Major
Some of our data and
Our Product, Data and Technology teams work
Supplier
infrastructure is sourced from
strategically to prevent over reliance on any one
third party suppliers and partners.
key supplier, having multiple suppliers and other
The removal from the market by
such mitigations where required.
one or more of these third-party
suppliers or interruptions in supply
could quickly and adversely affect
Suppliers are carefully selected to minimise risk of
supplier failure or insolvency.
our operations and result in the
We ensure our team members are aware of
loss of revenue and/or additional
supplier requirements or restrictions, to minimise
expenditure.
the risk of loss of a supplier, due to a breach of
contractual obligations.
34
Annual Report and Accounts 2021
Annual Report and Accounts 2021
35
OverviewStrategic ReportGovernanceFinancial Statements Principal Risks And Uncertainties continued
Risk
Description
Mitigation
Risk
Description
Mitigation
In support of our work undertaken prior to the
pandemic, as part of our Covid-19 business
continuity plan (“BCP”) process, we conducted
more immediate risk assessments and checks
of our key suppliers’ BCPs to assess their
preparedness and ability to meet GBG’s ongoing
requirements during the pandemic.
This list was prioritised to deal with our most
critical suppliers initially and work then continued
during the period to assess those suppliers further
down the priority. This review process now forms
part of the onboarding of new suppliers.
Cyber Attack
The nature of our business
Cyber risk continues to be an ever-increasing
means the threat of unauthorised
threat and the Group’s strategy ensures
or malicious attacks on our IT
continuing improvements in developing, maturing
systems is an ongoing risk. The
and testing our defences.
risk of a cyber-attack (such as
denial of service attacks, phishing,
data theft and disruptive software
campaigns) is constantly evolving
and becoming increasingly
sophisticated.
Natalie Gammon, GBG’s Non-Executive Director
with a specific technology background, meets
the Chief Technical Officer and Chief Information
Security Officer regularly. In addition, they
provide the Board and Audit & Risk Committee
with regular updates and progress reports on our
information security plans and strategy through
written reports in Board packs and in-person
updates at Audit & Risk Committee and Board
meetings.
We have cyber insurance in place and have
policies established and monitored by our Chief
Information Security Officer to protect the Group
against a cyber-attack and any security breaches
in this area.
The Group’s Information Security (“InfoSec”)
capability has been strengthened during the year
as part of our ongoing cyber strategy, providing
additional support and expertise.
We continue to develop our InfoSec awareness
programme with all of our team members to raise
the knowledge of cyber risk and information
security. We use our global intranet training
programme to ensure that all team members
undergo training and development on cyber
threats and good IT business practices.
Penetration testing is conducted via an approved
third-party specialist.
GBG has been diligent in maintaining the scope
of review and monitoring of cyber threats. We are
keenly aware of the increase during Covid-19 of
phishing and fraud attempts and have dealt with
these issues proactively including awareness
campaigns to update all of our team members to
supplement prior training given.
Loss of Data and Systems
We have an understandable
Our global business continuity programme covers
Despite Disaster Recovery
reliance on our IT systems and
policies and procedures for the key components
& Business Continuity
people. In the event of an incident
of each of the Group’s operating units. During
Plans
affecting business continuity,
the 2021 financial year, the Group completed a
we would initiate our business
comprehensive review of our business continuity
continuity plans. However, the
programme to ensure that the programme
loss of key components as a result
continues to meet the needs of the Group, as we
of the incident could affect the
continue to grow in size, diversity and complexity.
Group’s operations and result in
additional expenditure.
Disaster recovery requirements and network
security are regularly reviewed, back-ups are
maintained in databases and data centres
have off-site provisions. These policies and
programmes are subject to annual review and
audit.
We engage and undertake due diligence with
our data partners and suppliers to ensure
vulnerabilities are identified and mitigated.
For risk analysis and mitigation processes relating
to products and services that we either provide or
consume. We feed these into a risk matrix where
we track treatment plans against each risk.
As part of our increased monitoring of this risk
area, the Covid Team receives weekly reports on
usage volumes of all of our services together with
network service availability updates. This data has
been provided throughout the period to identify
trends and to support our activities.
36
Annual Report and Accounts 2021
Annual Report and Accounts 2021
37
OverviewStrategic ReportGovernanceFinancial Statements Principal Risks And Uncertainties continued
Risk
Description
Mitigation
Risk
Description
Mitigation
Inability to Meet New
We invest significant amounts
We carry out extensive research and market
Ineffective Succession Planning
Our people are key to our success.
We are very mindful that we operate in
Product Development and
of resource into our product
analysis around the viability of a product before the
and Dependence on Highly Skilled
We operate in very competitive
a highly competitive talent market. As a
Scalability Challenge
development in order to maintain
development phase is initiated and have increased
People
markets and acknowledge that
result we have ensured especially during
a competitive advantage.
the involvement of customers throughout the
The development of all new
technologies and products
involves risk, including the
product being more expensive,
or taking longer to develop than
originally planned. The market for
the product may be smaller than
originally envisaged or the product
may fail to reach the production
stage.
It is also imperative that our
developments have the ability to
scale as the business grows both
in size and complexity.
process.
We have increased the investment in our
product development teams, ensuring that
development meets both tactical and strategic
business objectives. We continuously improve
our development skills, processes and platforms
to ensure that GBG adopts best practice and
can address, at pace, potential challenges and
opportunities.
We have invested in improvements in methods,
tools and skills in our product and technology
teams to reinforce best practice development
approaches.
We have increased our focus on product retirement,
as part of our Product Lifecycle Management
approach, to ensure our development resources
are focused on the activities that drive growth.
We are investing in modernisation of our customer-
facing platforms to enable greater scale and reach.
In FY21 these developments included the front-
end platforms for location and fraud the back-end
platform for identity and plans are in hand to extend
this investment in FY22. As well as improving our
product platforms, we are investing in business
support systems and have established a new team
to drive automation and other improvements that
help the business scale.
Loss of Intellectual
We protect our proprietary
All of our contracts include provisions to protect
Property
application software products and
the proprietary rights of the Group. GBG’s
services by licensing rights to use
legal function also ensures that such rights are
the applications rather than selling
secured and protected during any negotiation
or licensing the computer source
with customers or suppliers.
code.
Where appropriate, we register trademarks
In addition to verifying and auditing
globally and work closely with external
our customers’ use of GBG’s
advisors to ensure that our business rights are
intellectual property, we also rely
safeguarded in all the territories in which we
on trademark, copyright, patent
operate.
and other intellectual property
laws to establish and protect our
proprietary rights in these products
and services. However, there is
a risk that our proprietary rights
could be challenged, limited,
invalidated or circumvented.
GBG has also invested in increasing resources
to improve how proactively we conduct audits of
customer compliance with licensing obligations
and successfully enforce our rights.
the skills that our people possess
the pandemic that we continue to provide
are attractive to other employers.
high levels of support and consideration to
There is the risk that not having
our team members’ wellbeing and ongoing
the right people and skills could
development. In light of Covid-19, the
impact negatively on our ability to
Board and the Remuneration Committee
serve our customers and grow the
have also discussed a range of proposals
business.
It is important that we maintain
high levels of employee
engagement to ensure that we are
and potential actions to support these
initiatives, in order to maintain our ability
to retain and attract talent needed by the
business.
able to retain and attract the best
talent.
We invest in developing the skills and
abilities of our people across all our
locations and geographies.
We offer competitive total benefits
packages (compensation and benefits)
and these are reviewed and benchmarked
regularly.
Employee engagement is monitored
formally every six months through a
Group-wide survey and the results are
used to focus on improvement activities.
This survey has continued during the
Covid-19 pandemic.
We monitor attrition rates by business
function and location in order to identify
issues and prioritise restorative action
where necessary.
We strongly believe that diversity
throughout the Group is a driver of
success and recognise it has significant
benefits. We have taken a number of
proactive steps to promote diversity and
equality within GBG under our Group-wide
initiative, be/yourself. Launched over three
years ago this initiative supports a range of
activities in our focus areas of: nationality,
race & religion; sexual identities;
experience & age as well as addressing
gender imbalances in our business, our
industry and our communities.
We also monitor the effectiveness and
skill set of the Board and recruit additional
members where necessary. This enables
effective succession to supplement the
Board’s skill set as well as maintaining a
strong independent director.
38
Annual Report and Accounts 2021
Annual Report and Accounts 2021
39
OverviewStrategic ReportGovernanceFinancial Statements
Principal Risks And Uncertainties continued
Non-Financial Statement
Emerging Risks
As indicated at the start of this report, GBG’s risks are continually reviewed and reassessed with reporting and
escalation to the Board. The process considers all relevant internal and external factors and is designed to capture risks
which are current but have not yet fully crystallised, as well as those which are expected to crystallise in future periods.
Our risk landscape continues to change as both business and regulatory environments evolve. The pace of change
and need for greater visibility across the business is growing and we adapt our risk practices accordingly. In addition to
known principal risks and the recent Covid-19 pandemic, we continue to identify and analyse emerging ones and discuss
as appropriate in different forums, including the Audit & Risk Committee.
Our Annual Report and Accounts details our approach to environmental, social and employee related matters. The table
below outlines where in the report you can find this information and where additional information can be found on our
website.
GBG policies and standards
which govern our approach
Further information
Environmental Matters
ESG Statement
ESG Statement (pages 42 to 57)
As a result of Covid-19, a further key and emerging risk to the Group’s strategy is the impact of the continued effects
of the pandemic on the geo-political and macro-economic environment. Our risk review processes prior to Covid-19
Employees
already addressed matters relating to potential economic downturn and political change in the jurisdictions in which we
operate (as was the case with the challenges and opportunities posed by Brexit). The precise duration and depth of the
downturn caused by the pandemic continues to be uncertain, but our focus is and will continue to be, on managing the
SECR information
Be/yourself policy
Directors Report (pages 94 to 98)
ESG Statement (pages 42 to 57)
One GBG Family Friendly policy
Nomination Committee Report
Health & Safety policy
(pages 92 to 93)
emerging risks associated with the disruption caused to our business.
Social Matters
ESG Statement
ESG Statement (pages 42 to 57)
Viability Statement
Our business model and strategic priorities are key to the Board’s assessment of the Group’s prospects. We
continuously review these alongside forecasts and budgets in order to have a clear view, so far as is possible, on the
viability of the Group over the medium term. The Board’s assessment of viability is influenced by the businesses’ current
and projected performance against financial and nonfinancial KPIs and an analysis of principal risks within the Group’s
risk assessment framework. In the current year this assessment has included detailed consideration of the evolving
impact of Covid-19 on viability.
There are a variety of different time horizons relevant to assessing our prospects. Management currently forecasts as
part of the business planning process and capital investment cycle over a varying period. A detailed bottom-up model is
used to budget the business for a period of one-year in advance and a top down model for a period of five years.
We have continued to use a three-year timeline when considering viability because we believe to forecast across the
entire group for a period longer than this with any significant level of certainty is difficult. Market volatility during the
pandemic and uncertainty as markets emerge from the pandemic at different rates only serves to reinforce this view.
In assessing the viability, the Board has considered the following:
n
GBG operates across diverse sectors and has an extensive global presence which provides mitigation from over
reliance on key geographic markets
n GBG products support businesses operating in an online world
n GBG has strong cost control mechanisms
n
There is considerable headroom available to us in our cash reserves and revolving credit facility agreement. This
has been tested through stress testing, reverse stress testing and sensitivity analysis as part of the Going Concern
review detailed in note 2.2
Having considered all of the above factors, we have a reasonable expectation that the Group will continue in operation
and meet our liabilities as they fall due over the next three-year period.
We acknowledge that this assessment is subject to uncertainties outside of our control and accordingly, the viability of
the Group cannot be guaranteed.
Human Rights
Modern Slavery policy and procedures
ESG Statement (pages 42 to 57)
S.172 Statement (pages 99 to 103)
Be/yourself policy
https://www2.gbgplc.com/hubfs/
GBG/GBG-Modern-Slavery-
Statement-2020.pdf
Anti-Fraud, Bribery and Corruption
Anti-corruption and bribery policy and
Audit & Risk Committee Report
procedures
(pages 72 to 77)
Whistleblowing policy and procedures
ESG Statement (pages 42 to 57)
Anti-tax evasion policy
Share dealing code and policy
Business Model, Principal Risks &
Business Model
Key performance indicators (pages
Non-Financial KPI’s
Principal risks
Non-Financial KPI’s
18 to 19)
Business Model (pages 14 to 15)
Principal Risks & Uncertainties
(pages 28 to 40)
Audit & Risk Committee Report
(pages 72 to 77)
40
Annual Report and Accounts 2021
Annual Report and Accounts 2021
41
OverviewStrategic ReportGovernanceFinancial Statements Environmental, Social and
Governance Statement
Introduction from Natalie Gammon (Non-Executive Director Responsible for ESG)
At GBG, our focus on Environmental, Social and Governance (‘ESG’) is a fundamental part of everything we do. It is
integral to our business and strategy, underpinning our strategic pillars (people, customers, product, technology and
brand) and a key driver of our culture, behaviour and ethical practices. We have based our ESG framework on our
We believe that one of the most tangible ways our business can positively impact society is through the societal, ethical
and environmental benefits our products and services offer. Our identity verification and fraud capabilities contribute to
fraud reduction. Our accurate address data saves carbon emissions by preventing failed deliveries. In all these ways, GBG
provides measurable benefits for our customers and their consumers around the globe.
purpose, ‘to build trust in a digital world’ and our vision – a world where everyone can transact online with confidence.
In summary, we are always looking for the best ways of establishing trust between our customers and their consumers;
working in a responsible manner; empowering our team members; creating broader societal value and protecting the
environment.
Natalie Gammon
Non-Executive Director
14 June 2021
We recognise the urgency to drive global sustainable development and the duty of businesses to play their part, so
we are aligning our ESG programme with the United Nations Sustainability Development Goals (‘SDGs’) to positively
contribute to meaningful progress. In this year’s report, we have identified six SDGs that are the most relevant to our
business and sphere of influence. We will report on our contribution to these goals annually. This is an evolving process
and we aim to further enhance reporting next year as we continue to develop our approach. We believe the SDGs will
give us a constructive framework, which we can use to evaluate the success of our ESG activities and efforts. The Board
has recently made the decision to establish an ESG Committee to formulate our ESG framework and set Group-level
targets that are authentic and realistic. The ESG Committee will meet formally for the first time in July 2021 with myself
as Chair and I will have ultimate responsibility for monitoring and reporting on progress against the ESG targets set.
We are already working hard to increase our transparency in ESG reporting. In 2021, we published a new section of our
website dedicated to ESG topics (see www.gbgplc.com/investors/corporate-responsibility/) and we have achieved an
MSCI ESG rating of AA.
Governance
Our products and services are supported by robust corporate governance (read more on pages 64 to 71), a strong
corporate culture and solid ethical practices. We strongly believe that by getting governance right, we can ensure we
have the systems, policies, ethics and culture in place to effectively manage our environmental and social impacts. This,
in turn, creates value for all of our stakeholders.
Data security, protection and privacy remain a priority for us. We maintain compliant and ethical practices in line with
regulations and best practice and provide robust training programmes for all our team members. We also adapt our
practices in line with legislative updates. There have been a number of significant changes globally during the year,
including regulatory amendments in Singapore, New Zealand and the US, as well as developments in the UK as a result
of Brexit.
Social
We remain focused on the wellbeing of our team members. I have been enormously impressed by their continued
dedication and commitment to GBG in light of the challenging conditions we are all facing as a result of the Covid-19
pandemic. You can read more about our response to Covid-19 on pages 6 to 7. Despite remote working conditions, we
have maintained a cohesive, collaborative team. We have done this by communicating and engaging with all our team
members and prioritising training and development. We have also worked with a health and wellbeing consultant to help
us build resilience and improve the mental fitness of our team members.
We are committed to reducing inequalities, broadening diversity and facilitating inclusion within our Company,
industry and society. We have a number of initiatives to help us improve in this critical area, including our ‘be/yourself’
programme and our new ‘Family Friendly Policy’. We are proud of the contributions we make to the communities in which
we work and that we were able to continue our support in 2021, while adjusting our approach due to the pandemic.
Environmental
We have a duty to use resources responsibly and to minimise any environmental impacts of our activities. As part of this,
we operate a ‘Cloud-first policy’ aimed at improving the energy efficiency of our activities. We are also implementing
a CO2 dashboard to measure our carbon footprint, so we can identify ways of reducing and offsetting our carbon
emissions.
42
Annual Report and Accounts 2021
Annual Report and Accounts 2021
43
OverviewStrategic ReportGovernanceFinancial Statements Environmental, Social and
Governance Statement continued
Our contribution to the UN SDGs
SDG
Key objectives
Commitment
2020/21 highlights
Related objectives
Ensure inclusive and
Training and development play an important role in running
equitable quality education
our business successfully. We consider skills development
and promote lifelong
and learning as important ways of delivering value to and
learning opportunities for all
inspiring our team members, advancing our strategy and
maintaining a great place to work.
Science, technology, engineering and mathematics (‘STEM’)
education is a key theme within our community support
programmes.
Achieve gender equality
We strongly believe that diversity throughout the Group
and empower all women and
provides us with access to a greater range of talent and is a
girls
driver of success. By focusing on diversity, we believe GBG
can be a more effective, successful and profitable company.
This will also ensure our team members continue to view
GBG as a great place to work.
Promote sustained,
Trust, responsibility and ethics are the cornerstones of
inclusive and sustainable
an effective organisation. We actively promote a culture
economic growth, full and
of honesty, integrity and respect across the business. We
productive employment and
also look to uphold human rights, encourage equality and
decent work for all
promote good governance.
Build resilient infrastructure,
GBG is the trusted strategic partner for 19,000+ businesses
promote inclusive and
globally. We facilitate numerous social and environmental
sustainable industrialisation
benefits for our customers as a result of the products and
and foster innovation
solutions we offer. Technology is one of the five pillars that
underpin our corporate strategy and we aim to develop
innovative solutions to meet the needs of our customers and
society.
We contribute to responsible and sustainable digital
acceleration around the globe by supporting fintechs and
financial services businesses with customer onboarding
and verification and ensuring safety and security. Our use
of Cloud technology and the wide geographic reach of our
providers, enable us to offer services to those who require it,
virtually anywhere in the world.
n 17,679 hours spent on training
n Improve the take-up of professional development
and career development activity
n Increase the number of team members carrying
out training to attain relevant qualifications
n £320,000 invested in training and development
n Quarterly updates to training material on our ‘be/
developed’ platform
n 100% of our apprentices completed their technical
apprenticeships in information technology (‘IT’),
supporting our work to bridge the skills gap
n We have encouraged our Technology team members to
become STEM ambassadors through a national initiative
in the UK
n 37% women in our workforce
n We aim to increase the number of women across
n 33% female representation on our Board
n 20% female representation in the Executive Leadership
Team
n ‘Family Friendly Policy’ launched in 2020, affording
enhanced maternity leave and added flexibility
all levels of our organisation
n We are working with ‘Women in Identity’ to
develop an industry Code of Conduct for
inclusivity in digital identity
n 91% employees recommend GBG as a great place to
n Maintain employee satisfaction above 90%
work
n Further strengthening of policies and related
n 9.9% Group voluntary attrition
procedures across the Group
n Publication of annual Modern Slavery Statement
n Code of Conduct supported by robust whistleblowing
procedures
n Supplier Code of Conduct
n Publication of annual Gender Pay Gap Report
n GBG’s products and services help prevent financial and
identity fraud, protecting citizens and reducing losses
n Lowering barriers to consumption and adoption
through increased use of Cloud technology
for businesses. This includes: the launch of our “passive
liveness” functionality which is helping support our
financial services customers against fraudulent account
takeover and impersonation checks.
n Improving accessibility, through our GBG Design
System. Our goal is to ensure our services are
accessible to all, despite physical disabilities (in
line with Disability Discrimination Act 1992 (‘DDA’)
n Loqate technology reduces failed deliveries, thereby
and Sector 508 in US)
lowering carbon emissions for our customers. We also
supported Sainsburys in the safe and speedy delivery of
food throughout the pandemic.
n US$3.0m investment into Credolabs which uses AI to help
institutions make lending decisions for applicants without
depending on traditional credit bureau data.
44
Annual Report and Accounts 2021
Annual Report and Accounts 2021
45
OverviewStrategic ReportGovernanceFinancial Statements Environmental, Social and
Governance Statement continued
SDG
Key objectives
Commitment
2020/21 highlights
Related objectives
Reduce inequality within
We are committed to equal opportunities and to recruiting,
and among countries
training, promoting and retaining skilled and motivated
people regardless of gender, age, marital status, disability,
sexual orientation, race and religion, or ethnic or national
origin. As part of our Group-wide initiative ‘be/yourself’,
we take proactive steps to promote diversity and equality
and address imbalances in our business, industry and
communities.
Promote peaceful and
Our business model is built upon our ability to engender trust
inclusive societies for
with our data partners, the businesses using our products
sustainable development,
and their end consumers. Acting as a custodian of customer
provide access to justice
identity data for some of the largest organisations in the
for all and build effective,
world, GBG aims to set the highest standards of information
accountable and inclusive
security. We also consider privacy to be a fundamental
institutions at all levels
human right.
As the digital leader in identity verification, we facilitate
inclusion in society more broadly through the products and
services we provide.
n Further development of ‘be/yourself’ initiative, including
confirming its structure and resources and carrying out a
n Plan and conduct appropriate data collection
across our various employment jurisdictions,
number of projects and initiatives
which will then identify and support meaningful
n We conducted various training sessions to further
promote diversity and inclusion throughout the Group in
2021
n Working in partnership with external organisations to
support our ‘be/yourself’ initiative
objectives in the future
n ISO 27001 accredited
n Maintain ISO 27001 accreditation
n Responsible data collection, processing and analysis in
compliance with General Data Protection Regulation and
n Continue to prioritise data protection and align our
policies and practices with relevant regulations as
California Consumer Privacy Act
they evolve
n Member of the International Association of Privacy
n Remediation of all vulnerabilities within company
Professionals
agreed service-level agreements
n Regular penetration testing
n We facilitate inclusion in eCommerce as a result of our
global location data, which enables our customers to
verify and locate their customers, facilitating successful
goods delivery - our services have helped vulnerable
citizens receive essential deliveries during the pandemic
and charities to reach donors
n Using multiple data sources enables inclusion for citizens
who may not have a financial background, thereby
reducing inequalities in society.
46
Annual Report and Accounts 2021
Annual Report and Accounts 2021
47
OverviewStrategic ReportGovernanceFinancial Statements Environmental, Social and
Governance Statement continued
Governance
GBG, that enables us to introduce information relating to our suppliers own corporate responsibility agenda and use this
when selecting suppliers.
As part of our risk review process, we have identified areas for improvement in the Company’s approach to policies. We
will be addressing these to ensure:
n That we have all relevant policies in place
n That we are providing comprehensive training
Trust, responsibility and ethics
n That we are conducting necessary checks throughout our supply chain
Our Board takes ultimate responsibility for ethical issues throughout the Group and looks to lead by example. At GBG,
we promote a culture of honesty, integrity, trust and respect. We are committed to conducting business in an ethical
manner, supported by a rigorous governance framework and the required policies, procedures and risk management
processes.
Corporate Governance
The Board ensures that the highest standards of corporate governance are practiced within the Company and that it
conducts itself in the best interests of the Group’s many stakeholders. GBG complies in full with the Quoted Companies
Alliance Corporate Governance Code and a comprehensive account of our compliance and corporate governance
activities is detailed on pages 62 to 71.
Ethical practices and policies
GBG has a Code of Conduct (the ‘Code’) which forms the basis of our approach to ethical behaviour. We expect all of
our team members to act in a professional, honest and ethical manner and we do not tolerate practices which could
lead to a GBG team member feeling victimised or compromise GBG’s reputation. We provide training as part of our
Group learning management system, ‘be/developed’, which outlines how to apply an ethical framework to decision
making in the workplace with the aim of contributing to an ethical culture at GBG. GBG has an externally facilitated,
24/7 whistleblowing hotline to enable team members to report unethical practices or concerns in complete confidence,
without fear of reprisals. The hotline provides access to local operators who deliver a wider scope of support in local
languages. No issues were reported during the year.
We recognise that all businesses play a key role in preventing modern slavery and human trafficking. We are therefore
committed to continuously improving our practices to ensure that these activities are not taking place in any part of
our business or supply chain. We expect the same commitment from our suppliers, contractors and business partners.
We have a policy on modern slavery, setting out the standards we expect from our stakeholders that is reviewed each
year. We publish a Modern Slavery Statement, which is available at www.gbgplc.com and updated annually. All new
starters are required to review and confirm their understanding of our Modern Slavery Statement as part of their online
induction process. Our standard Terms and Conditions includes a modern slavery clause and we assess instances of
non-compliance on a case-by-case basis, tailoring remedial actions appropriately.
GBG takes a zero-tolerance approach to bribery and corruption. We are committed to acting professionally, fairly and
with integrity and implementing and enforcing effective systems to counter bribery. GBG’s Anti-corruption and Bribery
Policy applies to all team members. It provides guidance on acceptable behaviour and encourages the reporting of
any suspected bribery activities through our independent whistleblowing channel. We communicate the policy to all
suppliers, contractors and business partners. All team members receive regular, relevant training on how to implement
and adhere to it, both during the new employee induction process and as part of ongoing ethical training. We also have a
policy to uphold all laws relevant to countering tax evasion and prevent persons associated with GBG and its subsidiary
companies from engaging in the criminal facilitation of tax evasion in the UK or in a foreign country.
GBG’s Supplier Code of Conduct sets out the highest standards of ethical and professional behaviour, with
commitments in the fields of human rights and employment, occupational health and safety, sustainable procurement,
environmental impact, information security, counter fraud, anti-corruption, anti-money laundering and corporate social
responsibility. In selecting suppliers, we perform checks in line with procurement regulations. We guarantee fair access
to opportunities for all suppliers and equal treatment during selection processes, as well as stringent information
security and data compliance examinations. We have implemented a new, Group-wide supplier management tool at
Safeguarding data security and privacy
Our customers need innovative digital solutions to grow, reduce online fraud and meet increasingly stringent compliance
regulations. The variety and complexity of fraud is increasing across the board, especially as a result of the global
Covid-19 pandemic, which has caused a sudden “digital acceleration”. Our business model bases itself on our ability to
establish and engender trust with our data partners, the businesses using our products and end consumers. This places
us at the heart of the global digital economy.
Acting as a custodian of customer identity data for some of the largest organisations in the world, GBG aims to set the
highest standards of information security. We also consider privacy to be a fundamental human right. Therefore, our
ability to safeguard data at every step of the supply chain is one of our most material issues and central to our corporate
responsibility strategy.
We recognise our duty to think carefully about how we source, process and use data. This ensures we maintain a high
standard of data ethics within the business and enables our customers and their end-consumers to do the same. Our
overarching aim is to protect both information and systems from malicious or accidental data loss, damage or abuse.
As our highest governing body, the Board has oversight of this fundamental area of the business, with clear lines of
responsibility through the Executive Directors to the Privacy Council and Privacy Forum. Together with the Privacy
Council, GBG’s Privacy Forum works to embed privacy into operations. It supports GBG’s ‘three lines of defence’
model (see Principal Risks on pages 28 to 40) to ensure all team members are aware of regulatory requirements in
order to protect GBG’s stakeholders. The Privacy Forum consists of 40 company representatives (‘GBG’s Data Privacy
Champions’) covering all key teams. The Privacy Council meets on a monthly basis and the Forum operates a bi-monthly
programme.
GBG is committed to ensuring that all team members are fully aware of their responsibilities in relation to data
protection and security. We have created mandatory training modules, which all team members must complete,
regardless of their employment status. All team members can access these via ‘be/developed’. We review these modules
in line with any legislative changes or on an annual basis (whichever is soonest). In addition to the generic training for
all team members, we provide role-specific training to ensure team members are fully aware of what they need to do to
enable GBG to fulfil its obligations in relation to privacy and security.
Data protection and privacy
We are committed to collecting, processing and analysing data compliantly, in line with data privacy legislation. As a
global company, this covers many jurisdictions and laws, such as the General Data Protection Regulation (‘GDPR’) in
the EU & the UK, the California Consumer Privacy Act (‘CCPA’) in North America, the Singapore Data Protection Act
and the New Zealand Privacy Act. We are also working towards compliance with new US legislation, such as California
Privacy Rights Act (‘CRPA’), Virginia & Washington. Given the significant changes to data protection and privacy
legislation during the year, we have worked to ensure compliance wherever required. GBG has a robust privacy plan
in place to manage any amendments as a result of Brexit. GBG’s Privacy Policy, which can be found on our website,
has been expanded this year to include a Products & Services Privacy Policy, which was agreed with the Information
Commissioner’s Office in October 2020. We also have region-specific privacy notices that clearly set out individual
privacy rights, including the right to deletion, in the regions we are located.
48
Annual Report and Accounts 2021
Annual Report and Accounts 2021
49
OverviewStrategic ReportGovernanceFinancial Statements
Environmental, Social and
Governance Statement continued
We work closely with our data partners to ensure that the data we source is compliant with applicable legislation.
We have an extensive framework of policies and procedures (available to all our team members through our intranet),
which include GBG’s Data Protection Policy. This policy is designed to ensure that we address the broad range of
risks to our corporate, supplier and customer information. All such procedures are housed within our ‘be/compliant’
framework.
With a data network spanning over 160 partners worldwide, we recognise our obligation to source data in a responsible
manner to ensure that we can maintain our high credentials in this area.
In support of these security and data activities, GBG is a member of the International Association of Privacy
Professionals (‘IAPP’) and we have implemented the One Trust Privacy Management Software to further support our
global privacy management obligations.
The Principal Risks and Uncertainties Report on pages 28 to 40 contains additional information on what we have done
to assess and mitigate data privacy and information security risks.
IT security
Our Information Security Management System (‘ISMS’) aims to safeguard our systems and networks from unauthorised
access, compromise and or/disclosure of data. Its goal is to protect the confidentiality, integrity and availability of
information resources and assets held by GBG and its customers. ISMS meets ISO 27001 requirements and considers
other industry standard requirements, including Payment Card Industry Data Security Standard (‘PCI-DSS’), System and
Organisation Control (‘SOC’) 2 and other best practices.
The Company has rigorous information security policies, processes, systems and networks. We conduct a continuous
measurement programme to test and validate the effectiveness and currency of our security measures. This programme
includes regular penetration testing, annual internal and external audits and risks assessments.
We conduct annual penetration testing across GBG products. We also complete a Global Threat Assessment (‘RedTeam’)
exercise across the entire business. We conduct vulnerability scans with all Cloud environments at least once a month,
in addition to conducting a continuous security test (‘CST’) service. GBG maintains a proactive and resilient approach
to threat mitigation via its Global SOC team. GBG’s SOC team utilises controls such as ‘Threat Intelligence’, ‘End Point
Protection’ and ‘Behaviour Analytics’ – using machine learning to identify any abnormal user or entity behaviour.
The number of phishing and fraud attempts has increased during the Covid-19 pandemic and we have proactively
addressed this issue. Our cyber operations have been audited by an external provider and as a result, we have ensured
that our cyber strategy reflects the ever-increasing threat that surrounds us. We have increased investment in cyber
defences across the Group to address this risk.
Social
Our team members
Our team members are central to the long-term success and sustainability of our business – they make us who we
are. We look to attract and retain the best and most engaged people in the industry. We prioritise effective employee
engagement as well as investing in the training and development of our people. We aim to cultivate a strong, committed
and innovative culture within a diverse and inclusive workforce.
Our people vision is the origin of our employee experience brand, ‘be@GBG’ which sits in the centre of everything we
do. We have built our People Plan to create an engaged workforce where our people are able to deliver at their best
every day. We have ambitious aspirations as a business and having a People Plan, which is understood by everyone, will
help enable this growth.
Attracting and hiring the
very best talent.
Ensuring everyone can
access learning
opportunities.
Creating choice and
rewarding people for the
contribution they make.
Creating connectivity and
fostering collaboration as
one global team.
Underpins everything
At GBG, we work together and empower every single team member to make decisions, own their future and collaborate
for the best results. We place significant trust in our team members and afford them the freedom that drives our
success.
Culture
Our culture is a fundamental aspect of who we are as a company. We have made deliberate efforts to enhance our
culture and remain committed to our key behaviours of “Quickly, Differently, Together”.
These behaviours describe the way we move at pace to deliver for our customers, whilst also acting collaboratively and
innovatively in everything we do. They form part of our quarterly team member/manager review process.
One of our ways of assessing the effectiveness of GBG’s organisational culture is through Glassdoor, the anonymous
public online employee-to-company review platform. During 2021, we increased our score from 3.75 to 4.02, which we
consider a strong achievement, given the average rating for all organisations is 3.2.
50
Annual Report and Accounts 2021
Annual Report and Accounts 2021
51
OverviewStrategic ReportGovernanceFinancial Statements
Environmental, Social and
Governance Statement continued
Equality, diversity and inclusion
We recognise the significant benefits of a diverse workforce. We believe that, by focusing on diversity, GBG can be a
more effective, successful and profitable company; a company our team members continue to consider a great place
to work. By broadening the diversity of our team, we are able to access a greater range of talent. We aim to continue to
focus on identifying candidates who can support our ambition to improve the overall diversity of the GBG team.
We do not tolerate discrimination, harassment or victimisation in the workplace. Our employment, training and career
development policies and practices promote equality of opportunity regardless of gender, sexual orientation, age,
marital status, education, disability, race, religion or other beliefs and ethnic or national origin.
We continue to look at ways of broadening diversity and have specific initiatives to further this goal. These include our
‘be/yourself’ programme, which aims to support and promote an inclusive and diverse culture at GBG and encourage
individuals to be their authentic selves at work. It supports numerous activities in our focus areas of nationality, race,
religion and location, sexual identities (inclusive of LGBTQ+ definitions and gender fluidity), experience and age.
The initiative also looks at addressing gender imbalances in our business, industry and communities. It is targeted at
assessing opinions and views, raising awareness and providing opportunities for learning and sharing knowledge. In
September 2020, the Company dedicated a week to holding important discussions around diversity and inclusion with
our global team. This generated conversation and built appetite for future programme initiatives, as well as increasing
the profiles and visibility of our ‘be/yourself’ champions.
We conducted various training sessions to further promote diversity and inclusion throughout the Group in 2021,
including ‘Leading in an Inclusive World’, ‘Allyship versus Advocacy’, ‘Effective Networks’ and ‘Conscious Inclusion
Training’.
Currently, women comprise 37% of our total workforce (2020: 36%), 20% of the Executive Leadership Team
(2020: 17%) and 33% of our Board of Directors (2020: 43%). Being aware of the barriers to entry for many women
in the technology sector, we have a number of ways of encouraging more female representation – read more below
in ‘Attracting and retaining talent’. We recognise that, in order to progress our ‘be/yourself’ programme and make
meaningful changes in terms of equality, we need to collect and monitor other diversity statistics within the business
beyond gender. We are therefore currently determining the best way to collect relevant data from our teams. We want to
make sure we are sensitive to cultural nuances, personal data and data collection privacy issues, as well as remaining
legislatively compliant across our regions.
GBG is reaching out to work with external networks and agencies who can support us with resources, training and
benchmarking on diversity and equality metrics. Currently, we work with INvolve People, a specialist, cross-sectional
advisory group, which is our partner for education and people management support. Last year, our CEO signed an open
letter with Audeliss (sister company to INvolve) committing to taking long-term sustainable action on Black inclusion
within the workplace.
We will also be joining as a signatory for the ‘Tech Talent Charter’ (‘TTC’), a non-profit organisation leading a movement
to address inequality in the UK tech sector and drive inclusion and diversity in a practical and uniquely measurable
way. We focus on inclusivity and accessibility in all of our products and are currently working with ‘Women in Identity’, a
non-profit membership organisation which aims to inspire, elevate and support a more diverse workforce in the digital
identity industry, to develop an industry Code of Conduct for inclusivity in digital identity.
GBG publishes an annual Gender Pay Gap Report for the UK, available on our website at www.gbgplc.com/about-us/
The Group has a flexible working policy and we also encourage working from home where possible. By being as flexible
as possible in how we recruit, we are able to attract a broader range of candidates. We are currently working to confirm
details, but moving forward in a post-Covid world, we will continue with working flexibly and adopt a hybrid way of
working.
CASE STUDY
GBG’s Family Friendly Policy
For our business to thrive, we are aware of the benefits afforded by supporting our team members in their family
lives. Therefore, earlier this year, we launched a ‘Family Friendly Policy’. This policy provides for enhanced paid
maternity leave, up to 10 paid ‘keeping in touch’ days for team members on maternity leave and offers added
flexibility for both genders to support their family.
Since the introduction of the policy, we have retained 100% of all team members on their return from family
friendly leave, demonstrating the success of the policy.
Group voluntary attrition provides a useful measure of the Company’s ability to retain its people. In FY 2021, we saw a
turnover of 9.9% (2020: 9.2%).
Communications with team members
Our team comprises 1,024 people (2020: 1,050) (the vast majority of whom are in permanent positions) in 14 countries.
Given our size and geographic spread, successful internal communications are vital for the cohesion of our workforce
– particularly with remote working as a result of Covid-19. Via our ‘be/connected’ platform, we look to ensure all team
members feel connected with each other and can communicate and collaborate effectively. Our global intranet is
an indispensable tool for sharing information, managing knowledge and disseminating news, improving our internal
communications globally and creating greater connectivity. We also use tools such as Office 365 to facilitate online
collaboration and work effectively together throughout the business. Demonstrating its significance to our people, ‘be/
connected’ is visited by 87.5% of the business monthly.
We communicate regularly with team members via:
n Bi-weekly CEO webinars
n Roundtable sessions
n Q&A panels
n Regular video calls between managers and their teams
n Monthly manager and bi-weekly all team member newsletters
gender-pay-report. The mean UK gender pay gap in hourly pay for women’s earnings was 28.7% in 2020 (2019: 30.9%)
n Annual events
We continue to work to meet our commitments and we have seen positive progress in these areas, with sustained and
steady year-on-year progress evident.
Attracting and retaining talent
In order to recruit the best people around the world, we believe in accessing the broadest and most diverse range
of candidates. We use our ‘be@GBG’ message, aimed at clearly expressing why GBG is a great place to work, to
encourage future talent to work with us and to motivate and energise existing team members to do their very best. Our
approach involves fair and transparent recruitment practices, with a focus on gender neutral job descriptions. We use
artificial intelligence (‘AI’) technology to identify and eliminate gender-biased wording and strive to be inclusive in the
candidate interview process. All our managers have completed unconscious bias training.
Engagement and satisfaction
We strongly believe that all our team members should have a voice within the Group and feel that they are truly valued.
Our twice-yearly employee engagement survey enables them to provide feedback and allows us to respond to any
issues which might impact engagement and/or employee satisfaction before any problems emerge. This continues to
be a highly successful programme and we saw that 91% of the global team would recommend GBG as a great place to
work in our March 2021 survey (2020: 91%). This year 94% of the team participated in the engagement survey (2020:
92%).
52
Annual Report and Accounts 2021
Annual Report and Accounts 2021
53
OverviewStrategic ReportGovernanceFinancial Statements
Environmental, Social and
Governance Statement continued
Our focus on employee engagement is defined against the best practice principles set by global consultancy, Gallup,
who we partner with in this respect. Demonstrating its significance to the Group, successful employee engagement is
used as a metric to reward senior management and Executive Directors within the business (see further detail in the
Remuneration Report on page 78).
Given the requirement for team members to work from home during Covid-19, we initiated an equipment allowance
to enable people to work effectively. We made reasonable adjustments to those team members who were managing
multiple priorities, including caring and/or parental responsibilities, whilst ensuring business needs were met. These
Health and safety and wellbeing
Our first priority is to keep our people safe. We are committed to effectively managing health and safety and to
protecting our team members’ wellbeing. Our Health and Safety Policy details key standards, systems and procedures
and we train all team members, especially those with specific duties and responsibilities (such as fire wardens and first
aiders). We share best practice and guidance updates around health and safety issues with team members on a regular
basis. We report all accidents and near misses, even if they do not lead to employee absences and we identify and take
the necessary steps to prevent them from happening again. There have been no reportable accidents within the last
included carer’s furlough schemes paid for by the Company, as well as adjustments in working hours and days. We have
year, only minor incidents. Our external health and safety consultants provide GBG with annual audits and guide us on
prioritised an empathetic approach towards every individual’s circumstance throughout the global pandemic.
all health and safety matters.
As we look ahead, all our office locations are prepared to re-open when local government guidelines allow.
Training and development
Training and development are vital tools that help us:
n Successfully run our business
n Deliver value to and inspire our team members
n Advance our strategy
n Maintain a great place to work
We prioritise learning experiences to maintain compliance, succeed in building core skills that increase our team
members’ employability and provide access to recognised qualifications, professional development opportunities and
certifications. In FY 2021, 42 team members were pursuing external professional development opportunities, including
technical certifications (ITIl, AWS and Microsoft) project management, accountancy and company secretarial.
Our internal training platform ‘be/developed’ ensures that everyone has access to a large variety of learning
opportunities relevant to their role, ranging from soft and digital skills development, to management leadership and
information and security compliance. In FY 2021, team members dedicated 17,679 hours to learning and development
through ‘be/developed’ (2020: 19,873 hours).
At GBG, we are focusing on broadening our learning offering. We update training content on a quarterly basis to keep
pace with new and emerging areas to support the ongoing professional development of our team members.
We build our reputation on excellence in technology. We have implemented a career progression framework in our
technology areas which offers levelled descriptions of the professional skills and competencies required and provides
a clear pathway for career progression. In 2021, we launched ‘progression@GBG’ in Technology, with the goal of
expanding the initiative more widely throughout the business in due course. ‘progression@GBG’ aims to support
personal development, linked to our career development pathways and personal development planning.
As part of our work to bridge the skills gap, we employ five apprentices across our IT services management team and
our facilities team. In FY 2021, 100% of our apprentices completed their apprenticeships as planned.
In FY 2021, GBG committed £320,000 to the training and development of our people (2020: £201,345) mainly focusing
on developing technical and sales skills, as well as funding specific courses in line with individual personal development
plans. We plan to increase our investment in training in Technology for FY 2022, when compared to FY 2021.
Recognition and incentives
‘ be/rewarded’ is our philosophy of fairly rewarding our team members for the contribution they make. We operate
an annual Save-As-You-Earn (‘SAYE’) Share Option Scheme (the ‘Scheme’), which affords all team members at GBG
(except for China where there are challenges in respect of personal share ownership) the opportunity to share in the
Group’s performance. Currently, we have 54% of team members investing across the various schemes.
We have continued to recognise success through our Group Vision, Objectives and Strategies (‘VOS’) awards. We also
acknowledge and reward our team members who have demonstrated consistent exceptional performance through our
Annual Incentive Scheme.
Ensuring that our team is safe and secure has remained paramount throughout the Covid-19 pandemic. To that end,
we have been working with a health and wellbeing consultant to build resilience and improve mental fitness amongst
team members. We have used virtual webinars, intranet resources and by introducing our ‘Global Employee Assistance
Programme’, which ensures that all team members have 24/7 confidential support. We have also communicated health
and safety guidance on our intranet to ensure that we reach all team members at a time when they are working from
home.
Society
We are committed to contributing to the communities in which we work and society as a whole. We aspire to do so
through the innovative and unique products and solutions we offer and through community outreach, investment and
volunteering.
CASE STUDY
Societal benefits of our products and solutions
As the trusted strategic partner for over 19,000 businesses globally, we believe that the most material way we
can positively influence society is through our products and solutions. We tackle some of the most prevalent
issues related to fraud, identity and digital environment protection facing today’s global society. Through this
work, we contribute by protecting businesses and their consumers. We help our customers to mitigate ethical
risk within their own business and keep principled practices at the heart of their business models.
Many of our products and solutions have inherent societal benefits such as facilitating customer verification,
ensuring that age-restricted products and services are not offered to children as well as providing data tools to
police forces to assist in crime prevention and detection.
Through our identity verification tools, we expand inclusion by helping the excluded find their place in society.
GBG ID3global solutions enable our customers to tackle the growing problems of identity fraud and money
laundering. By supporting fintechs and financial services businesses with customer onboarding and verification
as well as ensuring safety and security, we are contributing to responsible and sustainable digital acceleration
around the globe. During the pandemic, GBG/IDology’s platform, ExpectiD played an important role in both
removing friction and managing risk in distributing funds to the right people and within tight timeframes.
54
Annual Report and Accounts 2021
Annual Report and Accounts 2021
55
OverviewStrategic ReportGovernanceFinancial Statements
As a result of Covid-19, we heavily reduced business travel during FY 2021, which has had a positive effect on our
environmental impact. This period has shown us how much travel can be replaced by video conferencing and online
engagement, so we will aim to maintain lower levels of physical travel going forward. We are investing in technology that
promotes more hybrid working and encourages virtual meetings.
We operate a ‘reduce, reuse and recycle’ policy across all our offices, which includes technology and office
consumables. Wherever possible, equipment is donated to local causes and charities. Our recommendation to all team
members is to move to paperless wherever possible and we believe we are moving towards this goal.
GBG complies with all relevant environmental regulations.
CASE STUDY
Environmental benefits of our products and
solutions
We facilitate certain environmental benefits for our customers as a result of our products and solutions. We
believe this represents our most material capability of positively impacting on the environment on a global scale.
Our Loqate technology, which provides accurate consumer addresses for e-commerce customers, offers
benefits, one of which is the reduction in carbon emissions as a result of enhanced successful deliveries. With
a 50% reduction in failed deliveries, we are able to help deliver material reductions in carbon emissions for
our customers, as they use our technology to optimise first time delivery & reduce ‘drive-time’ by defining the
most efficient routes. At the same time, GBG’s solutions help improve address accuracy, preventing lost and
undelivered mail which could end up in landfill.
Environmental, Social and
Governance Statement continued
Community support
We take a global, strategic approach to community support. Our goal is to contribute consistently and meaningfully.
We continually consider ways of maximising the positive societal contributions we make as a business. Every year, we
select a different issue to focus on; for FY 2021, we chose Covid-19.
Employee contribution is a fundamental element of our community support strategy. We believe that by encouraging
volunteering and involvement, we promote collaboration and cooperation between team members, afford personal
enrichment and provide our team members with the opportunity to think differently and use a wide variety of skills.
Our APAC team organised online events and raised funds for a range of charities, supporting everything from the supply
of personal protective equipment (‘PPE’) to educational resources to the prevention of domestic abuse. In the UK and
US, our teams replaced the annual outdoor hiking/cycling event with an individual challenge. They collectively achieved
a total of 2,843 miles in the UK and 6,009 miles in the US by walking, running, cycling or swimming over a 12-hour
period, raising funds for various charities.
In addition to our annual charitable cause, we are also committed to longer-term schemes. One of our key areas of
focus is science, technology, engineering and mathematics (‘STEM’) education, as we believe this to be fundamental
to bridging the skills gaps for future generations. In Technology, we have encouraged team members to become STEM
ambassadors through a national initiative in the UK. We support their applications and allow time to participate. Whilst
the pandemic has impacted to some degree their ability to participate and volunteer, we consider this an important
programme to encourage STEM education.
In FY 2021, 222 team members committed a total of circa 11,100 hours and raised approximately £21,459 for community
support programmes. In addition to this, GBG spent £15,186 on community investment.
Environment
We recognise our duty to use resources responsibly and to minimise any environmental impacts of our business
activities. Climate change is one of the biggest challenges facing our society and we are aware of the increasing
responsibility of business to tackle some of the world’s most urgent environmental issues.
Given the nature of our operations, as an office-based operator using leased facilities, our environmental impact is
relatively low compared with other sectors. Nonetheless, we are committed to reducing energy consumption and waste
production within our office environments wherever possible and we have a number of strategies in place to achieve
this.
This year, in the UK, we have increased the accuracy of our emissions data through compliance with the Streamlined
Energy and Carbon Reporting (SECR) regulations. We are publishing energy usage and emissions data for our business
activities in the UK (involving the combustion of gas, fuels and the purchase of electricity) and we intend this year to
form the base year to enable us to set realistic targets for future comparison. This information can be found in the
Director’s Report on page 97. As reported last year we calculated direct emissions, from combustion of fuel (diesel
and petrol) and operations of facilities, was 494 tonnes of CO2 (2,006,498 KWH). Alongside our mandatory reporting
requirements we have built a CO2 dashboard, for use globally and we are making good progress in being able to
measure our carbon footprint. This will help us investigate ways of reducing and offsetting our emissions at all our
locations. This dashboard includes emissions from Cloud providers as well.
We operate a ‘Cloud-first policy’ aimed at improving the energy efficiency of our activities. Each of the main Cloud
providers has their own carbon-neutral agendas, thereby contributing to our own environmental impact. Additional
energy efficiency actions taken include the installation of light sensors and air conditioning and heating timers in our
offices. We employ electrical sensors to minimise water usage in our offices, though we already have a relatively low
consumption on account of our business.
56
Annual Report and Accounts 2021
Annual Report and Accounts 2021
57
OverviewStrategic ReportGovernanceFinancial Statements
Directors And Officers
David Rasche
Chris Clark
Dave Wilson
David Ward
Chairman (Aged 71)
Chief Executive Officer (Aged 52)
Appointed to the Board in September 2010.
Appointed to the Board in April 2017.
N (Chair)
N
Chief Financial Officer & Chief Operating
Officer (Aged 59)
Appointed to the Board in October 2009.
N
Chief Financial Officer (Aged 45)
David has close to 50 years’ IT industry experience with
Before joining GBG Chris was Managing Director at
Having joined GBG as Finance Director, Dave has a
David Ward joined GBG on 17 May 2021 and will replace
over 35 years at Board level in the software and services
Experian for 5 years where he was responsible for the UK
strong background in managing business growth. He
Dave Wilson when he retires at the end of June. It is
sectors. He was the founder of SSP Holdings Limited,
& EMEA. Experian gave Chris first-hand knowledge of the
has worked in technology, media and telecoms for over
anticipated that David will be appointed to the Board on
which became one of the largest specialist insurance
Identity Data Intelligence market. Chris previously worked
40 years, with over 30 years at board level. Previously
1 July 2021 and will, being eligible, stand for election at
software houses in the world. David has chaired and
at BT for 20 years, running several technology businesses
holding international and operational board level positions
the AGM taking place that same month (in accordance
advised businesses in both the public and private markets
across the globe. Chris has lived and worked in the USA,
with companies including Eazyfone (brand Envirofone.
with GBG’s Articles of Association). David’s biography
and has overseen numerous acquisitions and disposals
Europe and Asia, as well as the UK and has significant
com), Codemasters, Fujitsu and Technology plc. Dave
has therefore been included in this year’s Annual Report
over the last 30 years. He is a strong believer in lifelong
international experience. Chris has a passion for and a
was named Finance Director of the Year at the 2013 Grant
and Accounts for the benefit of shareholders who will be
learning, has a diploma in company direction and is the
strong track record of, team member engagement and
Thornton Quoted Company Awards and Finance Director
asked to vote on his appointment.
longest serving member of the Vistage executive learning
customer focus.
of the Year at the 2015 FD Awards.
organisation in the UK. David invests in and mentors some
smaller technology businesses and is Chairman to Chatta,
a learning software company. He also chairs a family
property and investment company and a family charitable
trust. He was Yorkshire Business Leader of the Year in
2008 and the Grant Thornton QCA Chairman of the Year
in 2009. In March 2020, David won The Sunday Times
FTSE AIM Non-Executive Director Award in recognition of
his stewardship and contribution at GBG.
Prior to joining GBG, David held the position of Finance
Director and Company Secretary at Aveva Group
plc where he led the Finance function and Legal and
Commercial Operations Teams. He was heavily involved
in the M&A and integration that lifted Aveva to the FTSE
100. David trained as a Chartered Accountant with Ernst
& Young where he spent 14 years. He holds a bachelor’s
degree in Economics and Accounting and is a Fellow of
the Institute of Chartered Accountants in England and
Wales.
Committee membership key:
A Audit & Risk R Remuneration N Nomination
58
58
Annual Report and Accounts 2021
Annual Report and Accounts 2021
Annual Report and Accounts 2021
Annual Report and Accounts 2021
59
59
OverviewStrategic ReportGovernanceFinancial Statements
Directors And Officers continued
Nick Brown
Liz Catchpole
Natalie Gammon
Annabelle Burton
Group Managing Director (Aged 60)
Non-Executive Director (Aged 56)
Non-Executive Director (Aged 43)
Company Secretary (Aged 40)
Appointed to the Board in April 2017.
Appointed to the Board in September 2017.
Appointed to the Board in November 2019.
(Secretary to all Committees)
A (Chair) R N
R (Chair) A
Nick has been a member of GBG’s Executive Team since
Liz is an Independent Non-Executive Director and Chair
Natalie has over 20 years of global technology,
Annabelle has over 17 years’ experience in governance,
joining the business in 2007. Nick is currently responsible
of the Audit Committee at Investec Wealth & Investment
commercial and operational experience with a
compliance and company law. Annabelle originally
for managing the operating businesses of GBG on
where she is also a member of the Risk, Remuneration
demonstrable track record of successful digital, strategic
joined GBG’s Governance Team in 2007 and was Deputy
a global basis. Prior to joining GBG Nick held senior
and Nomination Committees and Independent Non-
and transformational change programmes in both private
Company Secretary until 2019, managing the Governance
management positions at Sage plc, Microsoft UK and
Executive Chair of the architectural and design practice
equity and blue-chip companies. Natalie was previously
Team and supporting the Company Secretary. In 2019
Fujitsu Services in the UK. Nick is also an independent
TP Bennett. Liz has over 20 years of executive Board level
Group Chief Information Officer for FNZ UK and more
Annabelle left GBG to become Group Company Secretary
Non-Executive Director of Proactis Holdings plc where he
experience gained primarily in the insurance, business
recently Chief Cloud Officer for Finastra Ltd. In addition
at Phoenix UK, a pharmaceutical wholesale company,
is also Chair of its Remuneration Committee, the Senior
services and property sectors. Liz has previously held
to undertaking an advisory role at a number of technology
returning to GBG in 2021 as Company Secretary.
Independent Director and member of its Audit Committee.
Non-Executive positions at FTSE listed bwin.party, British
start-ups, Natalie is also an Independent Non-Executive
Annabelle has a passion for governance and a pragmatic
Gas, Bournemouth Water, The University of Law and Be
Living Holdings (formerly Willmott Residential). Her career
started in insurance with a subsidiary of GE Capital where
she worked for almost 17 years. Liz is a chartered certified
accountant and holds an MBA from Cranfield University.
Director of Masthaven Bank Ltd and an Independent
approach to how the Governance Team supports
Member of the Audit Committee of the National Trust.
the wider business, she is a Fellow of the Chartered
Governance Institute (FCG) and holds a law degree (LLB)
from the University of Newcastle upon Tyne.
60
Annual Report and Accounts 2021
Annual Report and Accounts 2021
61
Committee membership key:
A Audit & Risk R Remuneration N Nomination
OverviewStrategic ReportGovernanceFinancial Statements Letter From The Chairman
Dear Shareholder
Year in summary
GBG has adopted the Quoted Companies Alliance Corporate Governance Code (the ‘QCA Code’) as the basis of our
This last year the Board and wider GBG team focus has inevitably shifted towards addressing the effects of the
governance framework. In this statement, we will report how we have complied in all respects with the QCA Code.
Covid-19 pandemic. As a result, the Board’s activities and meetings have increased in frequency to address the ever-
As Chairman it is my responsibility, working with my fellow Board members, to ensure we follow the highest practicable
changing situation. The following page contains a summary of the matters the Board has dealt with during the year.
standards of corporate governance and manage the Board in the best interests of our many stakeholders. It is also
Although it has been an exceptionally challenging year and the year ahead appears uncertain, the Board continues to
my responsibility to communicate regularly with shareholders and ensure that the Board are made aware of any
take decisions that create long-term sustainable value for our stakeholders, whilst supporting the wider GBG team in
shareholder concerns in a timely manner.
delivering the Groups’ strategy.
As a Board we place great importance on corporate governance and believe that in doing so, we are able to build a
successful and sustainable business, which reflects the long-term interests of all our stakeholders. Our commitment to
corporate governance and promoting a culture of honesty, transparency and respect has enabled us to build a healthy
corporate culture throughout the Group. We are committed to responsible and ethical practices when we make business
decisions, whether at Board level or in day-to-day operations. This is particularly important to us as an acquisitive
business. As we acquire more global companies, we recognise that we need to maintain and monitor our culture. Our
focus on governance, throughout the Group, has resulted in GBG achieving an MSCI ESG rating of AA.
We work hard to make sure that all of the Group’s businesses (whether newly acquired or longstanding) are in step with
our strategy, people processes and internal controls. We do this through strategy workshops, training and by involving
managers in our risk assessments and internal control meetings. This approach means our Executive Team can report
to the Board on progress and identify any issues that need addressing. You can find more information on our culture and
Group policies in our Environmental, Social and Governance (“ESG”) Statement on pages 42 to 57.
Changes to the Board & Committees
Annual General Meeting (AGM)
As a result of measures imposed by the UK Government in response to the Covid-19 pandemic, we conducted last year’s
AGM as a closed meeting. We asked shareholders to submit their votes in advance by proxy and to not attend in person.
At the time of writing, we are facing similar challenges. We understand, however, that the AGM is an important event
that gives shareholders the opportunity to engage with our Board. As such, we have taken the decision to conduct a
‘hybrid’ AGM this year.
At the time of writing, shareholders still have the right to physically attend and vote at the AGM. However, we have
reminded them that, due to the ongoing Covid-19 pandemic, the Board recommends that shareholders attend the AGM
virtually instead. This is to protect the health and wellbeing of our shareholders, directors, team members and other key
stakeholders.
You can find more information about this in the Notice of AGM.
If shareholders have any questions or concerns regarding the AGM, we encourage you to send an email ahead of the
There have been a number of changes to the Board during the year. Charmaine Carmichael stepped down from her role
meeting to GBG’s Governance Team (Governance@gbgplc.com) who will endeavour to respond promptly.
as Non-Executive Director in August 2020 as she took up a new full-time executive role, which required her to relinquish
her external non-executive board commitments. As a result of this, we have started the process of searching for a
replacement Non-Executive Director.
In addition to this, Dave Wilson, CFO and COO, will be stepping down from the Board and retiring as CFO and COO. I am
pleased to say that David Ward will be appointed to the Board as our new CFO, replacing Dave. David Ward joined us in
May 2021, with Dave Wilson leaving at the end of June 2021, providing sufficient time to complete an orderly handover.
I would like to thank both Charmaine and Dave for their significant contribution to the growth and success of the Group
during their time on the Board.
I have stepped down from the Audit & Remuneration Committees in response to feedback from governance proxy
agencies and institutional shareholders and taking into account their guidelines relating to long-serving directors also
serving on Board committees. As soon as the Board has appointed a new Non-Executive Director they will be appointed
to the appropriate committees.
Changes to the Executive Team
There have also been a number of changes to the Executive Team during the year. We appointed three new Executive
team members, Lara Clark as Chief Regulation Officer, Dev Dhiman as APAC Regional Managing Director and Boris
Huard as Managing Director of Identity and Fraud. Further information on their appointments can be found in the
Nomination Committee Report on pages 92 to 93.
In addition, Annabelle Burton was appointed as Group Company Secretary from 1 April 2021, replacing John Constantin
who retires but will remain with the Group until the end of June 2021. I would like to thank John for the support he has
provided to the Board during his 27-year tenure.
David Rasche
Chairman
14 June 2021
62
Annual Report and Accounts 2021
Annual Report and Accounts 2021
63
OverviewStrategic ReportGovernanceFinancial Statements
Corporate Governance Statement
Summary of Board Activity
Further information
Governance
We have set out this year’s statement using the ten principles from the QCA Code.
Deliver growth
Establish a strategy and business model which promote long-term value for shareholders
Reviewed developments to Corporate Governance reporting and made necessary
Corporate Governance
Our vision is to help create a world where everyone can transact online with confidence with our purpose being to
changes
Statement
Took part in annual internal evaluation of the Board, Directors & Committees
Corporate Governance
Statement
Approved our 2020 Modern Slavery statement
Received an update on AIM obligations & market from NOMAD
Review of the Board, Executive Team and Committees’ Terms of Reference
The Non-Executive Directors held an investor roadshow in March 2021, to address
Corporate Governance
governance points of importance to investors
Statement
People
build trust in a digital world. Our strategy is to create and maintain unique online products and services that give our
customers added value and are strong enough to let us create new markets and win new business. We achieve this by
investing in people, business and product development and applying innovation, quality and excellence in everything we
do.
Our strategy, business model and business operations are set out on pages 11 to 17. The Executive Team, led by
the Chief Executive, is responsible for recommending the Group’s strategy to the Board, based on the interests of
our shareholders, customers, team members and other stakeholders. The Board is fully involved in discussing and
developing our strategy and business model with the Executive Team before we implement it. The Executive Team is
then responsible for putting the strategy into action and managing the day-to-day business.
As they follow our strategy and operational plans, the Executive and Management teams will usually face day-to-
day challenges that we see as our principal risks and uncertainties. We have agreed on steps to mitigate them and we
always look to follow these steps whenever the risks appear. You can find more details on our internal control and risk
Continued discussions on succession planning and initiated successful planning
Nomination Committee Report
management process on pages 28 to 40.
for replacement CFO and Company Secretary
Considered Board & Group diversity and approved the appointment of Lara Clark
Nomination Committee Report
(Chief Regulation Officer), Annabelle Burton (Company Secretary), Dev Dhiman
(APAC Regional Managing Director) and Boris Huard (Managing Director of Identity
and Fraud)
Discussed and approved developments to the Share Save Scheme to offer more
ESG Statement
inclusivity and encourage more take-up from team members
Discussed the results of our annual employee engagement survey and put in place
ESG Statement
action plans to deal with any issues we identified
Discussed the findings of our 2021 Gender Pay Gap Report
ESG Statement
Strategy
Held our annual strategy meeting to discuss our ongoing vision, the direction of our
business and our strategic priorities
Received and reviewed regular reports from the Executive Team on progress
against strategic objectives, as well as risk management and operational matters
Reviewed key risks that may threaten our strategy, such as cyber risk and data
Principal Risks and
privacy
Financial
Uncertainties Report
Reviewed and approved the FY21/22 Budget
Considered the impact of Covid-19 on the going concern status of the Group and
Note 2.2
conducted various stress tests against a number of scenarios to test resilience of
the Group cash forecasts
Reviewed and approved the half and full-year announcements and the 2021 Annual
Report and Accounts
Approved LTIP, Share Match and Share Save schemes
Remuneration Report
We believe that our AIM listing continues to add long-term value to our shareholders. It gives us access to capital
markets, flexibility to make acquisitions and the ability to incentivise and reward management through share schemes. It
also provides a regulatory environment that is appropriate to the size of the Group.
Our progressive dividend policy and share performance over the last five years are also indicators of long-term value
for our shareholders. For the past 17 years GBG has consistently paid a final dividend. However, due to uncertainties
presented by Covid-19, we made the decision to suspend declaring and paying a final dividend for FY20 until our
outlook was more certain. Thanks to prudent steps GBG took at the start of the pandemic to preserve liquidity,
combined with strong performance and confidence in the outlook of the Group, the Board reinstated the progressive
dividend policy and declared an interim dividend of 3 pence per share in December 2020. The Chairman’s Statement on
page 8 and in the Directors’ Report on page 94 contain further information on this financial year’s dividend.
You can also see a total shareholder return graph in the Remuneration Committee Report on page 89.
Seek to understand and meet shareholder needs and expectations
Chris Clark (CEO), Dave Wilson (CFO & COO) and where appropriate, other members of the Board communicate
regularly with institutional investors and analysts through our investor roadshows. Here, they give updates on any
changes to our business, strategy, marketplace and acquisition pipeline. Understanding what analysts and investors
think about GBG and in turn, helping them understand our business, is a key part of driving the business and investment
forward. We tailor our communication based on whether we are speaking with new or longstanding investors.
The AGM is the main forum for dialogue between private investors and the Board. The chairs of the Board and its
Committees, along with all other Directors, attend the AGM and are available to answer shareholder’s questions formally
during the meeting, or, informally afterwards. The AGM is also a chance to demonstrate our products and services and
explain how they work and how our customers use them. This year’s AGM and all future AGM’s will be held as hybrid
meetings to allow shareholders the option to attend in person, or join via electronic means.
During the year, myself, Liz Catchpole and Natalie Gammon, conducted a ‘Non-Executive Director Investor Roadshow’.
The Roadshow gave our major investors the chance to virtually meet with us and raise any questions or concerns they
wanted us to address. We felt that this was particularly important this year due to the uncertainties presented by the
Covid-19 pandemic. I am pleased to say that the event was a success and we discussed in depth many important topics,
including: Environmental, Social and Governance (‘ESG’) matters and what additional disclosures shareholders would
like GBG to make. We also discussed ensuring an orderly succession of the departing CFO and general governance
matters, such as remuneration. Shareholders indicated their approval of our Remuneration Committee’s work and the
remuneration framework adopted. These conversations allow us to gain greater insight into what our investors expect of
us and what improvements we may need to make throughout the Group.
64
Annual Report and Accounts 2021
Annual Report and Accounts 2021
65
OverviewStrategic ReportGovernanceFinancial Statements
Corporate Governance Statement continued
Whenever any of the Board meets with investors, they always give feedback to the other Board members either verbally
The Board has conducted a rigorous and in-depth assessment of GBG’s financial position and outlook and has adopted
on an as and when basis, or through the monthly investor update provided to the Board.
the going concern principle in preparing these financial statements, as described in note 2.2 of the accounts.
As always, Liz Catchpole (Senior Independent Director) and I are available to speak with shareholders to discuss
governance and anything else that is important to them. You can send a meeting request to: investor.relations@gbgplc.
Insurance
com to arrange this.
Take into account wider stakeholder and social responsibilities and their implications for long-term
success
Engaging with our stakeholders strengthens our relationships and helps us make better business decisions that deliver
on our commitments. We take our wider stakeholder and social responsibilities seriously. That means maintaining
effective working relationships with stakeholders including team members, partners, customers, suppliers and
regulatory authorities. There is more detail on how we do this in our ESG Statement on page 42, Directors’ Report on
page 94 and through our Section 172 Statement on page 99.
In our operations and working methods, we balance the needs of all of these stakeholder groups while still ensuring our
success. We promote a culture of honesty, integrity, trust and respect. We expect all members of our team to operate in
an ethical way, whether they are dealing with people inside or outside the business.
Our customers and suppliers are mainly long-term partners, so an important part of our culture is to establish and
maintain relationships of trust. Our priority is to create a positive customer experience across our whole business,
including our product experience, customer success management, professional services and helpdesk.
As part of our commitment to continually improve the GBG Customer Experience, we listen to customers across all
business areas. Each year we welcome direct feedback from all our customers and in the last 12 months we have
received over 2,000 pieces of feedback. As part of our Voice of the Customer programme, we use this feedback to
drive material improvements that are evidenced in key metrics over time. We continue to use the feedback we receive to
inform our strategy, product roadmap and customer interactions across all parts of the customer journey.
Embed effective risk management, considering both opportunities and threats,
throughout the organisation
Risk management and controls
The Board and Group approach to risk is set out in the Principal Risks & Uncertainties Report on pages 28 to 40 and the
Audit & Risk Committee report on pages 72 to 77.
The Board has overall responsibility for our approach to assessing risk, systems of internal control and our risk appetite,
with the Audit and Risk Committee taking responsibility for monitoring and reviewing how effective these systems are.
These systems are designed to manage risks rather than eliminate them. They provide only reasonable and not absolute
assurance against material misstatement or loss and flag any new and material risks to the Board.
The Board believes risk assessment and control, with an acceptable risk/reward profile, is fundamental to achieving our
corporate objectives. We confirm that there is an ongoing process to identify, evaluate and manage the significant risks
the Group faces and the effectiveness of related controls.
Budgets
As reported last year, the events of Covid-19 and the uncertainties this placed on agreeing to any meaningful and
accurate budget meant that the formal annual budget was replaced with regular updates from the Executive Directors
on the Group’s financial performance. These updates included but were not limited to, revenue, growth and cash and
helped us monitor progress, trends and assessment of the Group banking covenants.
For the FY22 financial year, we have reverted to the normal process of approving an annual budget which has been
reviewed, challenged and approved by the Board. The Executive Directors will provide regular updates on performance
against this Budget and any updates to the forecast results due to Covid-19 or other factors.
We have comprehensive insurance cover against material loss or claims against GBG. We are also covered for actions
taken against the Directors because of their roles. Each year, we carry out an extensive renewal programme which
allows us to review the sums we insure and what type of cover we have across the Group and assess whether current
cover is still suitable for a company of our size operating in our current industry.
Maintain a dynamic management framework
Maintain the Board as a well-functioning, balanced team led by the Chair
As at 31 March 2021, the Board was made up of the Non-Executive Chair David Rasche, three Executive Directors,
Chris Clark, Dave Wilson and Nick Brown plus two Non-Executive Directors, Liz Catchpole and Natalie Gammon.
David Rasche, Chairman of the Board stood down from being a member of the Audit & Remuneration Committees
effective 31 March 2020. This action was as in response to feedback from governance proxy agencies and institutional
shareholders, taking into account their guidelines for long-serving directors who also serve on Board committees.
In compliance with the QCA Code, independence is to be determined by the Board. In the Board’s opinion, Liz and
Natalie are independent in both character and judgement. The Board have considered David Rasche’s length of service
and remain confident that he is still independent in character and judgement however, in line with best practice, he will
be subject to annual re-election.
The Executive Directors all work full-time for the Group. The Non-Executive Directors work part-time, alongside other
commitments outside of GBG. A summary of these commitments appears in their biographies on pages 58 to 61. In the
Chair’s opinion and as confirmed in the annual Board evaluation, each member of the Board dedicates the appropriate
amount of time to fulfil their responsibilities.
In accordance with our Articles of Association all Directors’ retire by rotation and are subject to election by shareholders
at least once every three years. In line with best practice, Non-Executive Directors who have served on the Board for 9
years or more, will be subject to annual re-election. Currently this only applies to David Rasche. To see which Directors
have been put forward for re-election at the 2021 AGM, please go to the Directors’ Report on pages 94 to 98 and the
Notice of AGM. The service agreements for each of the Directors are available from our registered office in Chester.
The Board has a formal schedule of matters reserved for it to decide on, which is available on our website.
The Non-Executive Directors have also met during the year without the Executive Directors and Chair being present.
In the year to 31 March 2021, the Board met virtually on twenty-four occasions. A summary of their attendance is as
below.
66
Annual Report and Accounts 2021
Annual Report and Accounts 2021
67
OverviewStrategic ReportGovernanceFinancial Statements
Corporate Governance Statement continued
Board Meeting Attendance
David
Rasche
24/24
Chris
Clark
24/24
Dave
Wilson
24/24
Nick
Brown
23/24
Charmaine
Carmichael
13/24 **
Liz
Catchpole
24/24
Natalie
Gammon
23/24
Evaluate Board performance based on clear and relevant objectives, seeking
continuous improvement
Evaluations
Every year, we ask each Board member to complete an online questionnaire as part of our Board evaluation process.
This is a chance to suggest improvements on a number of areas such as Board structure, functionality, objectives,
meetings (including the quality of information presented at such meetings) administration and the committees. The
responses to the questionnaire are collated by the Company Secretary and then passed on to the Chair in a detailed
report to discuss and take forward any resulting action plans.
This year, the annual evaluation showed that the main areas of focus were continuing to work towards effective
management succession and improving Board composition and balance, all of which, were highlighted in the last
external evaluation. We have taken and continue to take steps to improve our review of succession planning from
operational and strategic standpoints. We continue to keep the Board composition in mind when recruiting for further
Board appointments, as we intend to do this year. We plan on carrying out another external evaluation towards the end
of the next financial year and will report on the outcome of this in next year’s Annual Report.
As well as evaluating the Board and its Committees, we evaluate individual Directors through peer-group meetings. The
Non-Executive and Executive Directors monitor, evaluate and appraise each other’s performance. The Non-Executive
Directors also meet at least once a year to appraise the Chair’s performance.
The appraisal process lets the Board see whether a Director is contributing effectively and showing commitment to
the role. During the process, the Chair or Chief Executive Officer takes up any performance issues with the individual
Director and the Chair assesses whether they need any training and development.
**
Charmaine resigned from the Board effective 30 August 2020 and her attendance is calculated against the number of meetings she was eligible to
The Chair also regularly meets with the Chief Executive Officer and the other Directors outside of the Board meetings to
attend prior to her resignation.
Ensure that between them the Directors have the necessary up-to-date experience,
skills and capabilities
The Directors’ biographies can be found on pages 58 to 61, these outline their experience and skills, along with their
Committee memberships. The Board and Nomination Committee are satisfied that the Board composition currently
has the right balance of experience, skills, independence and expertise to deliver the strategy of the company. In terms
of gender balance, the Board are satisfied that positive steps have been taken in recent years to address this, with
the Board (following the departure of Charmaine Carmichael) including two female members and four male members.
Gender balance and diversity of thought and remains an important factor in any Board appointments.
discuss progress and performance of the Group and the Board.
Appointments to the Board
The Nomination Committee is responsible for recommending appointments taking into account the right balance of
skills, knowledge and experience. We assess whether or not to use recruitment consultants on a case-by-case basis.
New Directors receive a formal induction covering guidance about the workings of the Board and its Committees. They
also meet with senior managers of the Group for detailed information and presentations on Group strategy, products
and services.
Promote a corporate culture that is based on ethical values and behaviours
Overall employee experience is really important at GBG, from traditional HR and talent management practices to
Throughout the year, Board members receive regular business updates and have full access to the Company
business ethics, the environment, internal communications and our office spaces. Our culture is about honesty,
Secretary and external advisors. Each member of the Board is accountable for maintaining their skills and furthering
integrity, trust and respect. We expect all members of our team to operate in an ethical way, whether they are dealing
their knowledge and experience, which includes (but is not limited to) roles and experience with other boards and
with people inside or outside the business. GBG does not tolerate behaviour that goes against this, or that could
organisations as well as formal training.
damage our reputation.
Liz Catchpole holds the Senior Independent Director role (the ‘SID’) to give shareholders another channel of
Our vision is to have ‘the best and most engaged people’ because we understand the link between highly engaged
communication and to act as an intermediary for the other Directors where needed. All Directors are able to seek
people and results. We have clear strategies for how to achieve this objective and each year our Annual Report aims to
independent professional advice on the Group’s affairs, at the Group’s expense, though no Director did so this year.
demonstrate what we are doing to make it happen. We run an engagement survey twice a year (the Q12 survey) to give
Led by the SID, the Non-Executive Directors meet without the Chair at least once a year to appraise the Chair’s
performance. The Chair also regularly meets with the Chief Executive and other Directors to discuss progress and
Board performance. In addition to this, the Board as a whole maintain ongoing communications throughout the year,
between formal meetings.
all team members a voice and allow us to identify and respond to any issues that might affect engagement. On the back
of the Q12 results, all senior managers and Executive Team members must champion action plans in each of their areas
for any improvements that need to happen. More information on the results of this year’s Q12 surveys can be found on in
our ESG Statement on page 53.
The Board and Executive Team communicates with team members regularly to keep them informed about how the
business is performing through our global intranet platform called ‘be/connected’. This platform also lets team members
share news stories and access learning resources and general information about GBG.
Chris Clark, CEO, also hosts fortnightly virtual live business updates across the Group, ensuring that all team members
are kept up to date with how the business is performing and any key changes they need to know about. Team members
also have the opportunity to ask the CEO any questions they may have. Throughout the first half of the year and in
response to the Covid-19 pandemic, the CEO held weekly business updates to keep team members as informed as
68
Annual Report and Accounts 2021
Annual Report and Accounts 2021
69
OverviewStrategic ReportGovernanceFinancial Statements
Corporate Governance Statement continued
possible during uncertain times and also to address any key concerns. We believe this approach promotes transparency
Communicate how the company is governed and is performing by maintaining a dialogue with
throughout the Group.
More information on our culture can be found in our ESG Statement on pages 42 to 57.
shareholders and other relevant stakeholders
It is the Chair’s responsibility to:
Maintain governance structures and processes that are fit for purpose and support good decision
making by the Board
Our Board believes that good corporate governance is essential for building a successful and sustainable business in
the long-term interests of all our stakeholders.
The Executive Directors have day-to-day responsibility for the operational management of our activities
The Non-Executive Directors are responsible for bringing independent and objective judgement to Board decisions
n
n
n
n Communicate with shareholders and make sure that the Board is made aware of any concerns in a timely manner
n
Make sure members of the Board, particularly the Non-Executive Directors, understand major shareholders’ views
n Make sure the Board keeps its integrity and effectiveness
It is very important to us to communicate regularly with our various stakeholder groups in a clear, fair and accurate
way. We do this through regular announcement and update statements to the London Stock Exchange and through our
website, particularly the investors section where you can register for emails about our future announcements.
The Board sets the direction for the Group through a formal schedule of matters reserved for it to decide on
Our main ways of communicating with shareholders are through the Annual Report and Accounts, full-year and half-
year announcements, the AGM and GBG Investor Roadshows.
You can read our historical financial reports and AGM Notices on our website.
We announce the results of voting on all AGM resolutions shortly after the AGM itself. We also post a more detailed
analysis of voting at general meetings on our website. This includes any actions we would propose to take, in situations
where more than 20 percent of shareholders voted against a resolution.
There is a clear separation of the roles of Chief Executive Officer and Non-Executive Chair:
n
n
n
The Chair is responsible for overseeing the running of the Board, making sure that no individual or group dominates
the Board’s decision-making and seeing that Non-Executive Directors are properly briefed. The Chair is responsible
for corporate governance overall and chairs the Nomination Committee
The Chief Executive Officer is responsible for implementing the strategy of the Board and managing day-to-day
business activities
The Company Secretary is responsible for making sure the Board follows its procedures and sticks to rules and
regulations
A calendar of Board meetings and key matters for discussion are agreed at the beginning of each year. As a result of
the Covid-19 pandemic, throughout the financial year, the Board met on a weekly basis up until August, on a fortnightly
basis from August to October and then held monthly meetings thereafter. This was the caveat that should any urgent
business arise, the Board would once again hold weekly meetings (this is reflected in the attendance table on page 68).
Board papers are usually circulated securely via our Board Intelligence portal five days before each meeting. This allows
for sufficient reading time and any necessary clarifications ahead of the meeting. However in response to the weekly
meeting calendar adopted at the start of the year, verbal updates were given at each meeting to ease the administrative
burden of producing formal papers. The Board found that this approach was just as useful as producing the usual
papers, as it allowed members to have focussed discussions. Prior to the Covid-19 pandemic the Board would usually
meet in person at the Chester or London offices. The Board has met virtually since March 2020 and this continues to
work well. We do though intend to resume some face to face meetings after the Summer and will then continue with a
combination of virtual and in person meetings.
The Board has established Audit & Risk, Remuneration and Nomination Committees with formally delegated duties and
responsibilities. The Terms of Reference for each can be found on our website and a summary of their work for the year
ended 31 March 2021, found in each individual report.
70
Annual Report and Accounts 2021
Annual Report and Accounts 2021
71
OverviewStrategic ReportGovernanceFinancial Statements Audit & Risk Committee Report
Dear Shareholder
Committee Membership and Attendance
On behalf of your Board, I am pleased to present the Audit & Risk Committee Report for the year ended 31 March 2021.
The Audit & Risk Committee held 5 meetings during the year. The attendance details are set out below:
Accounts that are fair, balanced and understandable
The Audit Committee is responsible for ensuring that the financial performance of the Group is properly prepared,
reviewed and reported. Our role includes ensuring the integrity of the financial statements including examining
documentation relating to the Annual Report, Interim Report, preliminary announcements and other related reports.
We are responsible for reviewing internal control systems, risk management systems and the accounting principles,
policies and practices adopted for preparing public financial information. We are satisfied that this Annual Report is fair,
balanced and provides the information necessary for shareholders to assess the Group’s position and performance, as
well as its business model and strategy.
Key Responsibilities
The Committee reviews its terms of reference annually and these are available on the Group’s website www.gbgplc.
com/investors.
The role of the Committee is to provide oversight in the following areas:
n
Financial reporting, including reviewing the financial statements and other formal announcements and challenging
and reviewing the significant judgements contained in these documents
n Risk management and related controls and compliance
Monitoring the relationship with the external auditor and reviewing the effectiveness, scope, objectivity and
independence of auditor
Approving the external auditor’s remuneration and terms of engagement, including making recommendations
regarding its re-appointment
n
n
n
n
Charmaine
Carmichael
2/5 **
Liz
Catchpole
5/5
Natalie
Gammon
5/5
Note: Two of the meetings held this year were scheduled meetings timed to coincide with key dates in the Group’s financial reporting and audit cycle. At the
end of each of these meetings, the Committee met separately with the external auditors, without the Executive Directors or management being present.
By invitation, this year’s meetings were attended by the Executive Directors, Company Secretary, external auditors, internal auditors and management. David
Rasche stepped down from Audit committee membership effective 31 March 2020. David was invited to attend the meetings in his capacity as Chair of the
Board and not as a committee member.
**
Charmaine Carmichael resigned from GBG on 30 August 2020 and her attendance is based on the number of meetings she was required to attend during
this time.
Key Activities Report during the year
Financial Reporting
The Committee has reviewed and discussed with Executive Management and the external auditor, the audited
consolidated financial statements in the FY21 Annual Report. The Committee also reviewed the half year results.
Internal audit, including agreeing the plan, findings and implementation of these findings
Our rigorous challenges and discussions focussed on:
Ensuring whistleblowing processes are robust
n Reporting to the Board on how the Committee has discharged its responsibilities throughout the year
The Audit Committee
The Board is confident that the Committee has sufficient recent financial experience, relevant to the sector in which
the Group operates. I am a Chartered Certified Accountant with an MBA and also chair the audit committees of other
boards. Natalie Gammon also serves on the audit committee of other companies. We seek professional advice at the
Company’s expense, if needed, although no such advice has been sought during the year.
n The quality, not just the acceptability, of the accounting principles
n
n
The reasonableness of significant judgments and estimates
The clarity of disclosures in the financial statements, particularly in reference to the impact of Covid-19 and the
effectiveness of internal control over financial reporting
Significant issues
The Committee, external auditors, internal auditors and management considered the following issues are significant in
relation to the financial statements.
72
Annual Report and Accounts 2021
Annual Report and Accounts 2021
73
OverviewStrategic ReportGovernanceFinancial Statements
Audit & Risk Committee Report continued
Matter Considered
Conclusion
Revenue recognition
The Committee assessed Management’s analysis of contracts under IFRS15 and
after challenge, concluded that revenue has been properly recorded in the period
in accordance with accounting standards
Accounting for business
This is an area requiring accounting judgement particularly around discount rates,
combinations
tax rates, growth rates and attrition rates. In the current year this also specifically
concerned the valuation of the technology intangible asset acquired as part of the
HooYu acquisition. The Committee reviewed and challenged these assumptions
and looked at external evidence and the Committee’s own market knowledge. The
Committee was satisfied this area has been appropriately disclosed.
Going Concern
The Committee reviewed Management’s papers, scenario modelling and disclosures
regarding going concern. The Committee was satisfied that it was appropriate to
produce the accounts on a going concern basis.
Disclosure of disposed
The Committee considered whether the financial results of the Marketing Services
businesses
and Employ and Comply businesses which were disposed of during the year,
should be presented as discontinued operations in accordance with IFRS 5.
The Committee agreed with Management’s assessment that neither business
‘represents a separate major line of business or geographical area of operations’
and therefore did not meet the criteria for this classification.
Impairment of goodwill and
The Committee reviewed Management’s papers and after challenge, concluded
intangible assets
that it agreed with the impairment in the Group accounts of goodwill in the e-Ware
Interactive cash generating unit and impairment in the Company accounts of
goodwill related to the disposal of Employ and Comply. The Committee concluded
that the goodwill and intangible assets in the other cash-generating units were
supportable based on future cashflows, which were approved as part of the Budget
process.
External audit
In the 2019 Annual Report and Accounts I reported that we had carried out a rigorous audit tender process in
accordance with FRC best practice guidelines and EY were reappointed as auditors, but with a new senior audit partner,
Jenn Hazlehurst, now leading our audit. During the year we approved EY’s terms of engagement, scope of work and the
process for the interim review and the annual audit. We also reviewed, challenged and agreed the audit fee proposals
and approval for non-audit services fees, tenure and audit partner rotation (based on best practice and professional
standards within the United Kingdom). The current audit partner was reappointed for the audit of the year ending 31
March 2021. I have been in regular contact with them during the year to discuss, amongst other things, progress of
this year’s audit, succession planning regarding our CFO and specific actions required in response to the Covid-19
pandemic. In addition, the Chairman met with EY UK Chair and UK and Ireland Managing Partner to discuss proposed
changes to EY fee structure.
Non-audit services
The only non-audit services provided by EY in the year were the review of the Group’s half-year results and agreed upon
procedures regarding covenant compliance in accordance with the Group’s banking facilities. EY did not perform any
other non-audit services during the year. We do not expect EY to perform any non-audit services (except for the review
of the half-year results and covenant compliance procedures in the coming year). EY were selected for these tasks as
they would normally be undertaken by the external auditor as detailed in note 6 to the financial statements.
Auditor independence
The Board ensures external advisors remain independent by having separate firms (non-EY) carrying out financial due
diligence and general advice relating to acquisitions and tax matters.
The Committee has and will continue to assess the independence, tenure and quality of the external auditor at
least once a year, in addition to requiring both verbal and written confirmation of the auditor’s independence. EY
has confirmed that there are no relationships between themselves and the Group that could have a bearing on their
independence.
Whistleblowing policy
We have carried out an annual review of our whistleblowing policy to ensure that it is still appropriate for a Group of our
size and for the geographies in which we operate and we are satisfied that it is. We receive monthly reports from our
external whistleblowing hotline provider and can confirm that no concerns have been raised during the year.
Internal audit
BDO LLP was appointed as the Group’s internal auditors last year. Their role is providing the Committee and
Management with assurance on the adequacy of the Group’s internal control arrangements, including risk management
and governance.
In their first year of working with us, BDO reviewed the Group’s Risk Management Framework. Their approach to this
was to conduct interviews with relevant team members across the Group to understand the design of controls that
were currently in place. They also requested any relevant documentation to review the effectiveness and application
of controls in the areas of scope. The review then focussed on how risks are identified, captured and assessed on an
ongoing basis to critically challenge the control processes identified. They also considered the mechanisms in place to
escalate risks across the Group’s global entities.
The review identified a number of areas of good practice that the Group had already implemented before engaging
with the internal auditor. However, it also identified areas where the Group can look to improve, to make sure our Risk
Management Framework remains aligned and can scale with the Group’s size and future ambitions.
Since this review, Lara Clark, Chief Regulation Officer has worked alongside Executive Management and BDO
to establish a roadmap plan of action to address each of the reviews findings. Despite the effects of the Covid-19
pandemic, I am pleased to say that we have made positive progress against the roadmap plan of action and we continue
to receive regular management reports monitoring progress.
Despite some early challenges posed by Covid-19, the internal audit plan for the year to 31 March 2021 was finalised
within the year and it was agreed that the plan would focus mainly on areas of procurement and financial controls.
Before this review, management had already invested in systems for technology procurement, due to the level of spend
in this area and had started to implement a group-wide supplier management and purchase order system. The internal
audit review covered the full procurement lifecycle to assess whether the new system and management’s plans for
further investment in procurement outside of technology were appropriate.
In respect of financial controls, the findings were that there were no significant improvements required and that the new
finance systems (see section below) enhanced the visibility of expenditure across the Group.
Our intention was always to ensure that there were systems in place that could support the operation of group-wide
policies and procedures, before a group-wide procurement system was created. Whilst the implementation of this
system continues, the findings of the Internal Audit report showed that if implemented as designed, it will achieve this
aim. We were pleased that the internal audit report recognised that in many areas the procurement processes the
technology team had adopted were considered best practice and so provide a good platform to rollout to other areas of
the Group.
In May 2021 GBG recruited a Group Procurement Manager to design, own and communicate group-wide procurement
policies to be followed throughout the procurement lifecycle, which can be managed and monitored through the new
systems.
74
Annual Report and Accounts 2021
Annual Report and Accounts 2021
75
OverviewStrategic ReportGovernanceFinancial Statements
Audit & Risk Committee Report continued
The Committee maintained regular contact with BDO throughout the year to discuss progress and the status of our
The rollout of the global finance systems will continue under David Ward's stewardship. The Audit Committee will
internal audit programme. In addition, the Committee has also met with BDO and the Executive management team to
continue to monitor progress and ensure that the finance team has the appropriate resources to deliver the project and
review and challenge the reports produced by BDO and management’s responses to BDO findings.
the committee will provide challenge to ensure that the expected efficiencies are achieved.
Internal control and risk management
Paper on Audit Reform.
The Board has overall responsibility for the Group’s approach to assessing risk and systems of internal control and
for monitoring how effective they are. There are limitations inherent in any system of internal control. The system is
designed to manage risks rather than eliminate them. It provides only reasonable and not absolute assurance against
material misstatement or loss. However, there is a robust ongoing process for identifying, evaluating and managing
the principal and emerging risks the Group faces. Full details of our risk management and internal control systems and
processes can be found in our Principal Risks & Uncertainties report on pages 28 to 40.
Ernst & Young LLP (‘EY’) has audited the Group’s accounts since 1993 and as mentioned earlier in this report, were
reappointed in 2019 following a rigorous retender process. Although the Board and the Committee have been satisfied
with EY’s quality of service, independence and objectivity, the Committee is closely monitoring the reforms being
proposed in the recent BEIS White Paper on Audit Reform and the impact and timing of these reforms on future external
auditor appointment. In accordance with recommendations from BEIS GBG will look to conduct a tender process for
external audit with EY being replaced and a new auditor taking over for the audit of the year beginning 1 April 2023.
The Audit Committee will also be reviewing and considering UK governance changes proposed in the recent BEIS White
Board-level reporting on risk management and internal control
Annual Committee Evaluation
This year, we have reviewed reports from the external and internal auditor and executive management relating to
The Committee’s effectiveness was reviewed during the year as part of the annual internal review of the Board and its
internal control, financial reporting, risks and risk management and presented those reports to the Board. This process
Committees. I am pleased to report that the review concluded that the Committee continues to discharge its duties
is reviewed on a quarterly basis to make sure the risks included in the bi-annual reports are valid and relevant.
effectively.
Liz Catchpole
Audit & Risk Committee Chair
14 June 2021
We have provided the Board with an independent assessment of the Group’s financial position, accounting affairs and
internal control systems.
The Audit Committee has also met with both the internal and external auditor without management being present.
Anti-tax evasion policy
The Group adopted and has in place a policy to uphold all relevant laws that counter tax evasion. This policy has been
added to the Group’s ‘Code of Conduct’ and published on our intranet. The policy is reviewed on an annual basis and
updated as required.
Global Finance Systems
During the year a suite of cloud-based finance systems was implemented across the Group, covering core financial
operations, purchase order management, consolidations and budgeting.
The Audit Committee has provided oversight of this significant project from the outset, approving the project at the
outset and then through regular monitoring. A monthly status report on progress versus the intended timetable has
been provided by the Director of Finance Operations. Due to the impact of the pandemic and the finance team working
remotely the original timetable was updated to delay the implementation in certain countries to ensure that day-to-day
operations were not impacted. The Audit Committee supported and approved these decisions.
These systems will provide greater visibility to the Group finance team on subsidiary operations, reduce reliance on
manual spreadsheets in order to improve accuracy and efficiency and also improve controls on spending throughout the
Group.
Future focus for Audit Committee
After 12 years Dave Wilson, is retiring from the role of CFO. Dave has made a significant contribution to the growth and
success of GBG and to the maturity, stability and development of both the global finance team and the Group’s internal
controls. I would like thank Dave for his hard work and to say how grateful I am for all the support Dave has given me.
The Audit Committee was heavily involved in the thorough and rigorous search process for Dave’s successor and as
mentioned previously Dave Wilson is being replaced by David Ward, who is a very experienced Finance Director and
chartered accountant. I will be working with David to support a smooth handover from Dave and to ensure David has an
excellent induction to the business and is well positioned for future success in the role.
76
Annual Report and Accounts 2021
Annual Report and Accounts 2021
77
OverviewStrategic ReportGovernanceFinancial Statements
Remuneration Committee Report
Annual Statement from the Chair of the Remuneration Committee
Information not subject to audit
This report is for the year ended 31 March 2021. It sets out the remuneration policy and the remuneration details
for the Executive and Non-Executive Directors of GBG. As an AIM-quoted company, we have to disclose this
information to fulfil the requirements of AIM Rule 19. In accordance with AIM Rule 26, GBG complies with the
Quoted Companies Alliance Corporate Governance Code (the “QCA Code”). While GBG is not required to comply
with Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations
2008, we are committed to achieving both high governance standards and a simple and effective remuneration
structure. The following information is unaudited except where stated.
Dear Shareholder
I am very pleased to present our Directors’ Remuneration Report for the year ended 31 March 2021, my first since taking
up the Chair of the Remuneration Committee in August 2020. In keeping with last year’s structure, we have separated
the Report into three sections: the Annual Statement; the Directors’ Remuneration Policy; and the Director’s Annual
Report on Remuneration, which describes how we have implemented the policy throughout the year and looks ahead
to 2021-22. As in previous periods, we have presented the remuneration policy as a table to make it clear and simple, in
line with best practice amongst AIM companies.
The Committee is primarily responsible for determining and recommending to the Board the policy for the remuneration
and employment terms of the Executive Directors. The Committee is also responsible for reviewing (and making
recommendations to the Board about) share incentive plans and performance related pay schemes and their associated
targets, as well as employee benefit structures across the Group. In addition, the Committee also monitors remuneration
structures below Board level and considers proposals and remuneration packages when bringing key talent into the
Group. As it does these things, the Committee considers the wider economy, the markets in which GBG operates and
the Group’s overall performance.
The Committee at a Glance
The Remuneration Committee held 2 meetings during the year. The attendance details are set out below:
Natalie
Gammon
2/2
Liz
Catchpole
2/2
Charmaine
Carmichael
1/2 **
**
Charmaine Carmichael resigned from GBG on 30 August 2020 and her attendance is based on the number of meetings Charmaine was required to attend
during this time.
The Committee has discharged its responsibilities throughout the year by:
n
Considering and approving bonus measure & KPIs*
n Considering and approving Executive salary*
n
Approving Executive bonuses earned during the 2019-20 year but deferred as a result of the Covid-19 pandemic
and paid during FY20/21
n Approving Executive bonuses earned during the 2020-21 year and awarded this year
n Considering and approving share matching awards for Executive Directors*
The Committee will put an advisory resolution to shareholders at the 2021 Annual General Meeting (AGM) to consider
n Considering and approving the exercise and sale of Executive Directors’ share awards*
and approve this Report. Shareholders considered a similar resolution at the 2020 AGM and supported it by 98.53% of
the votes cast.
We firmly believe that our remuneration policy effectively rewards and incentivises our Executive Team and Senior
Management, as well as ensuring fair pay, wellbeing and engagement across all of our team members. By considering
the distribution of incentives across all GBG team members and closely aligning our remuneration to achieve GBG’s
strategic aims, we believe these incentives result in value creation for our stakeholders for the long term.
Transition Remuneration Committee Chair and Committee Composition
As reported in last year’s Annual Report and Accounts, I replaced Charmaine Carmichael as the Chair of the
Remuneration Committee at the conclusion of GBG’s 2020 AGM on 10 August 2020. Charmaine subsequently resigned
from her position at GBG as Non-Executive Director on 30 August 2020. David Rasche, Chairman of the Board, also
stood down from being a member of the Committee with effect from 31 March 2020. David’s decision to stand down
was in response to feedback from governance proxy agencies and institutional shareholders, taking into account
their guidelines for long-serving directors also serving on Board committees. The Committee is made up of the two
independent Non-Executive Directors and continues to operate effectively, satisfying its quorum requirements.
n
Reviewing and considering the Group’s LTIP structure to ensure that it remains appropriate, fair and effective in
supporting the Group’s growth strategy and is aligned with shareholders’ interests*
Note*: The impact of the Covid-19 pandemic was thoroughly considered when agreeing these matters, further information in relation to GBG’s position as a
result of the pandemic can be found in our Covid-19 statement on pages 6 to 8 of the Annual Report.
Impact of Covid-19 on remuneration decisions
As we have previously reported, the Board took a number of actions during the year to conserve cash and preserve
short-term liquidity in light of the Covid-19 pandemic. These include agreeing on a Group-wide pay freeze; deferring
payment of Executive Directors’ bonuses which resulted in an inevitable delay with awards under the Group’s share
matching scheme and not declaring a final dividend for FY20. Additionally, the Executive Team, with the support of
the Board, looked at Government grants and incentives available to support the business. The Group decided not to
place anyone on compulsory furlough and instead we redeployed team members whose roles were diminished as a
result of Covid-19 impacts, to other teams with resource needs. We did however offer voluntary ‘carer furlough’ to those
team members who felt that they needed additional personal support. 13 team members elected for this and whilst the
duration varied, the total funding we received was £54,000.
However, reflecting the strong first-half performance and confidence in the outlook for the business, the Board made
the decision to reimburse all financial support initially taken under the furlough in November 2020 and declared an
interim dividend at the date of the half-year results. Consequently, the Board also approved payment of the Executive
Directors’ bonuses accrued in FY20 and the Executive Directors used their maximum allowances of bonus and salary to
make market purchases of GBG’s shares in order to participate in GBG’s share matching scheme.
After thoroughly reviewing the Executive remuneration packages during the year, the Committee reviewed the annual
bonus targets for the year. The targets remain the same as the previous year and the Committee decided to keep the
EPS growth targets for the annual bonus as per pre-Covid expectations but adjust those for the share matching option
scheme (“Share Matching Plan”). Regarding the Share Matching Plan, EPS CAGR was adjusted because of the scale of
78
Annual Report and Accounts 2021
Annual Report and Accounts 2021
79
OverviewStrategic ReportGovernanceFinancial Statements Remuneration Policy
the business, meaning compound growth rates went from 10-17% to 8-15%. The Committee believes setting the targets
at this level would make sure they continue to stretch and motivate our executives. The policy table on pages 82 to 83
sets out further details of the performance metrics.
In line with the Group-wide pay freeze, we did not implement any increases in salary, fees or benefits for any director
(Executive or Non-Executive) during the year.
Workforce & Fair pay
Our reward philosophy (be/rewarded) is to ensure our team members are fairly rewarded for the contribution they make.
During the financial year we have made two exceptional bonuses to our team, to ensure that every team member (where
not receiving other types of bonus or variable pay) was recognised for the strong performance across the Group. We
have also continued to conduct market evaluation and pay benchmarking exercises, to ensure competitive and fair pay
practices. In some markets we have added to benefits such as health insurance, to ensure we remain competitive and
During FY22, the Committee will continue to review executive bonus targets and performance metrics closely ahead of
fair to our team.
FY21/22 to make sure they reflect current circumstances.
New CFO Recruitment
During the financial year, GBG undertook a recruitment exercise to appoint a successor to the CFO. In doing so, the
Board sought benchmarking information from our remuneration advisor, as well as other market insights. On this basis,
an appropriate competitive package was determined to appoint a high calibre Executive, and following an extensive
search supported by Odgers Bernstein, the Remuneration and Nomination Committees approved an offer to David Ward.
David joined GBG in May 2021. Upon his appointment David Ward received a base salary of £375,000, a car allowance
of £12,000, a 5% pension contribution (mirroring standard UK team member contribution), a bonus of up to 130%, and
he will be eligible for share options under GBG’s Share Matching Plan. Both bonus and Share Matching Plan are in line
with current CFO and Group MD plans. In addition and as previously reported, David Ward received 150,000 Incentive
Options upon joining, which vest in equal tranches from years one to three. These options are awarded as compensation
to match the earnings and incentives forfeited on leaving his former employer.
Performance and Decisions on Remuneration Taken During 2020-21
Company performance
Despite the impact of Covid-19 on the business and operations, GBG has continued to meet the Board’s growth
expectations throughout the year, with revenue increasing by 9.3% and organic growth of 12.1% on a constant
currency basis.
Payment of Deferred Bonus for Executive Directors
As noted above, the Committee initially deferred the payment of the Executive bonuses accrued during 2019/20 then
following a strong half-year performance paid the bonuses to the Executive Directors in December 2020.
Annual Bonus
In light of this year’s strong performance and targets being met, the CEO, CFO & COO and the Group Managing Director
earned annual bonuses for FY21 totalling 143.3%, 123.3% and 123.3% of their respective salaries.
Share option awards
On 18 December 2020, the CEO, CFO & COO and Group Managing Director received share match awards under the
Company’s share matching scheme following their reinvestment of salary and bonus in purchasing shares in GBG. In
response to feedback from shareholders, vesting of awards made from FY20 onwards are now subject to an additional
Total Shareholder Return (TSR) performance measure. As a result, vesting of 75% of the award will be based on GBG’s
EPS growth and vesting of 25% of the award will be subject to GBG’s TSR, measured against the FTSE250 (excluding
Investment Trusts).
Further details of these awards together with share option vesting and exercises, all of which have been publicly
announced, are set out on pages 87 to 88.
Engagement with Shareholders
During the 2020/21 financial year, we consulted with major shareholders in relation to a number of aspects of executive
remuneration for the year ahead. The Committee continues to monitor closely the impact of Covid-19 on the business
and wider economy in light of future developments.
Committee evaluation
The Committee’s performance was evaluated during the year with no areas of focus to report.
Looking forward to financial year 2021-2022
GBG has always recognised the need to report in an open and transparent manner and align with shareholder and
stakeholder expectations. The policy table on pages 82 to 84 sets out how annual bonus and long-term incentives
operate under the remuneration policy with some information on the historic parameters.
We hope that you will find this Report to be informative and transparent and we look forward to receiving your support.
We are committed to and encourage open dialogue with our shareholders and are pleased to hear feedback. You can
find further information about how we engage with stakeholders in our Section 172 Statement on pages 99 to 103.
Natalie Gammon
Remuneration Committee Chair
14 June 2021
Executive Director Remuneration Policy
Our remuneration policy is formulated to attract and retain high-calibre executives and motivate them to develop and
implement our business strategy to optimise long-term value for our stakeholders. It is our intention that this policy
should conform to best-practice standards, continuing to apply these for 2021 and later years. We will continue to
review these on an ongoing basis. The policy is based on the following key principles:
n
n
n
n
n
The total reward level is competitive enough to attract and retain high-calibre executives
Executives earn total incentive-based rewards by meeting demanding performance standards consistent with
shareholder interests
The Committee will structure incentive plans, performance measures and targets to operate soundly throughout the
business cycle
The Committee will prudently design long-term incentives so these do not expose shareholders to unreasonable
financial risk
In considering the market positioning of reward elements, the Committee will consider the performance of the
Group and of each individual Executive Director
n Reward practice will conform to best practice standards as far as reasonably practicable
80
Annual Report and Accounts 2021
Annual Report and Accounts 2021
81
OverviewStrategic ReportGovernanceFinancial Statements Remuneration Policy continued
When formulating the scale and structure of remuneration levels the Remuneration Committee considers market
rates, drawn from external market data, for the level of remuneration offered to directors of comparable type and
seniority in other companies whose activities are similar to GBG. In addition, we also consider the pay and employment
conditions of our team members when determining Directors’ remuneration. Where appropriate we seek advice from
external consultants and were advised by h2glenfern during the year. No Director was involved in deciding the level and
composition of their own remuneration.
Each Executive Director’s remuneration package consists of basic salary, bonus, share options, health and car benefits,
prolonged disability insurance and pension contributions. We maintain an appropriate balance between the fixed and
performance related remuneration elements. The details of individual components of the remuneration packages and
service contracts are outlined in the table below.
Bonus and share option awards to Executive Directors are subject to clawback and malus provisions. In addition,
Executive Directors are required within 5 years of their appointment to build and subsequently maintain, a minimum
level of share ownership in GBG shares. Details of the minimum shareholding policy are outlined in the table below.
This part of the report sets out the Executive Director’s remuneration policy. The table below details the policy on each
element of remuneration and how it operates.
Element
Link to
remuneration
policy/
strategy
Key features/
Operation
Potential
value
Performance metrics
Base salary
To attract and
Reviewed annually,
Effective 1
None
retain high-calibre
changes effective from
April 2020:
executives.
1st June. Executive
CEO salary:
Director’s experience,
£504,300 COO
responsibilities and
& CFO salary:
performance taken
£294,175
into consideration.
GMD Salary:
Performance is
£294,175
assessed both from an
individual and business
perspective.
Benefits
To provide an
Benefits include
The potential
None
attractive package
but are not limited
alongside basic
to private medical
value of
medical
salary to attract
insurance and dental
insurance
and retain
executives.
insurance. The
benefits is
Company provides
limited by the
cash in lieu of any car
terms of the
benefits.
policy.
Pensions
To provide market
The Company
CEO: 17.5% on
None
competitive
contributes to
basic salary
arrangements.
executives’ existing
personal pension
schemes. Cash
payments in lieu of
COO & CFO:
12.5% on basic
salary
pension are available in
the event an executive
GMD: 12.5%
on basic salary
has exceeded their
personal pension
allowance.
Element
Performance
related bonus
Link to
remuneration
policy/
strategy
To incentivise
achievement of
Company profit
targets and other
near-term strategic
objectives.
Long-term
incentives
(Share
Matching Plan)
To align executives
to the interests
of shareholders
and to incentivise
long-term financial
performance.
Key features/
Operation
Potential
value
Performance metrics
Based on performance
against targets related
to financial and
individual KPIs agreed
at the start of the year.
No formal deferral
requirement.
Executives can re-
invest up to 80%
of their bonus in the
Share Matching Plan.
In the past, Executives
have reinvested large
proportions of their
bonus in shares.
Participants may
purchase shares
up to a maximum
aggregate value of
80% of the amount
of their bonus and/or
20% of their annual
salary (‘Investment
Shares’). All of these
amounts are net of the
employee’s national
insurance and income
tax paid.
In consideration,
the Company grants
an option to allot a
number of matching
shares in proportion to
the Investment Shares
acquired on a grossed
up for income tax
basis.
Payments
capped at
150% of salary
for the CEO
and 130% of
salary for the
CFO,COO and
GMD
Matching
shares awarded
are capped
at up to three
times the
number of
Investment
Shares
purchased by
the participant.
For years
ended 31
March 2018
and 31 March
2019: matching
rates of 1.75x
and 2.0x
were applied
respectively.
For the year
ended 31
March 2020:
2.0x matching
rate was
applied.
For year ended
31 March 2021:
2.25x matching
rate was
applied.
EPS growth targets and
non-financial KPIs aligned to
strategic objectives. These
include improving employee
engagement, increasing
GBG’s Net Promoter Scores
and increasing organic growth.
For the executives the
maximum pay-out for the EPS
growth target is currently
130% of base salary for the
CEO and 110% of base salary
CFO, COO and GMD.
The maximum pay out for all
executives for the individual
KPIs is currently 20% of base.
The EPS CAGR and Total
Shareholder Return (”TSR”)
conditions detailed below
are measured over three
consecutive financial years.
For the award made during
the year ended 31 March 2018
and 31 March 2019, 25% of
the award will vest if 10% EPS
CAGR is achieved with full
vesting being applied where a
level of 22.5% EPS CAGR is
achieved.
For the awards made during
the year ended 31 March 2020,
25% of the award will vest if
10% EPS CAGR is achieved
with full vesting being applied
where a level of 17.5% EPS
CAGR is achieved.
For the awards made during
the year ended 31 March
2021, two performance criteria
(EPS CAGR and TSR) have
been applied with 75% of
the award being subject to
the achievement of an EPS
CAGR measure and 25% of
the award being subject to the
achievement of a TSR measure
(against the FTSE250 as a peer
group), as follows:
82
Annual Report and Accounts 2021
Annual Report and Accounts 2021
83
OverviewStrategic ReportGovernanceFinancial Statements Remuneration Policy continued
Element
Link to
remuneration
policy/
strategy
Key features/
Operation
Potential
value
Performance metrics
Consideration of employment conditions elsewhere in the Group
The Committee considers pay and employment conditions of team members throughout the Group when determining
executive remuneration. The Committee considers the relationship between Executive Director rewards and broader
changes to UK team members’ remuneration. Whilst the company does not formally consult with team members as part
of the process, the Board seeks feedback from employee surveys and takes a general view on employee remuneration
n
where EPS CAGR is a
into account when determining executive remuneration.
measure, 25% of this part
of the award will vest if 8%
EPS CAGR is achieved with
full vesting being applied
where a level of 15% EPS
CAGR is achieved.
n
where TSR is a measure,
25% of this part of the
award will vest where
medium TSR performance
is achieved with full vesting
being applied where upper
quartile performance is
achieved.
Shareholding
Incentivises
Target value to be
n/a
n/a
guideline
executives to
achieve the
Company’s long-
term strategy and
achieved over five
years:
CEO – 200% of salary
create sustainable
CFO & COO – 200%
stakeholder value.
of salary
Aligns with
shareholder
interests.
GMD – 200% of salary
Until the shareholding
guideline has been
achieved, executives
must retain at least
half of vested LTIP
awards beyond those
needing to be sold to
cover tax liabilities and
exercise costs.
Performance share plan (“PSP”):
The Company operates a PSP for all team members which we use for senior managers and key staff. When adopted, the
Company stated that the awards were intended for team members below the level of Executive Director. No awards to
Executive Directors have been made to date. Awards are subject to a three-year EPS performance condition and a TSR
performance measure. Employees can be granted awards of nil cost options with an aggregate value on date of grant of
up to 100% of base salary. The awards are subject to malus and clawback.
Shareholder consultation
The Company welcomes dialogue with its shareholders over matters of remuneration and will seek the views of its
significant shareholders if and when it plans any major policy changes and decisions. The Chair of the Remuneration
Committee is available for contact with institutional investors concerning the Company’s approach to remuneration. The
annual report on remuneration will be put to an advisory vote at the coming AGM.
Service Contracts
The service contracts and letters of appointment of the Directors include the following terms:
Executive Directors
Chris Clark
Dave Wilson
Nick Brown
Non-Executive Directors
David Rasche
Liz Catchpole
Natalie Gammon
Date of contract
1 April 2017
1 October 2009
3 April 2017
1 September 2020
1 September 2020
26 October 2020
Unexpired term
(months) or rolling contract
Notice period
(months)
Rolling Contract
Rolling Contract
Rolling Contract
5
29*
7
6
6
6
1
1
1
*
Liz Catchpole has a 3-year fixed term contract which commenced on 1 September 2020. In accordance with GBG’s Articles of Association, her subse-
quent reappointment is subject to shareholder approval at an AGM.
There are no special provisions for compensation in the event of loss of office. The Remuneration Committee considers
the circumstances of individual cases of early termination and determines compensation payments accordingly.
Non-Executive Directors
The Chair and the other Non-Executive Directors’ remuneration comprise only of fees. The Board approves the Chair’s
fee on the recommendation of the Remuneration Committee. The Board approved the other Non-Executives’ fees
on the recommendation of the Chair and CEO. The Non-Executive Directors are not involved in any decisions about
their own remuneration. Non-Executive directors receive a base fee and can earn extra fees for holding the position of
Committee Chair or Senior Independent Director.
In line with the Group-wide pay freeze, no increase in Non-Executives fees for 2020-21 was made. For 2021-22 it is
proposed that Non-Executive base fees increase with the standard percentage applied to our UK based team members.
The fees for the Non-Executives are presented in the table below:
Position
Non-Executive Chair
Non-Executive Director
Committee Chair
Senior Independent Director
2020-21 Fee
2021-22 Fee
£145,000
£149,000
£55,000
£7,100
£7,600
£56,500
£10,000
£10,000
84
Annual Report and Accounts 2021
Annual Report and Accounts 2021
85
OverviewStrategic ReportGovernanceFinancial Statements Annual Report On Remuneration
Introduction
This Annual Report on Remuneration sets out information about the remuneration of the Directors of the Company, for
n
n
n
Improvements in employee engagement
Increasing GBG’s Net Promoter Scores (NPS)
Increasing level of organic growth
the period ended 31 March 2021.
Information subject to audit
Directors’ Remuneration
2021
Executives
Chris Clark
Dave Wilson
Nick Brown
Non-Executives
David Rasche
Charmaine Carmichael*
Liz Catchpole
Natalie Gammon
Salaries /
Fees
£’000
Cash in lieu
of benefits in
kind
£’000
Benefits in
kind
£’000
Bonuses
£’000
Pension
£’000
2021 Total
£’000
504
294
294
145
26
70
60
100
14
12
–
–
–
–
2
2
2
–
–
–
–
723
363
363
–
–
–
–
–
37
37
–
–
–
–
1,329
710
708
145
26
70
60
*
Charmaine Carmichael resigned from her position as a Non-Executive Director with effect from 30 August 2020.
2020
Executives
Chris Clark
Dave Wilson
Nick Brown
Non-Executives
David Rasche
Charmaine Carmichael
Liz Catchpole
Natalie Gammon
Salaries /
Fees
£’000
Cash in lieu
of benefits in
kind
£’000
Benefits in
kind
£’000
Bonuses
£’000
Pension
£’000
2020 Total
£’000
504
294
294
144
60
68
20
103
14
12
–
–
–
–
–
–
–
–
–
–
–
723
363
363
–
–
–
–
–
37
37
–
–
–
–
1,330
708
706
144
60
68
20
Note: Executive Directors’ bonus payments accrued for FY20 were deferred due to the Covid-19 pandemic and paid following strong half year performance
Details of cash in lieu of benefits in kind and benefits in kind are disclosed above.
Note: Chris Clark, having reached the maximum level permitted for a personal pension, receives a direct payment in lieu of his pension entitlement, which
was £88,253 (2020: £90,352). This figure is included in the column entitled ‘Cash in lieu of benefits in kind’ in the Director’s Remuneration table above.
Information not subject to audit
Annual Bonuses
As detailed earlier in this report, the Executive Directors have earned this bonus based on the Company’s performance
in the year ended 31 March 2021.
The details of the Executive Bonus Scheme 2020-21 are set out below and includes details of the annual bonus targets,
threshold and maximum levels, also the bonuses paid to each Executive Director. Bonuses were earned based on the
achievement of a range of financial and non-financial targets as follows:
n
n
EPS growth targets where the maximum pay out for the achieving the target was capped at 130% of base salary for
the CEO and 110% of base salary for the CFO and Group MD
achieving non-financial key performance indicators (KPIs), aligned to our strategic objectives and covering:
The maximum bonus that could be earned by the Executive Directors for achieving these targets was capped at 20% of
base salary.
EPS growth
Bonus awarded
Executive
Directors
Budget
22.43p
per share
Max 24.32p
per share
Achievement
of KPIs %
Total max
bonus %
EPS target
achieved %
KPI target
achieved % % of salary
£’000
Chris Clark
Dave Wilson
Nick Brown
40%
40%
40%
130%
110%
110%
20%
20%
20%
150%
130%
130%
130%
110%
110%
13.3% 143.33% £723
13.3% 123.33% £363
13.3% 123.33% £363
Long-Term Incentive Awards - Grants
Following the Executive Directors investment in acquiring shares in the Group in 2020-21, Chris Clark, Dave Wilson
and Nick Brown received share matching awards of 173,267, 89,062 and 89,864 shares respectively on 18 December
2020. The amount of their investment was grossed up for income taxes and the match rate of 2.25 times deemed
investment applied. 75% of the share matching awards are subject to a three-year adjusted EPS compound annual
growth performance condition and 25% to the TSR vesting requirements. The EPS element will vest on a sliding scale
from 25% if 8% EPS CAGR is achieved over three consecutive financial years with full vesting being applied where a
level of 15% EPS CAGR is achieved. In terms of the portion of the award subject to the TSR measure, 25% of the award
vests at median performance against the peer group (FTSE250) and 100% of award vests at upper quartile, i.e. the
75th percentile.
Long-Term Incentive Awards – Vesting and Exercises
As part of his recruitment package, Chris Clark, was awarded an option over 1,000,000 shares (“Incentive Option”)
on joining GBG on 1 April 2017. The exercise price of 293p was set as the closing share price on the day before his
appointment. The award vests in three equal tranches three, four and five years from grant subject to an adjusted EPS
compound annual growth rate with vesting commencing from zero at 16.25% and increasing on a straight-line basis to
full vesting at 26.25%. We previously reported that based on GBG’s EPS performance, 72.3% of this first tranche of
Chris Clark’s incentive option vested. We can confirm that this proportion of his option was subsequently exercised on
8 July 2020. At the time of this report and based on GBG’s EPS performance, 71.01% of the second tranche of Chris
Clark’s incentive option has vested.
Dave Wilson and Nick Brown received share matching awards of 113,208 and 119,917 shares respectively on 5 February
2018 following their investment in acquiring shares in the Group. The amount of their investment was grossed up for
income taxes and the match rate of 2.0 times deemed investment applied. The share matching awards were subject
to a three-year adjusted EPS compound annual growth performance condition with vesting commencing from zero at
10% and increasing on a straight-line basis to full vesting at 22.5%. We previously reported that based on GBG’s EPS
performance, these awards vested fully. We can confirm that these options were subsequently exercised on 8 July 2020.
Chris Clark, Dave Wilson and Nick Brown received share matching awards of 128,853, 125,379 and 125,376 shares
respectively on 27 February 2019 following their investment in acquiring shares in the Group. The amount of their
investment was grossed up for income taxes and the match rate of 1.75 times deemed investment applied. The share
matching awards were subject to a three-year adjusted EPS compound annual growth performance condition with
vesting commencing from zero at 10% and increasing on a straight-line basis to full vesting at 22.5%. At the time of this
report, based on GBG’s EPS performance, these awards 73.72% of each award has vested.
86
Annual Report and Accounts 2021
Annual Report and Accounts 2021
87
OverviewStrategic ReportGovernanceFinancial Statements
Annual Report On Remuneration continued
Information subject to audit
Directors’ Interest in the Group’s Share Option Schemes
Share
Option
Scheme
At
31 March
2020
Granted
During
Financial Year
Exercised
During
Financial Year
Lapsed
During
Financial Year
At
31 March
2020
–
–
10,238
230,762
–
92,333
Executive
Directors
Chris Clark
Dave Wilson
Nick Brown
SOS
SOS
SMP
SMP
SMP
SMP
SMP
SMP
SMP
SMP
SMP
SMP
SMP
10,238
989,762
128,853
206,136
–
1,334,989
113,208
125,379
125,226
–
363,813
119,917
125,376
122,721
–
–
–
–
173,267
173,267
-
-
-
89,062
89,062
-
-
-
89,864
368,014
89,864
Option
Exercise
Price (p)
293.00
293.00
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
2.50
Date
Exercisable
2020-27
2020-27
2021-22
2022-23
2023-24
2020-21
2021-22
2022-23
2023-24
2020-21
2021-22
2022-23
2023-24
–
666,667
128,853
206,136
173,267
1,174,923
–
125,379
125,226
89,062
339,667
–
125,376
122,721
89,864
337,961
–
–
–
241,000
113,208
–
–
-
113,208
119,917
–
–
–
119,917
–
–
–
92,333
–
–
–
–
–
–
–
–
–
–
SOS: Share option plans adopted in or prior to 2010 SMP: Share Matching Plan
Notes: Share option scheme details are provided in relation to the Directors’ Interests in each share option scheme offered.
Further information about the general terms of the share option schemes we offer can be found on pages 179 to 181 of
this Remuneration Report.
The aggregate gains made on the exercise of options during the year was £2,611,658 (2020: £5,936,428).
Information not subject to audit
At 31 March 2021, GBG’s quoted share price on the London Stock Exchange was 848p and the lowest and highest
prices during the year ended 31 March 2021 were 511p and 954p on 3 April 2020 and 29 December 2020, respectively.
Directors’ Interests
Set out below are the beneficial interests of the Directors and their families in the share capital of the Group at the
beginning and end of the year.
Ordinary shares of 2.5p
31 March 2021
1 April 2020
David Rasche
Chris Clark
Dave Wilson
Nick Brown
Charmaine Carmichael
Liz Catchpole
Natalie Gammon
699,333
239,264
142,009
575,085
N/A
12,195
5,872
699,333
273,050
170,122
500,000
27,937
12,195
–
There have been no other changes to Directors’ interests in the shares of the Group from the end of the year to 14 June
2021. The Register of Directors’ Interests contains full details of the Directors’ interests in the Group’s shares and is
open to inspection.
In accordance with the calculations set out in GBG’s Shareholding Policy, based on the closing share price at 1 July
2021 of 678p, the value of Chris Clark, Dave Wilson and Nick Brown’s shareholding represented 322%, 327% and
1325% of their salaries. This means that their holdings comply with the Shareholding Guidelines.
Shareholder Return Graph
The graph below shows the percentage change in total shareholder return for each of the last five financial years
compared to the FTSE Techmark (All Share) index.
The FTSE Techmark (All Share) was selected as it represents a broad equity index in which the Group can be compared
against.
300
250
200
150
%
100
50
0
-50
-100
2016
2017
2018
2019
2020
2021
GBG FTSE Techmark (All-Share)
88
Annual Report and Accounts 2021
Annual Report and Accounts 2021
89
OverviewStrategic ReportGovernanceFinancial Statements Annual Report On Remuneration continued
Remuneration in 2021-22
There will be no change to the annual salaries of the
Executive Directors for the year commencing 1 April 2021,
which are as follows:
CEO: £504,300
Exiting CFO & COO: £294,175
Group Managing Director: £294,175
New CFO: £375,000
Salary
Long-Term Incentives
The Remuneration Committee will continue to monitor the
remuneration of Executive Directors of other companies
in the IT sector and other listed companies with similar
market capitalisation to ensure that the Executive
Directors remain sufficiently rewarded to promote long-
term success. The Remuneration Committee did approve
a standard rate company pay increase of 2.8% for each
Executive Director for the year commencing 1 April 2021
which they each chose to decline.
Benefits
There will be no change to the benefits for the Executive
Directors in the year commencing 1 April 2021.
Annual Bonus
Annual bonus for the year commencing 1 April 2021 will
be operated within the policy disclosed in this report. The
principles of bonus criteria which will be applied to each
Executive Director during the year ending 31 March 2022
will be similar to those applied during the year ended 31
March 2021, with the addition of a 4th KPI focused on
ESG. The targets for the annual bonus for 2021-22 are not
being disclosed in this report as that information is deemed
commercially sensitive and may be interpreted as forecast.
That information will be disclosed retrospectively in the
2022 Annual Report.
Non-Executive Director Remuneration
The Remuneration Committee intends to make further
Share Matching Awards in 2021-22. These will be made
in line with the remuneration policy. The Remuneration
Committee intends to apply a matching rate of 2.25x for
awards for EDs and a matching rate of 3.0x of awards to
the CEO to be made in the current year. The Committee
will determine the levels, performance conditions,
weighting and growth targets to be applied at the time
of award and disclose them in the 2022 Annual Report.
To create alignment and drive business performance
the Committee sees that it is appropriate to move to an
Absolute EPS Threshold for 2021-22 scheme awards in
order to overcome the specific Covid-related volatility of
2020-21. In view of the performance of the company’s
significantly increased size and its strategic outlook,
the Committee sees that it is appropriate to vary the
vesting and target ranges for the award to be made this
year so that 50% of the award will vest if the Adjusted
EPS target is achieved in 2023-24, with full vesting
being applied only if EPS is a further 10% higher than
the target. The adjusted EPS target has been set by the
Remuneration Committee to align with current market/
analyst consensus performance levels. We believe that
the new range represents robust and demanding targets
in view of the company’s increased scale.
The Executive Directors together with the Chairman
determined that, taking taken into account the
substantial demands on NED time with significant
acquisition discussions and reviews, as well as the
additional governance required on all committees and
overall board work, the base fees for GBG’s two NEDs
and the Chairman will be increased by the standard
company rate of 2.8% to £56,500 and £149,000 per
annum, respectively. The additional fees for the Audit and
Remuneration Committee Chairs and Senior Independent
Director of £7,100 and £7,600, respectively, will increase
to £10,000 each.
90
Annual Report and Accounts 2021
Annual Report and Accounts 2021
91
OverviewStrategic ReportGovernanceFinancial Statements
Nomination Committee Report
Key Responsibilities
The primary role and responsibilities of the Committee are to:
n
n
Ensure that appropriate procedures are in place to nominate and select candidates for appointment to the Board,
particularly in terms of the balance of skills, experience, independence, knowledge and diversity of the Board
Make recommendations to the Board about new appointments, re-electing Directors, succession planning and
Board composition, particularly the benefits of diversity on the Board, including gender
Committee Meeting and Attendance
departure was known, however, the Committee purposely focused its efforts on guiding the Company through the
Covid-19 pandemic. I am pleased to say that the Committee has now started the process with an executive search firm
and I look forward to updating you on progress made in this area in due course.
I am also pleased that Natalie Gammon has settled in well, following her appointment to the Board, which we reported
last year and is making positive contributions to the Board and the committees she sits on.
As always, the Committee continues to monitor the balance of skills and experience on the Board as well as its
independence, diversity and knowledge. We have good diversity of thought and an open culture which allows all Board
members to express their opinions and challenge the executives constructively. We would wish to continue this open
culture.
The Nomination Committee held 4 meetings during the year. The attendance details are set out below:
Appointments to the Executive Team
During the year, we have also seen some changes to our Executive Team. In August, Lara Clark joined us as Chief
Regulation Officer, in October Dev Dhiman joined as Regional Managing Director in APAC and Chris Luttrell was
promoted to CEO of IDology. Finally, Boris Huard was appointed Managing Director of Identity and Fraud in November
2020. All of these appointments have been made to further support GBG in delivering its strategy and to strengthen the
David
Rasche
3/4 ***
Chris
Clark
4/4
Dave
Wilson
2/4 *
Charmaine
Carmichael
2/4 **
diversity of our Executive Team.
Diversity and Inclusion
Liz
Catchpole
3/4 ***
Natalie
Gammon
3/4 ***
Footnote - The Nomination Committee is made up of members drawn from the Board as and when the Committee needs them. The table above shows
everyone who served on the Committee during this financial year.
*
Dave did not serve on the Committee for the appointment of his successor.
**
Charmaine resigned from the Board effective 30 August 2020 and her attendance is calculated against the number of meetings she was eligible to
attend prior to her resignation.
*** David, Liz and Natalie did not serve on the committee for their own re-appointment, therefore their attendance reflects their absence from this
particular meeting.
Dear Shareholder
On behalf of your Board, I am pleased to present the Nomination Committee Report for the year ended 31 March 2021.
Appointments to the Board
During the year, the Committee led the succession plan for the Chief Financial Officer (CFO) and recommended to the
Board the appointment of David Ward to the position of CFO, replacing Dave Wilson when he retires from the Board
and Group. David Ward joined the Group in May 2021 to work alongside Dave Wilson on an orderly handover, with Dave
Wilson expected to officially step down from his role at the end of June 2021. The Committee was also involved in the
succession plan for the Company Secretary and recommended to the Board the appointment of Annabelle Burton,
replacing John Constantin when he retired as Group Company Secretary on 31 March 2021.
Charmaine Carmichael stepped down from the Board in August 2020 as a result of her taking up a new full-time
executive role, which required her to relinquish her external non-executive board commitments. The Committee would
have usually carried out a search process for a replacement Non-Executive Director immediately once Charmaine’s
Diversity is important when we appoint someone new to the Board, or across the Group. We make sure our recruitment
processes do not discriminate against existing team members and applicants. The Group’s team members have a broad
range of skills, backgrounds, experience and diversity reflecting both the type of industry we are in and the places
where we operate.
We are committed to equal opportunities in every part of our business and we promote team members on merit. We
recruit, train, promote and retain skilled and motivated people regardless of gender, age, marital status, disability,
sexual orientation, race, religion, ethnicity or national origin. In line with this, we also promote a culture of openness and
responsibility in our business.
We want to increase the number of women across all levels of our organisation. As a global business we always consider
our success against our overall people diversity. Part of our significant growth in the last 12 months has been outside of
the UK. As a result of this we have seen an increase of women in roles across the Group, with women comprising 37%
of our total workforce (2020: 36%), 20% of the Executive Leadership Team (2020: 17%) and 33% of our Board of
Directors (2020: 43%) following the departure of Charmaine Carmichael in August 2020.
During the year, the Group launched a ‘be/yourself’ programme centred on ethnicity & culture, gender, experience, age
and LGBTQ+. The ‘champions’ of this campaign produced excellent content to support each area and further educate
other team members of GBG. This supports our intentions of becoming an even more inclusive organisation that is
representative of our ambitions. More information on this can be found in our ESG Statement on pages 46 to 52.
Board & Committee Evaluation
The annual Board & Committee evaluation took place during the year and showed that the main areas of focus were;
continuing to work towards effective management succession and improving Board composition and balance, all of which
were highlighted in the last external Board evaluation. We have taken and continue to take steps, to improve our reviews
of succession planning from operational and strategic standpoints. We will also continue to keep the Board composition in
mind when recruiting for further Board appointments, as we intend to do this year. We expect to carry out another external
evaluation towards the end of the year and will report on the outcome of this in next year’s Annual Report.
The Committee’s performance was also reviewed as part of the annual evaluation, with no areas of focus to report
Terms of Reference
The Nomination Committee’s terms of reference, including its role and the authority the Board delegates to it, are on the
Group’s website: www.gbgplc.com/investors
David Rasche
Nomination Committee Chair
14 June 2021
92
Annual Report and Accounts 2021
Annual Report and Accounts 2021
93
OverviewStrategic ReportGovernanceFinancial Statements Directors’ Report
The Directors present their report, together with the audited accounts in relation to the Group activities for the year ended
31 March 2021.
In accordance with s414c of the Companies Act 2006, certain matters that would otherwise be required in the Directors
Report is included in the Strategic Report or elsewhere in this document as indicated in the table below and is incorporated
into this report by reference.
Statutory Information
Section
Appointment and Reappointment of Directors
Biographical Details of the Directors
Change of Control
Directors’ Indemnities
Directors’ Interests
Directors’ Responsibility
Disclosure of Information to the Auditor
Employment Policies and Employee Engagement
Environmental Reporting
Employees with Disabilities
Future Developments
Directors’ Report
Corporate Governance Statement
Directors’ Report
Directors’ Report
Remuneration Report
Statement of Responsibilities
Directors’ Report
ESG Statement & Directors’ Report
ESG Statement & Directors’ Report
ESG Statement
Chairman’s Statement, the Chief Executive’s
Going Concern
Independent Auditor
Results and Dividends
Research and Development Activities
Restrictions on the Transfer of Securities
Rights Attached to Shares
Risk Management
Risk Appetite and Principal Risks
Share Capital Structure
Significant Related Party Agreements
Substantial Shareholders
Statement of Corporate Governance
Voting Rights and Ordinary Shares
Financial Results and Dividend
Statement and the Finance Review
Directors’ Report
Directors’ Report
Directors’ Report
Directors’ Report
Directors’ Report
Directors’ Report
Audit & Risk Committee Report
Principal Risks and Uncertainties Report
Directors’ Report
Note 32 to the Accounts
Directors’ Report
Corporate Governance Statement
Directors’ Report
Page
96
58
96
96
88
104
97
51 & 96
56 & 97
45
9, 22 & 24
98
97
94
97
95
95
76
28 to 40
95
182
94
64 to 71
95
The Group’s financial results, risk management objectives and policies are discussed in the Finance Review on pages
24 to 27 and within note 27. The Directors have recommended a final ordinary dividend of 3.40 pence per share (2020:
nil pence per share) amounting to £6.7 million (2020: £nil). If approved by shareholders at the Annual General Meeting
(AGM), the final dividend will be paid on 3 August 2021 to ordinary shareholders whose names were on the Register
of Members on 25 June 2021. A Dividend Reinvestment Plan (DRIP) will be offered, allowing eligible shareholders to
reinvest their dividends into GBG shares. Further information regarding the DRIP is set out on page 26.
Substantial Shareholders
In accordance with the Disclosure and Transparency Rules, we have been notified of the following interests in the
ordinary share capital, representing 3% or more of our issued share capital. Details of substantial shareholders is
regularly published and updated on our website. The position as at 31 March 2021 is detailed below:
Substantial Shareholder
No. of Shares Owned
at 31 March 2020
Percentage of Shares Owned
at 31 March 2021
BlackRock
Liontrust Sustainable Investments
AXA Framlington Investment Managers
7,443,079
7,134,025
6,899,678
3.79%
3.63%
3.51%
Since 31 March 2021 to the date of release of this Annual Report and Accounts, we have not received any notifications
from our shareholders in accordance with the Disclosure and Transparency Rules
Additional Information for Shareholders
The following provides the additional information required for shareholders as a result of the implementation of the
Takeovers Directive into UK law.
Share Capital Structure
At 31 March 2021, the Group’s issued share capital comprised:
Ordinary shares of 2.5p each
Restrictions on transfers
No.
196,303,554
£’000
4,908
% of Total
Share Capital
100%
We are not aware of any agreements between shareholders that may result in restrictions on the transfer of securities
and for voting rights.
Ordinary shares
On a show of hands at a General Meeting of the Group, every holder of ordinary shares present in person and entitled
to vote shall have one vote and on a poll, every member present in person or by proxy and entitled to vote shall have one
vote for every ordinary share held. The notice of the General Meeting specifies deadlines for exercising voting rights
either by proxy notice or present in person or by proxy in relation to resolutions to be passed at the General Meeting.
All proxy votes are counted and the numbers for, against or withheld in relation to each resolution are announced at the
AGM and the results are released as an announcement after the meeting.
There are no restrictions on the transfer of ordinary shares in the Company other than:
n
n
Certain restrictions may from time to time be imposed by laws and regulations (for example, insider trading laws and
market requirements relating to close periods)
Pursuant to the internal policies of the Company whereby certain employees team members of the Company require
the approval of the Company to deal in the Company’s securities
Articles of Association
The Company’s Articles of Association may only be amended by a special resolution at a General Meeting of the
shareholders. This year the Company are not recommending any changes.
Substantial Shareholder
Aegon Asset Management UK
Octopus Investments
Capital Group
Aberdeen Standard Investments
Swedbank Robur
Kabouter Management
No. of Shares Owned
at 31 March 2020
Percentage of Shares Owned
at 31 March 2021
Directors and their interests
12,652,839
12,446,881
10,893,800
7,905,221
7,842,380
7,642,510
6.45%
6.34%
5.55%
4.03%
4.00%
3.89%
The names and brief biographical details of each Director as at the date of this report are set out on page 58.
The Directors who have served during the year ended 31 March 2021 and details of their interests in the share capital
and share options are set out in the Report on Directors’ Remuneration on pages 88 to 89.
94
Annual Report and Accounts 2021
Annual Report and Accounts 2021
95
OverviewStrategic ReportGovernanceFinancial Statements
Directors’ Report continued
Directors are reappointed by ordinary resolution at a General Meeting of the shareholders The Board can appoint
a director but anyone so appointed must be reappointed by an ordinary resolution at the next General Meeting. In
accordance with the Articles of Association, David Ward, who is expected to be appointed to the Board on 1 July 2021,
will, being eligible, stand for election at the next AGM.
Directors who have held office for more than three years since their last appointment are eligible for re-election by
rotation at the next AGM. In accordance with the Articles of Association, Liz Catchpole having been appointed in 2018
will be retiring by rotation and seeking reappointment by the Group’s shareholders.
Any Non-Executive Director considered by the Board to be independent who has served on the Board for at least
nine years or more will be subject to annual re-election. In 2021 this applies to David Rasche and he will be seeking
re-election at this year’s AGM.
The Directors confirm that, having conducted the board performance evaluation process Liz Catchpole and David
Proposed resolutions for the Annual General Meeting
Details of business to be conducted at this year’s AGM to be held on 29 July 2021, are contained in the Notice of the
Annual General Meeting which will be communicated to shareholders separately. It is the opinion of the Directors that
the passing of these resolutions are in the best interest of the shareholders.
Financial
The Group’s financial risk management objectives and policies are discussed in the Finance Review on pages 24 to 27
and within note 27.
Research and development
Rasche continue to contribute effectively and demonstrate commitment to their roles. In addition, the Board has
Research and development activities continue to be a high priority with the development of new products and
considered David Rasche’s length of service and is confident that he remains independent in both character and
maintaining the technological excellence of existing products. During the year ended 31 March 2021, approximately
judgement. Details of their notice periods and service agreements are detailed in the Report on Directors’ Remuneration
34% (2020: 38%) of our employees were employed in research and development activities. This figure is lower than
on page 85.
Directors’ liabilities
previous years due to GBG’s growth which has brought the overall figure down.
Auditor
The Directors have been indemnified against liability in respect of proceedings brought by third parties, subject to the
A resolution proposing the re-appointment of Ernst & Young LLP as auditor to the Group will be put to the shareholders
conditions set out in the Companies Act 2006. Such qualifying third-party indemnity provisions remain in force at the
at the AGM.
date of approving this Directors’ Report.
Workforce policies and employment engagement
We continue to involve our team members in the future development of the business. Information is provided to team
members through virtual briefing sessions, our website and intranet ‘be/connected,’ which is continually updated. How
we engage our team members and have due regard to their interests in considering principal decisions taken during the
year are demonstrated in the s172 statement on page 99.
We are committed to the investment in our team at all levels to ensure a culture of continuous improvement. In order to
attract and retain a high calibre of team members we provide various benefit packages including share options schemes
in order to align team members’ interests with the long-term strategic objectives of the Group. We are committed to
our equality and diversity polices and seek regular feedback and engagement from our work force. Further information
regarding our work policies and engagement can be found on page 51 of the ESG Statement. Information regarding
GBG’s activities to promote diversity is contained within the Nomination Committee report on page 93.
Change of control
Within the Group’s revolving credit facility, the lender has the right to demand immediate payment of any outstanding
balances upon a change of control of the Group following a takeover bid.
Directors’ statement as to disclosure of information to auditor
The Directors who were members of the Board at the time of approving the Directors’ Report are listed on pages 58 to
61. Having made enquiries of fellow Directors and of the Group’s auditor, each Director confirms that:
n
n
To the best of their knowledge and belief, there is no information relevant to the preparation of their report of which
the Group’s auditor are unaware
They have taken all the steps a director might reasonably be expected to have taken to be aware of relevant audit
information and to establish that the Group’s auditor are aware of that information
Environment
Last year we calculated direct emissions from combustion of fuel (diesel and petrol) and operations of facilities, as 494
tonnes of CO2 (2,006,498 KWH). This year, in the UK, we have increased the accuracy of our emissions data with the
Streamlined Energy and Carbon Reporting (SECR) regulations. The data included this year covers greenhouse gas
emissions and energy use data for the period 1 April 2020 to 31 March 2021 and will be used for future comparison.
The data covers energy usage across all UK entities in the Group. Energy usage from subsidiaries outside of the UK are
outside the scope of this report and therefore excluded from the figures below.
The Group does have an agreement with a data supplier which, if the Group were acquired by a competitor of that data
supplier, would allow it to terminate its agreement with the Group. The data supplier would however, continue to be
UK energy use
bound to service arrangements with the Group’s customers’ existing on the date of termination.
Upon a change of control, share options may be exercised within six months of the time when the change of control
takes effect and any subsequent conditions at the offer process have been satisfied.
There are no agreements between the Group and its Directors or employees providing for compensation for loss of
office or employment (whether through resignation, purported redundancy or otherwise) that occurs because of a
takeover bid.
Energy consumption used to calculate emissions (kWh)
Energy consumption break down (kWh):
Natural Gas
Electricity
Reimbursed Mileage
Consumption in metric tonnes CO2e
UK energy use
Natural Gas (scope 1)
Purchased Electricity (scope 2)
Reimbursed fuel and electricity (scope 3)
Total gross emissions in metric tonnes CO2e
Intensity ratio in tonnes CO2e per UK employee (FTE)
FY 2021
571,221
76,716
434,073
60,432
FY 2021
14.11
101.20
23.69
139.00
0.27
96
Annual Report and Accounts 2021
Annual Report and Accounts 2021
97
OverviewStrategic ReportGovernanceFinancial Statements
Directors’ Report continued
Section 172 Statement
Quantification and reporting methodology
We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG
Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company
Reporting.
Intensity measurement
The chosen intensity measurement ratio is total gross emissions in tCO2e/FTE
The Board is aware of and understands its duties under Section 172 of the Companies Act 2006 (“Section 172”) and that
engaging with our diverse stakeholder base is key to successfully managing GBG. This has never been more relevant
than during the current Covid-19 pandemic, where we continue to work hard to keep our team members safe and our
business viable. The information below sets out how we treat and interact with our stakeholder groups, which we believe
demonstrates how seriously the Board takes its responsibilities under section 172. You can find more information on
each of the statements and further detail on how the directors engage with each stakeholder group in the corresponding
section of this Annual Report (as indicated in the table below).
Measures taken to improve energy efficiency
Consequences of any decisions in the long-term
Page Ref:
GBG continues to strive for energy and carbon reduction arising from their activities, however during this financial
reporting period no principal energy efficiency actions were undertaken.
Section 172 statement
Our s172 statement can be found on pages 99 to 103.
Going concern
The Group’s business activities, together with the factors likely to affect our future development, performance and
position are set out in the Chief Executive’s Review on pages 20 to 23. The financial position of the Group, its cash
flows and liquidity position are described in the Finance Review in pages 24 to 27.
In light of the unique and wide-ranging impact of the Covid-19 outbreak, the Group has carried out a diligent going
concern analysis. Full details of this analysis are set out in note 2.2 to the Annual Report.
Following consideration of the budget, downside and stress test scenarios, the Directors have a reasonable expectation
that the Company has adequate resources to continue in operational existence beyond the assessment period
which covers through to 30 September 2022. Therefore, the Directors continue to adopt the going concern basis of
accounting in preparing the consolidated financial statements.
By Order of the Board
Annabelle Burton
Company Secretary
14 June 2021
We recognise the importance of engaging with stakeholders to help inform our strategy
See the table on page
and Board decisions. We also acknowledge that every decision the Board has made will
101 (below) which sets
not necessarily result in a positive outcome for all of our stakeholders.
We carefully consider key and material decisions regarding the likely consequences
on all stakeholders and where appropriate, we discuss these matters with the affected
stakeholder group. This helps us understand their views and factor their feedback into our
decision process.
The business units and our central services teams regularly report to the Board about the
strategy, performance and key decisions they’ve taken. This assures the Board that we
consider stakeholder interests in decision-making and also that we consult the Board on
matters and decisions that require its support and approval
out some of the key
decisions we have
taken this year
The interests of all our team members
Page Ref:
Our people are key to our success and we want them to be successful both as individuals
ESG pages 42 to 57
and in the teams they operate. We are very proud of the culture we have across the Group
and the way that our team members work and collaborate together. Their cooperation
creates a unique environment in GBG, which our colleagues continue overwhelmingly to
recommend as a great place to work.
We support this culture by engaging with our team members through regular surveys; a
ESG pages 42 to 57
bi-monthly CEO webinar with a live Q&A session; awards for outstanding performance
in supporting our core values; annual kick-off seminars to provide in-depth detail of our
strategy and objectives and encouraging and supporting a range of team building events.
We support a number of initiatives and activities that focus on the health and wellbeing
of our people; diversity and inclusion; personal development opportunities and charitable
activities within the communities where we work.
The Board also regularly considers matters and initiatives as part of its commitment to
ESG pages 42 to 57
promote diversity and equality across all of our teams.
98
Annual Report and Accounts 2021
Annual Report and Accounts 2021
99
OverviewStrategic ReportGovernanceFinancial Statements
Section 172 Statement continued
The need to foster GBG’s business relationships with suppliers,
customers and others
Page Ref:
Suppliers: There is a direct correlation between the way we interact with our key suppliers
Strategic Report pages
and the quality of the product and services we deliver to our customers. Alongside looking
12 to 57
for new suppliers to enhance our business and to provide resilience, we also recognise the
importance of our existing supplier relationships. Developing these long-term relationships
builds trust and support within a partnership environment.
Customers: We build strong lasting relationships with our customers. We spend
Strategic Report pages
considerable time understanding their needs and views, listening to how we can improve
12 to 57
our products for them. We support this with our annual Voice of the Customer Survey.
Bankers: We actively engage with our bankers to secure optimum rates and terms, while
Finance Review pages
also providing them with information about the Group’s prospects and governance. By
24 to 27
doing this, we continue to secure long-term relationships, built on trust and mutual benefit.
Government and Regulators: Compliance with laws and regulations, especially in relation
ESG pages 42 to 57
to data privacy, accounting standards, health & safety and governance, are key focus
areas for the business. We actively engage with regulators as and when required.
GBG’s impact on the community and environment
Page Ref:
We engage with the communities where we operate by supporting local and international
ESG pages 42 to 57
charities, raising funds and encouraging team members to volunteer and participate in
activities that support these local causes. This includes our annual support of the GBG
Challenge, a global event which sees team members from all our locations completing
some form of challenge in order to raise money for their chosen charity.
We operate a ‘reduce, reuse and recycle’ policy across all our offices, which includes
ESG pages 42 to 57
technology and office consumables. To conserve energy, we have installed light sensors
as well as air conditioning and heating timers in our offices. We actively promote video
conferencing for team meetings to reduce unnecessary travel between offices.
GBG’s reputation for high standards of business and ethical
conduct
Page Ref:
GBG has a Code of Conduct which forms the basis of our approach to ethical behaviour.
ESG pages 42 to 57
We do not tolerate practices which breach any laws or regulations which could result in
reputational damage to the business. All members of our team are trained on the basic
compliance principles that underpin GBG’s Code of Conduct including: Modern Slavery;
Anti Bribery and Corruption and Anti-Tax Evasion. If team members have concerns, they
have access to a confidential, whistleblowing hotline that operates internationally.
To act fairly between GBG’s members
Page Ref:
GBG has only one class of share in issue and so shareholders benefit from the same
Corp Gov page 64
rights as set out in GBG’s Articles of Association. The Board recognises its legal and
regulatory duties and does not take decisions or actions, such as selectively disclosing
confidential or inside information that would provide any shareholder with an unfair
advantage. We have many lines of communication with our shareholders, including regular
investor presentations, results webcasts and the Annual General Meeting. Discussions
with shareholders cover a wide range of topics, including financial performance, strategy,
outlook and governance matters.
Key Decisions Made
The Board has operated effectively during the year and made a wide range of decisions in a way that would most likely
promote the success of the Company for the benefit of its members as a whole, having regard to the factors set out in
section 172 of the Companies Act 2006. Below, we’ve set out a number of decisions which demonstrates how the Board
have exercised this duty and considered the views of different stakeholder groups:
Issue
Decision:
Impact:
Stakeholder consideration:
Covid-19
Pandemic
The changing environment
The beneficial effects
In making its decisions, the Board
caused by Covid-19
of these actions were
carefully considered the long-term
meant that the Board
factored into the review
interests of stakeholders, especially
had to quickly approve
that the Board conducted
our team members, investors,
and support a range of
as part of an extensive
customers, suppliers and bankers.
decisions to conserve cash
stress test of GBG’s
and preserve liquidity,
balance sheet, cash and
including: an immediate
access to draw down
Group-wide pay freeze and
facilities.
The Board also considered the
importance in securing the support of
its bankers by demonstrating GBG’s
longer-term credentials to ensure
suspending the dividend
and deferring the bonus
payments accrued by the
Executive Directors.
The output of this
continued access to debt funding.
review meant the Board
could give appropriate
assurances about GBG’s
going concern, viability
and banking covenants.
Appointment of
As detailed in the
The Board agreed that
The Board considered the impact
a New CFO
Nomination Committee
David’s appointment was
of the appointment on the Board’s
Report, David Ward was
key to adding a director
composition and skill set, as well as
appointed to the Board on
with specific technical
how the position would support the
1 July 2021 having joined
skills and knowledge to
Non-Executive directors in having
GBG on 17 May 2021. The
support its competencies
an Executive Director with specific
Nomination Committee
and input as GBG
technical skills.
proposed the appointment
continues to grow and
decision and the Board
develop.
approved it.
Divestment
The Board carefully
The Board agreed that the
The Board considered the potential
of Marketing
considered the proposed
sale of GBG’s Marketing
implications for various stakeholders
Services
business
divestment, having
Services business would
(i.e. team members, investors and
originally discussed the
support GBG’s strategic
GBG as a whole). The Board noted
matter in December 2018,
focus on its core global
that selling to a company in the same
provisionally approved it in
capabilities in Location
sector, could save some team member
June 2019 and then finally
Intelligence, Identity
positions, rather than GBG potentially
approved it in January
Verification and Fraud
being forced to close the business in
2021.
Prevention.
the future.
100
Annual Report and Accounts 2021
Annual Report and Accounts 2021
101
OverviewStrategic ReportGovernanceFinancial Statements
Section 172 Statement continued
Issue
Decision:
Impact:
Stakeholder consideration:
Issue
Decision:
Impact:
Stakeholder consideration:
Divestment
The Board had discussed
The Board agreed that the
The Board agreed that the post
Award of share
During the year, the Board
Our vision is to have “the
As well as considering the benefits
of Employ
& Comply
business
this divestment case for
sale of GBG’s Employ &
divestment position would increase
save options
approved the award of
best and most engaged
to team members, the Board also
some time.
Comply business would
GBG’s organic revenue growth and
to all team
share options to all of
team members” so that
considered the potential impact of
The Board determined
that significant ongoing
investment would be
needed in this non-core
area with declining
revenues.
support GBG’s strategic
EBIT margins, which would allow
focus on its core global
us to increase investment capacity,
capabilities in Location
increase GBG shareholder value
Intelligence, Identity
and provide additional net cash. The
Verification and Fraud
Board considered that, seen from a
Prevention.
team perspective; while a difficult
decision, it would provide a more
certain long-term future for those in
roles that would be transferred across
to the buyer.
members on an
GBG’s team members
they contribute towards
this decision on investors in terms of
annual basis
on an annual basis under
GBG’s success. The
the long-term effect of share dilution
the Group’s share save
Board firmly believes
and share scheme headroom limits.
scheme.
this decision will have a
positive impact, not only
in engaging and rewarding
GBG’s team members,
but also in aligning their
interests with that of our
long- term investors.
Investigate
Investment
The investment case was
GBG Connexus is a highly
GBG Investigate will be available to
Asset
The Board decided
We were able to trace and
Reuniting shareholders with their
originally made to the
profitable line of business
all UK GBG customers, enabling them
Reunification
to introduce a share
reconnect with over 100
assets, demonstrates best practice in
Board in January 2020. It
which, although niche to
to conduct efficient and compliant
was then followed up and
the UK, provides a strong
investigations.
approved by the Board.
flow of cash to support our
broader businesses.
For team members, this investment
makes sure that we will continue to
and Share
Forfeiture
The rationale for acquiring
develop opportunities and income
Investigate (for £4m in
from our markets.
GBG equity) was to enable
GBG to access HooYu
Investigate’s IP in order to
protect and subsequently
grow GBG Connexus
revenue quickly.
In terms of our shareholders, we
made sure we bought a well-priced
asset and conducted extensive due
diligence to ensure the best chance of
success.
CredoLab
Investment
The investment case was
The Board agreed that
The Board considered it a lower
made to the Board in June
Credolabs was a sound
risk to invest in a company with
2020. The Board decided
investment.
proven skills and customers, rather
to make a $3m (c.£2.5m)
investment through issue
of GBG shares for an 11%
stake.
than develop these competences
ourselves. This provided a quicker
route to opportunities in a fast-paced
market.
Team Member
GBG operates an annual
The Board recognised
Team member engagement was a
Incentive
high achievers incentive
the issue and approved
major consideration, as well as the
trip initiative to recognise
the solution proposed
long-term uncertainty of when travel
members of our teams
by management to make
restrictions would be lifted. The
who have performed
an award totalling c.
Board decided we should continue to
exceptionally throughout
18k shares to 37 team
recognise team members’ contribution
the financial year.
members in July 2020,
to maintain employee motivation and
With travel restrictions
imposed by Covid-19, we
offered a share award
incentive instead.
with the condition that
engagement.
they could exercise the
option if they were still
employed by GBG on 1
May 2021.
forfeiture programme
shareholders representing
corporate governance.
following the completion
c. 100k shares. For those
of a tracing and
whom we were unable
notification exercise to any
to trace, their shares
shareholders who have
and unclaimed dividends
not had contact with the
were forfeited. The net
Company over the past
proceeds to GBG of this
12 years. The Company’s
process was c. £2.7m in
Articles of Association
cash.
were amended to allow
for this. Under the share
forfeiture programme
the shares and dividends
associated with shares
of untraced members are
forfeited.
We have removed the ongoing
requirement and cost of servicing
Untraced Members.
Where unsuccessful in tracing
shareholders, the return of funds
to GBG has improved GBG’s cash
position. This has both enabled us to
reduce our requirement on borrowings
and the associated costs involved and
it has also allowed us to invest in our
vision to build trust in a digital world.
In addition the Board has continued
to reimburse those shareholders that
have come forward after the deadline
of being able to make a claim, under
the share forfeiture programme, in
respect of their forfeited shares.
102
Annual Report and Accounts 2021
Annual Report and Accounts 2021
103
OverviewStrategic ReportGovernanceFinancial Statements Statement Of Responsibilities
Independent Auditor’s Report
To The Members Of GB Group Plc
Directors’ Responsibility Statement
The Directors are responsible for preparing the Annual Report and the Group and Company financial statements
in accordance with applicable United Kingdom law and international accounting standards in conformity with the
requirements of the Companies Act 2006.
The Directors are required to prepare Group and Company financial statements for each financial year which present
fairly the financial position of the Group and Company and the financial performance and cash flows of the Group and
Company for that period. In preparing the financial statements the Directors are required to:
n
n
Select suitable accounting policies in accordance with IAS 8 ‘Accounting Policies, Changes in Accounting Estimates
and Errors’ and then apply them consistently;
Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information;
n Make judgements and estimates that are reasonable and prudent;
n
n
Provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable
users to understand the impact of particular transactions, other events and conditions on the Group’s and the
Company’s financial position and financial performance; and
State that the Group and Company have complied with IFRSs, subject to any material departures disclosed and
explained in the financial statements.
The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable them to ensure that the financial statements comply
with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Company and
hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on The Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility Statement by Management
We confirm that to the best of our knowledge:
a)
The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and
fair view of the assets, liabilities, financial position and profit and loss of The Group and the undertakings included in
the consolidation taken as a whole.
b)
The strategic report includes a fair review of the development or performance of the business and the position of
the company and the undertakings include in the consolidation taken as a whole, together with a description of the
principal risks and uncertainties.
Opinion
In our opinion:
n
n
n
n
GB Group plc’s group financial statements and parent company financial statements (the “financial statements”)
give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 March 2021 and of
the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006;
the parent company financial statements have been properly prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006 and as applied in accordance with
section 408 of the Companies Act; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of GB Group plc (the ‘parent company’) and its subsidiaries (the ‘group’) for
the year ended 31 March 2021 which comprise:
Group
Parent company
Consolidated Balance Sheet as at 31 March 2021
Company Balance Sheet as at 31 March 2021
Consolidated Statement of Profit or Loss for the year
Company Statement of Changes in Equity for the
then ended
year then ended
Consolidated Statement of Comprehensive Income for
Company Cash Flow Statement for the year then ended
the year then ended
Consolidated Statement of Changes in Equity for the
Related notes 1 to 36 to the financial statements including a
year then ended
summary of significant accounting policies
Consolidated Cash Flow Statement for the year
then ended
Related notes 1 to 36 to the financial statements,
including a summary of significant accounting policies
The financial reporting framework that has been applied in their preparation is applicable law and international
accounting standards in conformity with the requirements of the Companies Act 2006 and, as regards to the parent
company financial statements, as applied in accordance with section 408 of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
c)
The Annual Report includes a fair review of the development, performance and position of The Group and the
financial statements section of our report. We are independent of the group in accordance with the ethical requirements
undertakings included in the consolidation taken as a whole, together with a description of the principal risks and
that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to
uncertainties that it faces.
By order of the Board
C G Clark
Director
D J Wilson
Director
14 June 2021
14 June 2021
listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
104
Annual Report and Accounts 2021
Annual Report and Accounts 2021
105
OverviewStrategic ReportGovernanceFinancial Statements
Independent Auditor’s Report continued
To The Members Of GB Group Plc
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group
and parent company’s ability to continue to adopt the going concern basis of accounting included the following
procedures:
n
n
n
In conjunction with our walkthrough of the group’s financial statement close process, we confirmed our
understanding of management’s going concern assessment process and also provided feedback to management to
ensure all key risk factors were considered in their assessment;
We obtained and reviewed the going concern assessment prepared by management for the period to 30 September
2022, being the going concern review period. We assessed the financial forecasts of the group to consider its ability
to continue to meet its liabilities as they fall due and remain in compliance with the covenants associated to the
group’s revolving credit facility;
We obtained management’s forecasts for the period to 30 September 2022 and checked the appropriateness of the
model, including the arithmetical accuracy, as well as the starting cash position as at 1 April 2021;
n We considered past historical accuracy of management’s forecasting;
n
n
n
n
n
n
We evaluated management’s assumptions applied in preparing the forecasts by corroborating to third party
data and/or by assessing changes from the prior period and considering whether there was any indication of
management bias, including consideration of any contrary evidence;
Management has modelled a downside scenario in their cash flow forecast in order to assess the impact of a
decline in revenue on covenant compliance and liquidity position. We evaluated the headroom under management’s
downside scenario, which formed the basis of management’s conclusions regarding going concern;
We evaluated management’s reverse stress testing on the forecast to understand how severe the downside scenario
would have to be to result in a covenant breach and/or elimination of the liquidity headroom;
We performed our own independent sensitivity analysis to assess the impact of changes in key assumptions,
including revenue growth rates, gross margin percentage and cash conversion rate;
We obtained an understanding of the availability and duration of the group’s revolving credit facility, including
evidence of extension of the facility to February 2023 and review of correspondence with the banks;
We reperformed covenant calculations and assessed cash flow forecasts along with appropriate sensitivity analysis
and reverse stress testing to assess current and projected covenant compliance by reference to the revolving credit
facility agreement;
n We read board minutes for any inconsistencies with the risks considered in the going concern assessment;
n
n
n
We assessed current trading performance by inspecting the April 2021 period end management accounts in
addition to making inquiries of management to identify any issues with the group’s current trading and profitability
through to the date of our audit report;
We enquired of management as to their knowledge of events or conditions beyond the period of their assessment
that may cast significant doubt on the entity's ability to continue as a going concern and compared their response to
our understanding from completion of our audit procedures; and
We read the disclosures in the Annual Report and Accounts to confirm that they were consistent with our
understanding of the going concern assessment that had been undertaken by the directors and that they
appropriately reflected the risks that had been considered and were in conformity with the relevant standards.
We note that management has performed a going concern assessment with a base case scenario, downside scenario
and reverse stress testing. They have extended the revolving credit facility in the period to February 2023.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the group and parent company’s ability to continue as a
going concern over the forecast period to 30 September 2022.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report. However, because not all future events or conditions can be predicted, this statement is not a
guarantee as to the group’s ability to continue as a going concern.
Overview of our audit approach
Audit scope
Key audit matters
n
n
n
We performed an audit of the complete financial information of four components and audit
procedures on specific balances for a further six components.
The components where we performed full or specific audit procedures accounted for 100% of
profit before tax and exceptional items, 99% of Revenue and 99% of total assets.
Revenue recognition: cut-off around year end
Materiality
n Accounting for business combinations – HooYu acquisition
n
Overall group materiality of £1,674,000 which represents 5% of profit before tax and
exceptional items.
An overview of the scope of the parent company and
group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our
audit scope for each company within the group. Taken together, this enables us to form an opinion on the consolidated
financial statements. We take into account size, risk profile, the organisation of the group and effectiveness of group
wide controls and changes in the business environment when assessing the level of work to be performed at each
company.
In assessing the risk of material misstatement to the group financial statements, and to ensure we had adequate
quantitative coverage of significant accounts in the financial statements, we selected ten reportable components within
the group.
Of the ten components identified, we performed an audit of the complete financial information of four components (“full
scope components”) which were selected based on their size or risk characteristics. For the remaining six components
(“specific scope components”), we performed audit procedures on specific accounts within that component that we
considered had the potential for the greatest impact on the significant accounts in the financial statements either
because of the size of these accounts or their risk profile.
The reporting components where we performed audit procedures accounted for 100% (2020: 100%) of the group’s
profit before tax and exceptional items, 99% (2020: 99%) of the group’s revenue and 99% (2020: 100%) of the
group’s total assets. For the current year, the full scope components contributed 88% (2020: 96%) of the group’s profit
before tax and exceptional items, 88% (2020: 88%) of the group’s revenue and 87% (2020: 90%) of the group’s total
assets. The specific scope components contributed 12% (2020: 4%) of the group’s profit before tax and exceptional
items, 11% (2020: 11%) of the group’s revenue and 12% (2020: 10%) of the group’s total assets. The audit scope of
these components may not have included testing of all significant accounts of the component but will have contributed
to the coverage of significant accounts tested for the group.
106
Annual Report and Accounts 2021
Annual Report and Accounts 2021
107
OverviewStrategic ReportGovernanceFinancial Statements Independent Auditor’s Report continued
To The Members Of GB Group Plc
The charts below illustrate the coverage obtained from the work performed by our audit teams.
Profit before
tax and exceptional
items
Revenue
Total assets
n
n
88% Full scope components
12% Specific scope components
n
n
88% full Scope components
11% specific Scope components
n
n
87% full Scope components
12% specific Scope components
Changes from the prior year
There have been no changes in the components where we performed full or specific scope procedures.
Involvement with component teams
In establishing our overall approach to the group audit, we determined the type of work that needed to be undertaken
at each of the components by us, as the primary audit engagement team, or by component auditors from other EY
global network firms operating under our instruction. Of the four full scope components, audit procedures were
performed on two of these directly by the primary audit team and two by a component audit team. For the six specific
scope components, where the work was performed by component auditors, we determined the appropriate level of
involvement to enable us to determine that sufficient audit evidence had been obtained as a basis for our opinion on the
group as a whole.
The primary team interacted regularly with the component teams where appropriate during various stages of the audit,
reviewed key working papers and were responsible for the scope and direction of the audit process. This, together with
the additional procedures performed at group level, gave us appropriate evidence for our opinion on the group financial
statements.
The Covid-19 outbreak and lockdown restrictions have continued across the group’s financial year. As a result of
these measures, the site visits were held virtually through the use of video or teleconferencing facilities, including
meetings with local management. Close meetings for component teams were held via video conference in May 2021
with attendance from the primary team, including the senior statutory auditor. For all components, the year end review
of relevant audit work papers was facilitated by the EY electronic audit file platform, screen sharing or the provision of
copies of work papers direct to the primary team. Based upon the above approach we are satisfied that we have been
able to perform sufficient and appropriate oversight of our component teams.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon,
and we do not provide a separate opinion on these matters.
Key observations
communicated to the
Audit Committee
Revenue has been
appropriately recorded in
the period, in all material
respects, in accordance
with the requirements
of IFRS 15, Revenue
Recognition.
Risk
Our response to the risk
Revenue recognition: cut off around
Our audit procedures included:
year end
(Revenue 2021: £217.7m, 2020:
£199.1m)
Refer to the Audit Committee Report
(page 74); Accounting policies (pages
134 to 137 and 141); and Note 3 of the
n
Understanding the revenue recognition
processes, including identification and
walkthrough of management’s key controls
over revenue recognition, for licence based
and usage based revenue streams;
Licence based
Consolidated Financial Statements
n
For a sample of sales recognised in March
(page 142)
The business has multiple revenue
sources which can be grouped into
two types of revenue stream: Licence
based (“Licence” revenue, as per Note
3 of the financial statements) and
and April 2021 we recalculated the revenue
recognised by inspecting the licence price,
duration and classification as per the
signed customer contracts and agreeing
completion of performance obligations to
supporting documentation.
Usage based (“Transactional” revenue
Usage based
and “Services” revenue as per Note 3
of the financial statements).
There is a risk that revenue is
recorded incorrectly around the year
end date. This cut off risk manifests
itself through the risk of management
override:
n
For a sample of sales recognised in March
and April 2021 we agreed sales prices to
signed customer contracts and vouched
usage data to usage reports.
n
We assessed the completeness and
accuracy of the usage reports by vouching a
sample to supplier invoices.
n
by processing invalid journals
Procedures across both revenue streams:
to revenue as part of the year
end financial statement close
consolidation process; and
n
within the processing of
n
For a sample of credit notes raised in March
and April 2021, we assessed their impact
on the value of revenue recognised and
whether the revenue in the period was fairly
transactions if these are not in line
stated.
with contractual arrangements
(price, duration, classification)
for licence based revenue or if
inaccurate usage data/costs
are used in the recognition of
usage based revenue around the
year-end date.
n
In addition to testing transactions around
the year end, we considered manual
journals to revenue at in scope components
and on consolidation and agreed any
journals affecting revenue to supporting
documentation to ensure they were valid.
n
We performed an overall analytical review
on revenue by month compared to budget
and prior year on an individual sub-
stream basis to identify, understand and
corroborate any unusual fluctuations,
considering any contradictory evidence.
n
We identified key contracts across the
group and considered and challenged
whether revenue had been recognised
correctly in accordance with IFRS 15 by
considering performance obligations under
each key contract and obtaining evidence
of achievement of those obligations by the
group, including review of management’s
accounting papers where available.
108
Annual Report and Accounts 2021
Annual Report and Accounts 2021
109
OverviewStrategic ReportGovernanceFinancial Statements Independent Auditor’s Report continued
To The Members Of GB Group Plc
Risk
Our response to the risk
Key observations
communicated to the
Audit Committee
Accounting for business combinations
– HooYu Investigate (‘HooYu’)
acquisition
We have reviewed and considered
The purchase
management’s accounting paper in relation to
price allocation,
the acquisition accounting adopted.
which includes the
We inspected the sale and purchase agreement
and business transfer agreement for HooYu
to assess the completeness of the acquired
assets and liabilities, including intangible assets
identification and fair
value of the assets and
liabilities acquired, is
materially correct.
identified by management, and agreed key
The related disclosures
in the financial
statements are in
accordance with IFRS.
details into the accounting applied.
We critically challenged the key inputs used
in the technology intangible valuation, as well
as the PFI used in management’s model, by
reference to external sources such as the
financial due diligence report, the amount of
costs capitalised in relation to when the asset
was initially built and consistency with internal
forecasts.
We engaged EY valuation specialists to
assist us with the audit of the acquisition
accounting model including commenting
on the methodology selected for valuing
intangible assets including the technology
asset, independently calculating an internal rate
of return (IRR) and determining a reasonable
range for the transaction as a corroboration for
the appropriateness of the discount rate used
by management.
We assessed the completeness and
appropriateness of the financial statement
disclosures for the acquisition.
Refer to the Audit Committee Report
(page 74); Accounting policies (pages
127 to 130 and 142); and Note 35 of
the Consolidated Financial Statements
(pages 184 to 186)
The group acquired 100% of the share
capital of HooYu Investigate on 14
December 2020. The consideration
paid was £4m and management
identified £5.3m of identified
intangibles (which includes £4.6m
related to technology intangible), net
liabilities acquired of £0.4m, deferred
tax liability of £1.0m and goodwill of
£0.1m.
Accounting for business combinations
under IFRS 3 (Revised) involves
estimation on the part of management;
in particular in the area of intangible
asset valuation. The identification
of separately identifiable intangible
assets and the appropriate valuation
methodology used to determine
fair value involves a high degree
of judgement and the inputs used
in the models include significant
estimation assumptions around the
future performance of the business
(prospective financial information,
‘PFI’) and replacement asset costs.
Small changes in key assumptions
could make a material difference to the
valuation of intangible assets acquired.
There is a risk that the judgements
and assumptions underpinning the
acquisition model lead to a material
error in the acquisition accounting
and specifically the purchase price
allocation, including the identification
and fair value of the assets and
liabilities acquired.
In the prior year, our auditor’s report included a key audit matter in relation to impact of Covid-19 and the implications
for going concern and other areas, such as the impairment of goodwill and provision for impairment of financial assets,
where the level of estimation uncertainty increased as a result of the pandemic . In the current year, the experience in
the past year gives the directors enhanced ability to identify which products and services are impacted by Covid-19 and
this is reflected in their forecasting process. On this basis, we have not identified a key audit matter in this area.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified
misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to
influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining
the nature and extent of our audit procedures.
We determined materiality for the group to be £1,674,000 (2020: £1,108,000), which is 5% of profit before tax
and exceptional items (2020: 5% of profit before tax and exceptional items). We believe that profit before tax and
exceptional items provides us with the most appropriate financial statement measure that is important to users of the
financial statements. The increase in materiality is primarily due to increased revenue and associated profit in the year.
We determined materiality for the parent company to be £1,503,000 (2020: £1,176,000), which is 5% (2020: 5%) of
profit before tax and exceptional items.
Starting basis
Profit before tax- £34,263,000
Adjust for exceptional items of £448,000 (net credit) excluding £342,000
Adjustments
redundancy costs to determine profit before tax and exceptional items
Materiality
Totals £33,473,000
Materiality of £1,674,000 (5% of materaility basis)
During the course of our audit, we reassessed initial materiality and the actual profit before tax adjusted for exceptional
items was higher than the group’s initial estimates used in planning and at the commencement of our year-end audit
testing. However, whilst we updated for the initial consolidated results compared to planning (where the difference was
significant), we did not change our materiality assessment at year end for the final actual results, as the impact was not
significant.
110
Annual Report and Accounts 2021
Annual Report and Accounts 2021
111
OverviewStrategic ReportGovernanceFinancial Statements Independent Auditor’s Report continued
To The Members Of GB Group Plc
Performance materiality
Opinions on other matters prescribed by the Companies Act 2006
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an
In our opinion, based on the work undertaken in the course of the audit:
appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds
materiality.
On the basis of our risk assessments, together with our assessment of the group’s overall control environment, our
judgement was that performance materiality was 50% (2020: 50%) of our materiality, namely £837,000 (2020:
£554,000). We have set performance materiality at this percentage due to our past experience on the audit which
indicated a higher risk of misstatements, both corrected and uncorrected.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement
accounts is undertaken based on a percentage of total performance materiality. The performance materiality set for
each component is based on the relative scale and risk of the component to the group as a whole and our assessment
of the risk of misstatement at that component. In the current year, the range of performance materiality allocated to
components was £165,000 to £537,000 (2020: £55,000 to £359,000).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of
£83,000 (2020: £55,000), which is set at 5% of planning materiality, as well as differences below that threshold that, in
our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and
in light of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report set out on pages 2 to 104 other than the
financial statements (excluding Note 37) and our auditor’s report thereon. The directors are responsible for the other
information within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears
to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial statements themselves. If, based on the
n
n
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the Strategic Report and Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in
the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report:
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
n
n
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
n certain disclosures of directors’ remuneration specified by law are not made; or
n we have not received all the information and explanations we require for our audit
Responsibilities of directors
As explained more fully in the Directors’ Responsibility Statement set out on page 104, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group and parent company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
work we have performed, we conclude that there is a material misstatement of the other information, we are required to
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
report that fact.
We have nothing to report in this regard.
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to
which our procedures are capable of detecting irregularities, including fraud is detailed below.
112
Annual Report and Accounts 2021
Annual Report and Accounts 2021
113
OverviewStrategic ReportGovernanceFinancial Statements Independent Auditor’s Report continued
To The Members Of GB Group Plc
Consolidated Statement of Profit or Loss
Year Ended 31 March 2021
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the
company and management.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and determined that the
most significant are those that relate to data protection and privacy, financial reporting framework (International Accounting
Revenue
Cost of sales
Gross profit
Note
3
2021
£’000
217,659
(65,096)
152,563
2020
£’000
199,101
(54,914)
144,187
Standards in conformity with the requirements of Companies Act 2006), AIM rules and the relevant tax compliance regulations
Operating expenses before amortisation of acquired intangibles, equity-
in the jurisdictions in which the group operates.
settled share-based payments and exceptional items
(94,667)
(96,242)
n
n
Operating profit before amortisation of acquired intangibles, equity-settled
share-based payments and exceptional items (adjusted operating profit)
Amortisation of acquired intangibles
Equity-settled share-based payments
Exceptional items
Group operating profit
Finance revenue
Finance costs
Profit before tax
Income tax charge
Profit for the year attributable to equity holders of the parent
Earnings per share
– basic earnings per share for the year
– diluted earnings per share for the year
– adjusted basic earnings per share for the year
– adjusted diluted earnings per share for the year
16
29
7
3, 9
10
11
13
57,896
(17,671)
(5,170)
448
47,945
(19,008)
(4,541)
(1,552)
35,503
22,844
120
(1,360)
34,263
(7,385)
26,878
13.8p
13.5p
25.2p
24.8p
143
(2,361)
20,626
(3,562)
17,064
8.8p
8.7p
21.8p
21.4p
We understood how GB Group plc is complying with those frameworks by making enquiries of management and those
responsible for legal and compliance procedures. We corroborated our enquiries through our review of Board minutes and
papers provided to the Audit Committee, as well as observation in Audit Committee meetings and consideration of the results
of our audit procedures across the group. We also obtained and reviewed the latest correspondence received from the
Information Commissioner’s Office, the data industry regulator in the UK, to understand how the group is progressing with
regards to the ongoing review, as referenced in Note 33.
n
We assessed the susceptibility of the group’s financial statements to material misstatement, including how fraud might
occur by assessing the risk of fraud absent of controls, and then identifying controls which are in place at the entity level
and whether the design of those controls is sufficient for the prevention and detection of fraud, utilising internal and external
information to perform our fraud risk assessment. We considered the risk of fraud through management override and
considered the design and implementation of controls at the financial statement level to prevent this, as well as incorporating
data analytics across manual journal entries into our audit approach, which was designed to provide reasonable assurance
that the financial statements were free from material fraud and error.
n
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our
procedures involved journal entry testing, with a focus on journals meeting our defined risk criteria based on our understanding
of the business; enquiries of legal counsel and management and obtaining legal confirmations. In addition, we completed
procedures to conclude on the compliance of the disclosures in the Annual Report and Accounts with the requirements of the
relevant accounting standards and UK legislation.
n
Specific enquiries were made with the component teams to confirm any non-compliance with laws and regulations and this
was reported through their audit deliverables based on the procedures detailed in the previous paragraph. There were no
significant instances of non-compliance with laws and regulations.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Jennifer Hazlehurst (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Liverpool
15 June 2021
114
Annual Report and Accounts 2021
Annual Report and Accounts 2021
115
OverviewStrategic ReportGovernanceFinancial Statements Consolidated Statement Of
Comprehensive Income
Year Ended 31 March 2021
Profit after tax for the period attributable to equity holders of the parent
2021
£’000
26,878
2020
£’000
17,064
Other comprehensive income:
Exchange differences on retranslation of foreign operations (net of tax)*
Total comprehensive income for the period attributable to equity holders of the parent
(20,559)
6,319
6,756
23,820
*
Upon disposal of a foreign operation, the associated element will be recycled to the Income Statement.
Consolidated Statement
Of Changes In Equity
Year Ended 31 March 2021
Equity
share
capital
£’000
Share
premium
£’000
Merger
reserve
£’000
4,821
261,149
6,575
Note
–
–
–
–
–
–
21
29
12
34
499
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 1 April 2019
Profit for the period
Other comprehensive income
Total comprehensive income for
the period
Issue of share capital
Share-based payments
Tax on share options
Equity dividend
Balance at 31 March 2020
4,855
261,648
6,575
Profit for the period
Other comprehensive income
Total comprehensive income for
the period
Issue of share capital
Share-based payments
Tax on share options
Share forfeiture receipt
Equity dividend
21
29
21
12
–
–
–
–
–
–
–
–
–
53
5,979
3,343
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 March 2021
4,908
267,627
9,918
Capital
redemption
reserve
£’000
Foreign
currency
translation
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
3
–
–
–
–
–
–
–
3
–
–
–
–
–
–
–
–
3
(2,803)
51,277 321,022
–
17,064
17,064
6,756
–
6,756
6,756
17,064
23,820
–
–
–
–
–
533
4,541
4,541
779
779
(5,761)
(5,761)
3,953
67,900 344,934
–
26,878
26,878
(20,559)
– (20,559)
(20,559)
26,878
–
5,170
1,700
2,641
6,319
9,375
5,170
1,700
2,641
–
–
–
–
–
(5,883)
(5,883)
(16,606) 98,406 364,256
116
Annual Report and Accounts 2021
Annual Report and Accounts 2021
117
OverviewStrategic ReportGovernanceFinancial Statements Company Statement
Of Changes In Equity
Year Ended 31 March 2021
Equity
share
capital
£’000
Share
premium
£’000
Merger
reserve
£’000
Capital
redemption
reserve
£’000
Note
Balance at 1 April 2019
Profit for the period
Total comprehensive income for
the period
Issue of share capital
Hive-up adjustment
Share-based payments charge
Tax on share options
Equity dividend
21
16
29
12
4,821
261,149
6,575
–
–
34
–
–
–
–
–
–
499
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 March 2020
4,855
261,648
6,575
Profit for the period
Total comprehensive income for
the period
Issue of share capital
Share-based payments charge
Tax on share options
Share forfeiture receipt
Equity dividend
21
29
21
12
–
–
–
–
–
–
53
5,979
3,343
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 March 2021
4,908
267,627
9,918
3
–
–
–
–
–
–
–
3
–
–
–
–
–
–
–
3
Other
reserves
£’000
Retained
earnings
£’000
Total
equity
£’000
4,543
44,735 321,826
–
–
–
(54)
–
–
–
23,271
23,271
23,271
23,271
–
–
533
(54)
4,541
4,541
779
779
(5,761)
(5,761)
4,489
67,565 345,135
–
–
–
–
–
–
–
25,844
25,844
25,844
25,844
–
5,170
1,700
2,641
9,375
5,170
1,700
2,641
(5,883)
(5,883)
4,489
97,037 383,982
Consolidated Balance Sheet
As At 31 March 2021
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investments
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Current tax
Cash and short-term deposits
Total assets
Equity and liabilities
Capital and reserves
Equity share capital
Share premium
Merger reserve
Capital redemption reserve
Foreign currency translation reserve
Retained earnings
Total equity attributable to equity holders of the parent
Non-current liabilities
Loans
Lease liabilities
Provisions
Deferred revenue
Deferred tax liability
Current liabilities
Lease liabilities
Trade and other payables
Deferred revenue
Contingent consideration
Current tax
Total liabilities
Total equity and liabilities
Approved by the Board on 14 June 2021
C G Clark
Director
D J Wilson
Director
Registered in England number 2415211
Note
2021
£’000
2020
£’000
14
15
16
18
11
19
20
3,706
3,231
4,653
4,767
377,663
414,505
2,288
7,676
–
6,294
394,564
430,219
123
58,617
5,778
21,135
85,653
480,217
128
66,554
1,803
27,499
95,984
526,203
21, 31
21, 31
4,908
4,855
267,627
261,648
31
31
31
22
23
25
11
23
24
36
9,918
3
(16,606)
98,406
6,575
3
3,953
67,900
364,256
344,934
–
62,139
2,286
1,010
545
22,120
25,961
1,650
41,067
42,298
3,662
1,323
90,000
115,961
3,713
1,016
787
27,155
94,810
2,012
40,641
37,627
6,179
–
86,459
181,269
480,217
526,203
118
Annual Report and Accounts 2021
Annual Report and Accounts 2021
119
OverviewStrategic ReportGovernanceFinancial Statements
Company Balance Sheet
As At 31 March 2021
Consolidated Cash Flow Statement
Year Ended 31 March 2021
Note
2021
£’000
2020
£’000
14
15
16
18
11
19
20
2,752
1,277
123,681
309,124
4,733
3,447
2,098
133,289
303,483
3,867
441,567
446,184
120
32,626
–
11,947
44,693
124
41,290
1,212
15,031
57,657
Group profit before tax:
Adjustments to reconcile Group profit before tax to net cash flows
Finance revenue
Finance costs
Depreciation of plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Impairment of goodwill
Loss on disposal of plant and equipment and intangible assets
Profit on disposal of businesses
Fair value adjustment on contingent consideration
Share-based payments
Decrease in inventories
Increase in provisions
486,260
503,841
Decrease/(increase) in trade and other receivables
21, 31
21, 31
4,908
4,855
267,627
261,648
9,918
3
4,489
97,037
6,575
3
4,489
67,565
383,982
345,135
Increase in trade and other payables
Cash generated from operations
Income tax paid
Net cash generated from operating activities
Cash flows from/(used in) investing activities
Acquisition of subsidiaries, net of cash acquired
Purchase of plant and equipment
Purchase of software
Proceeds from disposal of plant and equipment
Net proceeds from disposal of businesses
–
62,139
Interest received
9,825
983
312
797
4,555
16,472
49,296
31,780
704
3,662
364
85,806
102,278
486,260
4,156
1,978
467
843
4,474
74,057
47,747
30,019
704
6,179
–
84,649
158,706
503,841
Net cash flows from/(used in) investing activities
Cash flows used in financing activities
Finance costs paid
Proceeds from issue of shares
Proceeds from share forfeiture
Repayment of borrowings
Repayment of lease liabilities
Dividends paid to equity shareholders
Net cash flows used in financing activities
Net (decrease)/increase in cash and cash equivalents
Effect of exchange rates on cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investments
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Current tax
Cash and short-term deposits
Total assets
Equity and liabilities
Capital and reserves
Equity share capital
Share premium
Merger reserve
Capital redemption reserve
Other reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non-current liabilities
External loans
Intercompany loans
Lease liabilities
Deferred revenue
Provisions
Deferred tax
Current liabilities
Trade and other payables
Deferred revenue
Lease liabilities
Contingent consideration
Current tax
Total liabilities
Total equity and liabilities
During the year the Company made a profit of £25,844,000 (2020: £23,271,000).
Approved by the Board on 14 June 2021
C G Clark
Director
D J Wilson
Director
Registered in England number 2415211
31
31
31
22
22
23
25
11
24
23
36
Note
2021
£’000
2020
£’000
34,263
20,626
9
10
14
15
16
16
5
35
36
29
36
14
16
35
9
21
21
22
23
12
20
(120)
(143)
1,360
1,433
1,838
17,914
154
–
(1,403)
245
5,170
6
88
10,028
1,655
72,631
(14,205)
58,426
(2,762)
(455)
(283)
–
5,307
20
1,827
(1,231)
3,087
2,641
2,361
1,760
1,850
19,192
–
260
–
971
4,541
213
–
(5,725)
2,592
48,498
(6,386)
42,112
(86)
(1,199)
(140)
5
–
143
(1,277)
(1,911)
490
–
(62,500)
(24,914)
(2,252)
(5,883)
(66,138)
(5,885)
(479)
27,499
21,135
(2,043)
(5,761)
(34,139)
6,696
(386)
21,189
27,499
120
Annual Report and Accounts 2021
Annual Report and Accounts 2021
121
OverviewStrategic ReportGovernanceFinancial Statements
Company Cash Flow Statement
Year Ended 31 March 2021
Notes To The Accounts
Company profit before tax:
Adjustments to reconcile Company profit before tax to net cash flows
Finance costs
Depreciation of plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Impairment of goodwill
Loss on disposal of plant and equipment and intangible assets
Profit on disposal of businesses
Fair value adjustment on contingent consideration
Dividends received recognised within income statement
Share-based payments
Decrease in inventories
Decrease in provisions
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Income tax paid
Net cash generated from operating activities
Cash flows (used in)/from investing activities
Acquisition of subsidiaries, net of cash acquired
Dividends received
Purchase of plant and equipment
Purchase of software
Net proceeds from disposal of businesses
Net cash flows from investing activities
Cash flows (used in)/from financing activities
Finance costs paid
Proceeds from issue of shares
Proceeds from share forfeiture
Proceeds from new borrowings
Repayment of borrowings
Repayment of lease liabilities
Dividends paid to equity shareholders
Net cash flows used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
Note
2021
£’000
2020
£’000
28,479
24,659
1,656
911
561
4,899
6,112
–
(1,113)
245
2,200
1,214
675
5,720
–
256
–
971
(21,855)
(16,604)
4,341
4
56
7,600
1,293
33,189
(781)
32,408
(2,762)
21,855
(226)
(283)
5,306
23,890
(1,611)
3,087
2,641
5,669
4,271
214
–
(4,325)
3,069
22,320
(3,678)
18,642
(86)
16,604
(452)
(140)
3
15,929
(1,884)
490
–
4,156
(62,500)
(23,500)
(785)
(5,883)
(59,382)
(3,084)
15,031
11,947
(832)
(5,761)
(27,331)
7,240
7,791
15,031
14
15
16
36
29
14
16
21
21
22
22
23
12
20
1. Corporate Information
GB Group plc (‘the Company’) and its subsidiaries (together ‘the Group’) provide identity data intelligence products and
services helping organisations recognise and verify all elements of an individual’s identity at key interactions in their
business processes. The nature of the Group’s operations and its principal activities are set out in the Business Model.
The Company is a public company limited by shares incorporated in the United Kingdom and is listed on the London
Stock Exchange with its ordinary shares traded on the Alternative Investment Market. The company registration number
is 2415211. The address of its registered office is The Foundation, Herons Way, Chester Business Park, Chester, CH4
9GB. A list of the investments in subsidiaries, including the name, country of incorporation, registered office address
and proportion of ownership interest is given in note 18.
These consolidated financial statements have been approved for issue by the Board of Directors on 14 June 2021.
The Company’s financial statements are included in the consolidated financial statements of GB Group plc. As
permitted by section 408 of the Companies Act 2006, the profit and loss account of the Company is not presented.
The Company, GB Group plc is the ultimate group company of the consolidated group.
2. Accounting Policies
2.1 Basis of Preparation
These financial statements have been prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and with those parts of the Companies Act 2006 applicable to
companies reporting under International Accounting Standards. The financial statements have been prepared under
the historical cost convention, modified in respect of the revaluation of financial assets and liabilities at fair value. A
summary of the significant accounting policies is set out below.
The accounting policies that follow set out those policies that apply in preparing the financial statements for the year
ended 31 March 2021 and the Group and Company have applied the same policies throughout the year.
2.2 Going Concern
The assessment of going concern relies heavily on the ability to forecast future cashflows over the going concern
assessment period which covered through to 30 September 2022. Although GBG has a robust budgeting and
forecasting process, the continued economic uncertainty caused by the Covid-19 pandemic means that additional
sensitivities and analysis have been applied to test the going concern assumption under a range of downside and stress
test scenarios. The following steps have been undertaken to allow the Directors to conclude on the appropriateness of
the going concern assumption:
a) Understand what could cause GBG not to be a going concern
b) Consider the current customer and sector position, liquidity status and availability of additional funding if required
c)
Board review and challenge the budget including comparison against external data sources available and a potential
downside scenario
d)
Perform reverse stress tests to assess under what circumstances going concern would become a risk – and assess
the likelihood of whether they could occur
e) Examine what mitigating actions would be taken in the event of these stress test scenarios
f) Conclude upon the going concern assumption
122
Annual Report and Accounts 2021
Annual Report and Accounts 2021
123
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
2. Accounting Policies continued
a) Understand what could cause GBG not to be a going concern
The potential scenarios which could lead to GBG not being a going concern are considered to be:
n
n
n
n
Not having sufficient cash to meet our liabilities as they fall due and therefore not being able to provide services to
our customers, pay our employees or meet financing obligations.
A non-remedied breach of the financial covenants within the Group Revolving Credit Facility (RCF) agreement
(detailed in note 22). Under the terms of the agreement this would lead to the outstanding balance becoming due for
immediate repayment. These covenants are:
Leverage – consolidated net borrowings (outstanding loans less current cash balance) as a multiple of adjusted
consolidated EBITDA for the last 12 months, assessed quarterly in arrears, must not exceed 3.00:1.00
Interest cover - adjusted consolidated EBITDA as a multiple of consolidated net finance charges, for the last 12
months , assessed quarterly in arrears, must not fall below 4.00:1.00
b) Consider the current customer and sector position, liquidity status and availability of additional
funding if required
Following the outbreak of the Covid-19 pandemic the market consensus forecast for the year to 31 March 2021 was
a decline in revenue of 10.3% (£175 million). The actual performance was significantly ahead of this with revenue of
£217.7 million, representing revenue growth of 9.3% (12.3% on an organic constant currency basis).
GBG is not reliant upon any one supplier to provide critical services either to support the services we provide to our
customers or to our internal infrastructure. For these critical services, such as the provision of data, contingency plans
exist in the event of a supplier failure to be able to move to an alternative supplier with minimal disruption to customers
or to the wider business.
Liquidity
Operating cashflow before tax and exceptional items paid (note 37)
Adjusted EBITDA (note 37)
Cash conversion %
Cash (note 20)
Loans (excluding unamortised loan fees) (note 22)
Net Cash/(Debt)
Leverage
31 March
2021
£’000
73,385
61,410
119.5%
21,135
–
21,135
Positive Cash
31 March
2020
£’000
49,279
51,739
95.2%
27,499
(62,500)
(35,001)
0.68
Variance
£’000
24,106
9,671
24.3%
(6,364)
62,500
56,136
(0.68)
At 31 March 2021 GBG was in a net cash position of £21.1 million, an improvement of £56.1 million since 31 March 2020.
The outstanding RCF loan was fully repaid during the year.
During the year to 31 March 2021, GBG’s cash conversion improved with an EBITDA to operating cash ratio of 119.5%,
The Board of Directors are aware that future Covid-19 outbreaks could lead to further economic uncertainty, but the
an improvement of 24.3% on the prior year. The increase in the cash conversion was partly attributable to cash receipts
experience in the past year gives enhanced confidence to be able to forecast which of our products and services
in the first half of the year related to large multi-year deals where the profit was recognised at the end of the previous
are positively or negatively impacted by Covid-19 and therefore what steps are needed to react to this. The overall
financial year. Notwithstanding this, operating cash flows continued to be strong and the Group continually monitors its
performance has illustrated the relevance and importance of our products and services, even in a time of significant
cash generation and collection.
economic decline in many of our key markets.
The RCF has a maximum level of £110 million which could be drawn down for working capital purposes if required.
During the pandemic approximately 7% of revenue came from two customers in the United States who provided
The expiry of this facility was extended by one year in January 2021, so this now expires in February 2023 (previously
services directly related to Covid. We would not expect this level of revenue to recur in the year to 31 March 2022. Aside
February 2022).
from this one-off, GBG does not have a high customer concentration risk with no individual customer generating more
than 4% of Group revenue. The Group’s customers operate in a range of different sectors which reduces the risk of
a downturn in any particular sector. The financial services sector accounts for the largest percentage of customers,
particularly within the Fraud and Identity segments. There was a decline in revenue from the financial services sector
in Fraud (principally in Asia Pacific) as these contracts are generally larger and more complex in nature and can require
onsite installation which was more difficult during the pandemic. However, this was more than offset by the growth in
Identity services from the financial services sector.
GBG does have exposure to customers in sectors that have had a more direct impact from Covid-19 such as Travel &
Leisure, Employment Agencies & Training and Sporting Activities. However, these sectors in total account for less than
6% of Group revenue and we are already seeing growth in these sectors as the pandemic restrictions are lifted.
At 31 March 2021 the Group was in a net current liabilities position of £4.3 million (2020: net current assets of £9.5
million). However, within current liabilities is deferred revenue of £42.3 million (2020: £37.6 million) which represents
a liability to provide a future service rather than a direct cash liability. Whilst there is a cash cost to providing these
services (principally related data costs or employee wages) these costs would be lower than the value of the deferred
revenue liability, and will unwind over the course of the year rather than being a liability settled on demand. On this basis
the net current liabilities position is not considered to be a risk from a going concern perspective.
c) Board review and challenge of the budget including comparison against external data sources
available and a potential downside scenario
In the prior year the uncertainty around the scale, timing and impact of the coronavirus pandemic meant it was impossible
As a global company GBG operates in different countries and therefore is less exposed if particular countries recover
to set a meaningful budget. For the current year we have reverted back to the normal budget process using a detailed
from Covid-19 at different rates or suffer further waves of the pandemic. The breakdown of our revenue by country is
bottom-up approach which is then subject to review and challenge by the Executive Team and Board of Directors.
shown in note 4.
There are also macro dynamics supporting the increased use of GBG products and services, both in general and within
the context of the Covid-19 pandemic, such as:
n Continued compliance requirements globally
n
n
n
The ongoing existence of fraud globally, with Covid-19 giving fraudsters new opportunities such as with government
support loans, leading to increased cyber security risks and therefore demand for GBG anti-fraud solutions
Continued digitisation and rise of online versus physical transactions in both consumer and business to business
settings
Speed and quality of customer onboarding being a key differentiator, which is enhanced through the use of GBG’s
software
Management note that analyst’s forecasts published after the trading update in April 2021 estimate an overall revenue
decline in the year to 31 March 2022 due to the impact of the disposed businesses and one-off revenue linked to the
Covid-19 in the US. These estimates range from a decline of 4.9% and growth of 0.2% in the year to 31 March 2022
compared to the prior year, with the consensus position being decline of 3.2% which would be revenue of £210 million
on a constant currency basis. The budget for the year to 31 March 2022 is within the range of the analyst estimates.
This budget showed continued significant headroom in the covenant compliance tests and sufficient liquidity to
maintain operations. The budget model was then adjusted to reflect a realistic downside scenario and under this the
covenant compliance and liquidity position did not result in any risk to going concern. Relative to the budget produced
by management there have not been any adverse variances in the overall trading performance since the year-end.
124
Annual Report and Accounts 2021
Annual Report and Accounts 2021
125
OverviewStrategic ReportGovernanceFinancial Statements
Notes To The Accounts continued
2. Accounting Policies continued
d) Perform reverse stress tests to assess under what circumstances going concern would become a
risk – and assess the likelihood of whether they could occur
The budget model was then further adjusted to establish at what point a covenant breach would occur without
further mitigating actions. A covenant breach would occur before the available cash resources of the Group are fully
exhausted and therefore the focus of the reverse stress test was on covenant compliance. In making this assessment
it was assumed that management had reduced operating expenses by 20% which is the level that is considered
possible without causing significant disruption to business operations. These savings would primarily be linked to
people costs, net of any related redundancy costs.
2.3 Significant accounting policies
The Group and Company financial statements are presented in pounds Sterling and all values are rounded to the
nearest thousand pounds (£’000) except where otherwise indicated.
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31
March each year.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee
and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an
With a 20% operating expenses saving introduced in Q2 of FY22 it would take a revenue decline of 45% for a
investee if, and only if, the Group has:
covenant breach (interest cover) to occur (31% without any operating expenses savings). This breach would be as at
30 June 2022 although even at this point it would only take an EBITDA increase of £50,000 to remedy this breach.
Based on the prior year trading performance, performance in the period since the year end and through reference
to external market data a decline of anywhere near 45% is considered by the Directors to be remote. If this became
n
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the
investee)
n Exposure, or rights, to variable returns from its involvement with the investee
even a possibility, then deeper cost cutting measures would be implemented well in advance of a covenant breach as
n The ability to use its power over the investee to affect its returns
well as consideration of a range of other mitigation actions detailed in the next section.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when
the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts
e) Look at what mitigating actions could be taken in the event of these reverse stress test scenarios
and circumstances in assessing whether it has power over an investee, including:
Draw down on the £30 million Accordion facility within the Group’s banking agreement. This facility is subject to
expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
n
n
n
n
n
In the very unlikely event of the reverse stress test case scenario above occurring, causing a breach of covenants on
30 June 2022 unless further mitigation steps were taken. Detailed below are the principal steps that would be taken
(prior to the breach taking place) to avoid such a breach occurring:
Make deeper cuts to overheads, primarily within the sales function if the market opportunities had declined to
this extent. It would only take a reduction of 0.1% of overheads (based on the 31 March 2021 level) to increase
EBITDA to remedy a covenant breach of £50,000
Take similar cash conservation measures to those that were implemented in the early stages of the pandemic in
2020. These included not declaring a final dividend, pay and recruitment freezes and a deferral of director bonus
payments
Request a delay to UK Corporation Tax, Employment Tax or Sales Tax payments under the HMRC ‘Time to Pay’
scheme. In the year to 31 March 2021 Corporation Tax payments averaged £200,000 per quarter, Employment
Tax payments (including employee taxes) were approximately £1.2 million per month and Sales Tax payments
were £2.5 million per quarter
credit approval from the syndicate banks
Request a covenant waiver or covenant reset from our Bank Syndicate. Even under this stress test scenario the
forecast is that the Group would only be in breach for one quarter (quarter ending 30 June 2022) before returning
to covenant compliance the following quarter. The business would still be EBITDA positive on a rolling 12-month
basis at this point and the Directors believe they would have a reasonable expectation of achieving a temporary
covenant waiver from the banks if needed
n
Raise cash through an equity placing. Under the Articles of Association GBG has the right to raise cash through
an equity placing up to 10%of its market valuation at the date of the placing
n Disposal of part of the business
f) Conclude upon the going concern assumption
Following consideration of the budget and reverse stress test scenario, the Directors have a reasonable expectation
that the Company has adequate resources to continue in operational existence for the foreseeable future. Therefore,
the Directors consider it appropriate to adopt the going concern basis of accounting in preparing the consolidated
financial statements.
n The contractual arrangement with the other vote holders of the investee
n Rights arising from other contractual arrangements
n The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control
over the subsidiary and ceases when the Group loses control of the subsidiary.
Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the
consolidated financial statements from the date the Group gains control until the date the Group ceases to control the
subsidiary.
Profit or loss and each component of Other Comprehensive Income (‘OCI’) are attributed to the equity holders of the
parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having
a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income,
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-
controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any
investment retained is recognised at fair value.
Business Combinations
The Group uses the acquisition method of accounting to account for business combinations of entities not under
common control. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets
transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes
the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs
are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date.
Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date.
Contingent consideration classified as a financial liability within the scope of IFRS 9 ‘Financial Instruments: Recognition
and Measurement’ is measured at fair value with the changes in fair value recognised in the statement of profit or loss.
126
Annual Report and Accounts 2021
Annual Report and Accounts 2021
127
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
2. Accounting Policies continued
If a business combination is achieved in stages, the acquisition date fair value of the Group’s previously held investment
in the acquiree is remeasured to fair value at the acquisition date with any resultant gain or loss recognised through
profit or loss.
Group Companies
On consolidation, the assets and liabilities of foreign operations are translated into pounds Sterling at the rate of
exchange prevailing at the reporting date and their statements of profit or loss are translated at average exchange rates
for the period. The exchange differences arising on translation for consolidation are recognised in OCI. On disposal of a
foreign operation, the component of OCI relating to that particular foreign operation is recognised in profit or loss.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of
assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated
at the spot rate of exchange at the reporting date.
Foreign Currencies
The Group’s consolidated financial statements are presented in pounds Sterling, which is also the parent company’s
functional currency. For each entity the Group determines the functional currency and items included in the financial
statements of each entity are measured using that functional currency. The Group uses the direct method of
consolidation and on disposal of a foreign operation, the gain or loss that is reclassified to profit or loss reflects the
amount that arises from using this method.
Transactions and Balances
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency
spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates
of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognised
in profit or loss with the exception of monetary items that are designated as part of the hedge of the Group’s net
investment of a foreign operation. These are recognised in OCI until the net investment is disposed of, at which time,
the cumulative amount is reclassified to profit or loss. Tax charges and credits attributable to exchange differences on
those monetary items are also recorded in OCI.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on
translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the
change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognised in OCI or
profit or loss are also recognised in OCI or profit or loss, respectively).
Impairment of Assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the
asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s (‘CGU’s)
fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does
not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the
carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to
its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset. Impairment losses of continuing operations are recognised in the Consolidated Statement of Profit or Loss
in those expense categories consistent with the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only on assets other than goodwill if there has been
a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was
recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased
amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment
loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss. After such a reversal the
depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value,
on a systematic basis over its remaining useful life.
Investment in Subsidiaries
Investments in subsidiaries are held at cost, less provision for impairment.
Property, Plant and Equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
Depreciation is calculated to write off cost less estimated residual value based on prices prevailing at the balance sheet
date on a straight-line basis over the estimated useful life of each asset as follows:
Plant and equipment
- over 3 to 10 years
Freehold buildings
- over 50 years
Freehold land is not depreciated.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying
values exceed the estimated recoverable amount, the assets are written down to their recoverable amount.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the
Consolidated Statement of Profit or Loss in the year the item is derecognised.
Residual values and estimated remaining lives are reviewed annually.
Right-of-use Assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is
available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses,
and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, and lease payments made on or before the commencement date less
any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the
end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its
estimated useful life and the lease term. Right-of-use assets are subject to impairment.
Intangible Assets
Goodwill
Goodwill on acquisition is initially measured at cost, being the excess of the cost of the business combination over
the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial
recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill already carried in the
128
Annual Report and Accounts 2021
Annual Report and Accounts 2021
129
OverviewStrategic ReportGovernanceFinancial Statements
Notes To The Accounts continued
2. Accounting Policies continued
balance sheet at 1 April 2004 or relating to acquisitions after that date is not amortised. Goodwill is reviewed for
impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be
impaired.
For the purpose of impairment testing, goodwill is allocated to the CGU expected to benefit from the synergies.
Impairment is determined by assessing the recoverable amount of the CGU, including the related goodwill. Where the
recoverable amount of the CGU is less than the carrying amount, including goodwill, an impairment loss is recognised
in the Consolidated Statement of Profit or Loss. The carrying amount of goodwill allocated to a CGU is taken into
account when determining the gain or loss on disposal of the unit, or an operation within it. Goodwill disposed of in this
circumstance is measured on the basis of the relative values of the operation disposed of and the portion of the CGU
retained.
Research and Development Costs
Costs associated with maintaining the computer software are recognised as an expense when incurred. Computer
software licences are subsequently carried at cost less accumulated amortisation and accumulated impairment losses.
These costs are amortised to profit or loss using the straight-line method over their estimated useful lives of 3 to 5
years.
The amortisation period and amortisation method of intangible assets other than goodwill are reviewed at least at each
balance sheet date. The effects of any revision are recognised in profit or loss when the changes arise.
Inventories
Inventories are valued at the lower of cost or net realisable value (net selling price less further costs to completion),
after making due allowance for obsolete and slow moving items. Cost is determined by the first in first out (‘FIFO’) cost
method.
Financial Assets
Initial recognition and measurement
Research costs are expensed as incurred. An intangible asset arising from development expenditure on an individual
Financial assets are classified at initial recognition and subsequently as measured at amortised cost, fair value through
project is recognised only when the Group can demonstrate the technical feasibility of completing the intangible
OCI, and fair value through profit or loss.
asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the
asset will generate future economic benefits, the availability of resources to complete and the availability to measure
reliably the expenditure during the development. Following the initial recognition of the development expenditure, the
cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated
impairment losses. Any expenditure capitalised is amortised on a straight-line basis over 2 to 4 years.
Acquired Intangibles
Separately identifiable intangible assets such as patent fees, licence fees, trademarks and customer lists and
relationships are capitalised on the balance sheet only when the value can be measured reliably, or the intangible asset
is purchased as part of the acquisition of a business. Such intangible assets are amortised over their useful economic
lives on a straight-line basis.
Separately identified intangible assets acquired in a business combination are initially recognised at their fair value.
Intangible assets are subsequently stated at fair value or cost less accumulated amortisation and any accumulated
impairment losses. Amortisation is recognised in the Consolidated Statement of Comprehensive Income on a straight-
line basis over the estimated useful life of the asset. The carrying value of intangible assets is reviewed for impairment if
events or changes in circumstances indicate the carrying value may not be recoverable.
Estimated useful lives typically applied are as follows:
Software technology assets
- over 2 to 5 years
Brands and trademarks
- over 2 to 3 years
Non-compete agreements
- over 3 to 5 years
Customer relationships
- over 10 years
Acquired Computer Software Licences
Acquired computer software licences comprise computer software licences purchased from third parties, and also
the cost of internally developed software. Acquired computer software licences are initially capitalised at cost, which
includes the purchase price (net of any discounts and rebates) and other directly attributable costs of preparing the
asset for its intended use. Direct expenditure including employee costs, which enhances or extends the performance
of computer software beyond its specifications and which can be reliably measured, is added to the original cost of the
software.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not
contain a significant financing component or for which the Group has applied the practical expedient, the Group initially
measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss,
transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has
applied the practical expedient are measured at the transaction price determined under IFRS 15.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give
rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This
assessment is referred to as the SPPI test and is performed at an instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to
generate cash flows. The business model determines whether cash flows will result from collecting contractual cash
flows, selling the financial assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
n Financial assets at amortised cost (debt instruments)
n
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
n Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
n Financial assets at fair value through profit or loss
The Group only has financial assets falling into the first two categories above and as such has only included the policy
for these two below.
130
Annual Report and Accounts 2021
Annual Report and Accounts 2021
131
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
2. Accounting Policies continued
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the
following conditions are met:
The Group recognises loss allowances for expected credit losses (ECL) on financial assets measured at amortised cost.
Loss allowances for trade receivables are always measured at an amount equal to lifetime ECL. ECL are a probability-
weighted estimate of credit losses. An assessment of ECL is calculated using a provision matrix model to estimate
the loss rates to be applied to each trade receivable category. ECL are discounted at the effective interest rate of the
financial asset. Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying
amount of the assets. The gross carrying amount of a financial asset is written off (either partially or in full) to the extent
n
The financial asset is held within a business model with the objective to hold financial assets in order to collect
that there is no realistic prospect of recovery.
contractual cash flows
And
n
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject
to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group’s financial assets at amortised cost includes trade receivables.
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments
designated at fair value through OCI when they meet the definition of equity under IAS 32 ‘Financial Instruments:
Presentation’ and are not held for trading. The classification is determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income
in the statement of profit or loss when the right of payment has been established, except when the Group benefits from
such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI.
Equity instruments designated at fair value through OCI are not subject to impairment assessment.
The Group elected to classify irrevocably its non-listed equity investments under this category.
Derecognition
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain
cases, the Group may also consider a financial asset to be in default when internal or external information indicates
that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit
enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering
the contractual cash flows.
In the current year an additional management overlay to the ECL calculation has been applied as detailed in note 27.
Trade and Other Receivables
Trade receivables, which generally have 14 to 60 day terms, are recognised and carried at original invoice amount less
an allowance for any uncollectable amounts. A provision is made against a trade receivable only when there is objective
evidence that the Group may not be able to recover the entire amount due under the original terms of the invoice. The
carrying amount of the receivable is reduced through the use of a provision for doubtful debts account. Impaired debts
are derecognised when they are assessed as uncollectable.
Cash and Short-Term Deposits
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an
original maturity date of three months or less.
For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily
above, net of any outstanding bank overdrafts.
derecognised (i.e. removed from the Group’s consolidated statement of financial position) when:
The rights to receive cash flows from the asset have expired
Borrowings
n
Or
n
The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either
(a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither
transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value
through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original
effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit
risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within
the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in
credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the
exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the
Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each
reporting date. The Group has established a provision matrix that is based on its historical credit loss experience,
adjusted for forward-looking factors specific to the debtors and the economic environment.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using
the effective interest rate (‘EIR’) method. Gains and losses are recognised in profit or loss when the liabilities are
derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.
Trade and Other Payables
Trade and other payables are initially recognised at fair value and subsequently recorded at amortised cost using the
EIR method.
Lease Liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed
payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the
Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option
to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the
period on which the event or condition that triggers the payment occurs.
132
Annual Report and Accounts 2021
Annual Report and Accounts 2021
133
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
2. Accounting Policies continued
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date,
the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a
change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
Short-term Leases and Leases of Low-value Assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e.,
those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase
option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are
considered of low value (i.e. below £5,000). Lease payments on short-term leases and leases of low-value assets are
recognised as an expense on a straight-line basis over the lease term.
Judgement in Determining the Lease Term of Contracts with Renewal Options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an
performance obligations identified based on their standalone selling price and is recognised when those performance
obligations are satisfied and the control of goods or services is transferred to the customer, either over time or at a point
in time.
In determining the amount of revenue and profits to record, and related balance sheet items (such as contract assets,
contract liabilities, accrued income and deferred income) to recognise in the period, management is required to form a
number of judgements and assumptions. These may include an assessment of the costs the Group incurs to deliver the
contractual commitments and whether such costs should be expensed as incurred or capitalised. These judgements
are inherently subjective and may cover future events such as the achievement of contractual milestones. Please see
Judgements – Revenue Recognition below for further detail.
a) Software licences
Revenue from software licences is recognised when control is considered to have passed to the customer.
Control can pass either at a point in time or over time depending on the performance obligations under the
contract as further described below.
Web-service hosted software solutions
The performance obligation is to provide the customer a right to access the software throughout the licence
period for which revenue is recognised over the licence period.
option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate
On-premise installation or data disk - Location segment
the lease, if it is reasonably certain not to be exercised.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to
be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only
when the reimbursement is virtually certain. The expense relating to any provision is presented in the Consolidated
Statement of Profit or Loss net of any reimbursement. If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments
of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the
increase in the provision due to the passage of time is recognised as a finance cost.
Dilapidation Provisions
A dilapidation provision is recognised when there is an obligation to restore property to its original state at the end of the
leasehold period. The provision is estimated as the cost of restoration at the balance sheet date, with the corresponding
entry recognised in property plant and equipment. Depreciation is charged in line with the remaining leasehold period.
Pensions
The Group does not have a group contributory pension scheme. Payments are made to individual private defined
contribution pension arrangements. Contributions are charged in the Consolidated Statement of Profit or Loss as they
become payable.
Revenue Recognition
The performance obligations can include the provision of a software licence, data sets, updates to those data
sets during the licence period and support and maintenance. There are instances where customers are provided
a data set to use with their own software rather than the Group’s.
The Group’s software has no standalone value to the customer without the data as there is nothing upon which
to apply the algorithms. The data file cannot be accessed outside of the software so has no standalone value
(unless under the circumstance where it has been licenced for use on the customer’s system). As a result, the
software and the data are considered one performance obligation as the customer cannot benefit from one
without the other.
Customers are given a right-to-use the software and data as it exists at the point in time the licence is granted,
for which revenue is recognised at the point in time the customer can first use and benefit from it.
A proportion of the transaction price is allocated to the provision of data updates and support and maintenance,
which are considered separate performance obligations. This is either based on the stand-alone selling price for
those services or, where the Group does not have a history of stand-alone selling prices for a particular software
licence, a cost-plus mark-up approach is applied.
Data disk – Fraud segment
The performance obligations can include the licence to use specific data sets, updates to those data sets during
the licence period and support and maintenance.
The performance obligations over the period of the licence are satisfied by the provision of disk files to the
customer in the same format on a monthly basis to ensure that the customer has access to the most relevant
information throughout the contract period. This meets the series guidance under IFRS 15 paragraph 22: “a
promise to transfer to the customer a series of distinct goods or services that are substantially the same and that
have the same pattern of transfer”. Accordingly, the revenue for the full licence period is recognised over the
contractual term.
b) Transactional
Revenue is stated net of value-added tax, rebates and discounts and after the elimination of intercompany transactions
within the Group. The Group operates a number of different businesses offering a range of products and services and
accordingly applies a variety of methods for revenue recognition, based on the principles set out in IFRS 15.
Revenue is recognised to represent the transfer of promised services to customers in a way that reflects the
consideration expected to be received in return. Consideration from contracts with customers is allocated to the
A number of GBG SaaS solutions provide for the provision of transactional identity data intelligence services
with customer paying only for the number of searches they perform. The performance obligation is to provide
this identity check and revenue in respect of those solutions is recognised based on usage. Customers are either
invoiced in arrears for searches performed or make a prepayment giving them the right to a specific number of
searches.
134
Annual Report and Accounts 2021
Annual Report and Accounts 2021
135
OverviewStrategic ReportGovernanceFinancial Statements
Notes To The Accounts continued
2. Accounting Policies continued
Where customers make a prepayment, which entitles them to perform a specific number of transactions over an
agreed contract period, once this period has expired any unused transactions are forfeited. Based on a review
of historic forfeitures an estimate is made of the expected percentage of transactions that will remain unused
over their contracted life. This percentage is applied such that revenue for expected forfeiture is recognised in
proportion to the pattern of transactions performed by the customer.
c) Rendering of services
Revenue from the rendering of services is recognised over time by reference to the stage of completion. Stage
of completion of the specific transaction is assessed on the basis of the actual services provided as a proportion
of the total services to be provided. Where the services consist of the delivery of support and maintenance on
software licence agreements, it is generally considered to be a separate performance obligation and revenue is
recognised on a straight-line basis over the term of the support period.
d) Contract assets and contract liabilities
Costs to obtain a contract in the Group typically include sales commissions and under IFRS 15 certain costs
such as these are deferred as Contract Assets and are amortised on a systematic basis consistent with the
pattern of transfer of the goods or services to which the asset relates. As a practical expedient, these costs are
expensed if the amortisation period to which they relate is one year or less.
Where the Group completes performance obligations under a contract with a customer in advance of invoicing
the customer, the value of the accrued revenue is initially recognised as a contract asset.
Any contract assets are disclosed within the trade and other receivables in the Consolidated Balance Sheet.
Where the Group receives a short-term prepayment or advance of consideration prior to completion of
performance obligations under a contract with a customer, the value of the advance consideration received is
initially recognised as a contract liability in liabilities. Revenue is subsequently recognised as the performance
obligations are completed over the period of the contract (i.e. as control is passed to the customer). Contract
liabilities are presented in deferred income within trade and other payables in the Consolidated Balance Sheet.
e) Principal versus agent
The Group has arrangements with some of its customers whereby it needs to determine if it acts as a principal or
an agent as more than one party is involved in providing the goods and services to the customer.
The Group is an agent if its role is to arrange for another entity to provide the goods or services. Factors
considered in making this assessment are most notably the discretion the Group has in establishing the price
for the specified good or service, whether the Group has inventory risk and whether the Group is bears the
responsibility for fulfilling the promise to deliver the service or good. Where the Group is acting as an agent
revenue is recorded at a net amount reflecting the margin earned.
The Group acts as a principal if it controls a promised good or service before transferring that good or service to
the customer. Where the Group is acting as a principal, revenue is recorded on a gross basis.
a. Prospectively as an additional separate contract
b. Prospectively as a termination of the existing contract and creation of a new contract
c. As part of the original contract using a cumulative catch up
d. As a combination of b) and c)
For contracts for which the Group has decided there is a series of distinct goods and services that are
substantially the same and have the same pattern of transfer where revenue is recognised over time, the
modification will always be treated under either a) or b). However, d) may arise when a contract has a part
termination and a modification of the remaining performance obligations.
The facts and circumstances of any contract modification are considered individually as the types of
modifications will vary contract by contract and may result in different accounting outcomes.
g) Interest income
Revenue is recognised as interest accrues using the effective interest rate method. The effective interest
rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
instrument to its net carrying amount.
h) Presentation and disclosure requirements
The Group has disaggregated revenue recognised from contracts into contract type (Licences, Transaction
and Services) as management believe this best depicts how the nature, amount, timing and uncertainty of the
Group’s revenue and cash flows are affected by economic factors. The Group has also disclosed information
about the relationship between the disclosure of disaggregated revenue and revenue information disclosed for
each reportable segment. Refer to note 4 for the disclosure on disaggregated revenue.
Operating Profit
Operating profit is profits after amortisation of acquired intangibles, equity-settled share-based payments and
exceptional items but before finance revenue, finance costs and tax.
Exceptional Items
The Group presents as exceptional items on the face of the Statement of Profit or Loss those material items of income
and expense which, because of the nature and expected infrequency of the events giving rise to them, merit separate
presentation to allow shareholders to understand better the elements of financial performance in the year, so as to
facilitate comparison with prior periods and to assess better trends in financial performance.
Redundancy costs are only classified within exceptional items if they are linked to a reorganisation of part of the
business.
Dividends
This assessment of control requires some judgement in particular in relation to certain service contracts. An
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the
example is the provision of certain employment screening services where the Group may be assessed to be
period in which the dividends are approved by the Company’s shareholders.
agent or principal dependent upon the facts and circumstances of the arrangement and the nature of the
services being delivered.
f) Contract modifications
Although infrequent, contracts may be modified for changes in contract terms or requirements. These
modifications and amendments to contracts are always undertaken via an agreed formal process. Contract
modifications exist when the amendment either creates new or changes the existing enforceable rights and
obligations. The effect of a contract modification on the transaction price and the Group’s measure of progress
for the performance obligation to which it relates, is recognised as an adjustment to revenue in one of the
following ways:
Share-based Payment Transactions
Employees (including Directors) of the Group receive remuneration in the form of share-based payment transactions,
whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’).
Equity-settled Transactions
The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which
they are granted. The fair value is determined by an external valuation specialist using a binomial model. In valuing
equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price
of the shares of GB Group plc (‘market conditions’) and non-vesting conditions, if applicable.
136
Annual Report and Accounts 2021
Annual Report and Accounts 2021
137
OverviewStrategic ReportGovernanceFinancial Statements
Notes To The Accounts continued
2. Accounting Policies continued
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant
employees become fully entitled to the award (‘the vesting date’). The cumulative expense recognised for equity-settled
transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and
the Group’s best estimate of the number of equity instruments that will ultimately vest. The Consolidated Statement
of Profit or Loss charge or credit for a period represents the movement in cumulative expense recognised as at the
beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a
market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting
conditions were satisfied, provided that all other vesting conditions are satisfied.
Where the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the terms
had not been modified. In addition, an expense is recognised over the remainder of the new vesting period for any
modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to
the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense
not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled
award, and designated as a replacement award on the date that it was granted, the cancelled and new awards are
treated as if they were a modification of the original award, as described in the previous paragraph.
The dilutive effect of outstanding options is reflected in the computation of earnings per share (note 13).
Finance Costs
Finance costs consist of interest and other costs that are incurred in connection with the borrowing of funds. Finance
costs are expensed in the period in which they are incurred.
Finance costs also include the amortisation of bank loan arrangement fees, interest on long-service award liabilities and
interest on lease liabilities.
Taxes
Current Tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to
be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, by the reporting date, in the countries where the Group operates and
generates taxable income.
Deferred Income Tax
Deferred tax is recognised in respect of all temporary differences between the carrying amounts of assets and liabilities
included in the financial statements and the amounts used for tax purposes that will result in an obligation to pay more,
or a right to pay less or to receive more tax, with the following exceptions:
n
n
n
No provision is made where the deferred tax liability arises from the initial recognition of goodwill or of an asset
or liability in a transaction which is not a business combination that at the time of the transaction affect neither
accounting nor taxable profit
No provision is made for deferred tax that would arise on all taxable temporary differences associated with
investments in subsidiaries and interests in joint ventures, where the timing of the reversal of temporary differences
can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future
Deferred tax assets are recognised only to the extent that the Directors consider that it is probable that there will
be suitable taxable profits from which the future reversal of the underlying temporary differences and unused tax
losses and credits can be deducted
n
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in
which the asset is realised or liability settled, based on tax rates and laws enacted or substantively enacted at the
balance sheet date
New Accounting Standards and Interpretations
The following standards and amendments were effective for periods beginning on or after 1 January 2020 and as such
have been applied in these financial statements. The Group has not early adopted any other standard or interpretation
that is issued but not yet effective.
Amendments to IFRS 3: Definition of a Business
The amendment to IFRS 3 provides further clarity on the definition of a business when entering into a business
combination. It states that to be classified as a business, an integrated set of activities and assets must include, at a
minimum, an input and a substantive process that together significantly contribute to the ability to create output as
well as clarifying that a business can exist without including all of the inputs and processes needed to create outputs.
The Group has considered this in the business combinations entered into during the period ended 31 March 2021,
and although did not impact the way in which the combination was recognised, could impact future periods should the
business enter into further business combinations.
The following standards and amendments had no impact on the financial statements of the Group:
Amendments to IAS 1 and IAS 8 Definition of Material
Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform
Conceptual Framework for Financial Reporting issued on 29 March 2018
Amendments to IFRS 16 Covid-19 Related Rent Concessions
New Accounting Standards and Interpretations Issued but not yet Effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of
the Group’s financial statements are disclosed below. The Group intends to adopt these new and amended standards
and interpretations, if applicable, when they become effective.
Amendments to IAS 1: Classification of Liabilities as Current or Non-current - effective for annual reporting periods
beginning on or after 1 January 2023
Reference to the Conceptual Framework – Amendments to IFRS 3 - effective for annual reporting periods beginning on
or after 1 January 2022
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 - effective for annual reporting
periods beginning on or after 1 January 2022
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37 - effective for annual reporting periods
beginning on or after 1 January 2022
IFRS 9 Financial Instruments – Fees in the ’10%’ test for derecognition of financial liabilities - effective for annual
reporting periods beginning on or after 1 January 2022
None of the amendments are expected to have a significant impact to the Group, however the Group will continue to
consider these and any additional amendments, interpretations and new standards to identity potential future impact.
138
Annual Report and Accounts 2021
Annual Report and Accounts 2021
139
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
2. Accounting Policies continued
2.4 Judgements and Key Sources of Estimation Uncertainty
The preparation of financial statements requires management to make judgements, estimates and assumptions
Allowance for Impairment Losses on Credit Exposures
The Group apply the IFRS 9 simplified lifetime expected credit loss approach in calculating expected credit
losses (ECL). Under this method ECL provisions are determined using a combination of historical experience and
forward-looking information based on management judgement. In the prior year, due to the Covid-19 pandemic the
unprecedented economic uncertainty increased the likelihood of a higher level of ECL, but there was no historical
that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for
comparative evidence to draw upon to build the impact of this pandemic into the normal ECL model used. The Group
revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from
responded by calculating an additional level of provision to overlay the normal ECL calculation. This overlay was based
those estimates.
In the process of applying the Group’s accounting policies, management has made the following judgements, which
have the most significant effect on the amounts recognised in the financial statements:
Estimates
Impairment of Goodwill
The Group and Company tests annually whether goodwill has suffered any impairment in accordance with the
accounting policy stated earlier in note 2.3. Determining whether goodwill is impaired requires an estimation of the
value in use and/or the estimated recoverable amount of the asset derived from the business, or part of the business,
CGU, to which the goodwill has been allocated. The value in use calculation requires an estimate of the present value of
future cash flows expected to arise from the CGU, by applying an appropriate discount rate to the timing and amount of
future cash flows.
on management estimates taking into account an analysis of trade receivables broken down into customer sectors,
using internal and external forecasts to assess the sectors which were expected to see the biggest impact of the
pandemic.
For the current year this additional overlay has been maintained as, although it is now over 12 months since the
pandemic began, the majority of governments have maintained economy support packages throughout this period, such
as furlough in the UK. As a result, the past 12 months is not considered to be a fair representation of the potential risk
profile for the coming year once these support packages are removed. The impact of the overlay is detailed in note 27.
Judgements
Revenue Recognition
For contracts with multiple components to be delivered, management may have to apply judgement to consider whether
those promised goods and services are (i) distinct - to be accounted for as separate performance obligations; (ii) not
distinct - to be combined with other promised goods or services until a bundle is identified that is distinct or (iii) part
Management are required to make judgements regarding the timing and amount of future cash flows applicable to the
of a series of distinct goods and services that are substantially the same and have the same pattern of transfer to the
CGU, based on current budgets and forecasts, and extrapolated for an appropriate period taking into account growth
customer.
rates and expected changes to sales and operating costs. In making these estimates management have reflected the
uncertainty due to Covid-19 by assessing the sensitivity of the assets to a wider range of changes in the key inputs to
consider if an impairment would arise within these ranges.
At contract inception the total transaction price is determined, and the Group allocates this to the identified
performance obligations in proportion to their relative stand-alone selling prices and recognises revenue when (or as)
those performance obligations are satisfied. Because of the bespoke nature of some solutions, judgement is sometimes
Management estimate the appropriate discount rate using pre-tax rates that reflect current market assessments of the
required to determine and estimate an appropriate standalone selling price.
time value of money and the risks specific to the business or the individual CGU.
An analysis of the Group and Company goodwill and the assumptions used to test for impairment are set out in note 17.
Deferred Tax Assets (both Judgement and Estimate)
Impairment of Investments in Subsidiary Undertakings
The Company tests for impairment of investments where there are indicators that the carrying value exceeds the
recoverable value.
The amount of the deferred tax asset included in the balance sheet of the Group is recognised only to the extent that
it is probable that future taxable profits will be available against which the asset can be utilised. A deferred tax asset
is recognised when it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Recognition, therefore, involves management judgement regarding the prudent forecasting of future taxable profits
of the business including considering appropriate levels of risk. At the balance sheet date, management has forecast
In order to perform this assessment, management are required to make estimates regarding the timing and amount
that the Group would generate future taxable profits against which certain decelerated tax losses, tax losses and
of future cash flows applicable to the subsidiary, based on current budgets and forecasts, and extrapolated for an
other temporary differences could be relieved. Within that forecast, management considered the total amount of tax
appropriate period taking into account growth rates and expected changes to sales and operating costs. Management
losses available across the Group and the relative restrictions in place for loss streaming and made a judgement not
estimate the appropriate discount rate using pre-tax rates that reflect current market assessments of the time value of
to recognise deferred tax assets on losses of £13,705,000 (2020: £15,084,000). The carrying value of the recognised
money and the risks specific to the business. Refer to note 16 for further details.
deferred tax asset at 31 March 2021 was £7,676,000 (2020: £6,294,000) and the unrecognised deferred tax asset at 31
March 2021 was £3,033,000 (2020: £5,123,000). Further details are contained in note 11.
Share-based Payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
Disclosure of Discontinued Operations
instruments at the date at which they are granted. Judgement is required in determining the most appropriate valuation
During the year GBG disposed of two businesses, Marketing Services and Employ and Comply. A judgement was made
model for a grant of equity instruments, depending on the terms and conditions of the grant. Management are also
to considered whether the financial results of the disposed businesses should be presented as discontinued operations
required to use judgement in determining the most appropriate inputs to the valuation model including expected life of
in accordance with IFRS 5. The assessment was that neither business ‘represents a separate major line of business or
the option, volatility and dividend yield. The assumptions and models used are disclosed in note 29.
geographical area of operations’ and therefore did not meet the criteria for this classification. This was based on their
level of revenue and adjusted operating profit relative to the overall Group.
140
Annual Report and Accounts 2021
Annual Report and Accounts 2021
141
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
2. Accounting Policies continued
Classification of Investment
As detailed in note 18, during the year the Group made an investment in CredoLab Pte Ltd. Management have had to
apply judgement to assess the appropriate accounting treatment for this investment.
Under IAS 28 Investments in Associates and Joint Ventures: “If an entity holds, directly or indirectly (e.g. through
subsidiaries), 20% or more of the voting power of the investee, it is presumed that the entity has significant influence,
unless it can be clearly demonstrated that this is not the case. Conversely, if the entity holds, directly or indirectly (e.g.
through subsidiaries), less than 20% of the voting power of the investee, it is presumed that the entity does not have
significant influence, unless such influence can be clearly demonstrated.”
This investment represents approximately 10% of the shareholding in CredoLab. Under the above guidance this would
indicate the investment should be accounted for as a financial asset under IFRS 9 Financial Instruments. However,
judgement was required to assess whether the board seat held by GBG gave the Group the power to participate in
financial and operating policy decisions. On the basis that this seat is held in an observer capacity only and does not
provide a vote on board matters, management has determined that the Group does not have significant influence and
Significant changes in contract balances
Contract assets predominantly relate to software licence services, where revenue recognition for on premise
arrangements occurs as the solution is transferred to the customer, whereas the invoicing pattern is often annually over
the contract period. Contract assets recognised during the year totalled £4,877,000 (2020: £6,014,000). The contract
asset balance for work completed but not invoiced on satisfaction of a performance obligation, unwinds over the
contract term. Contract assets are transferred to receivables when the right to consideration becomes unconditional, or
conditional over the passage of time.
Revenue recognised in the year of £37,701,000 (2020: £35,453,000) was included in the opening contract liability.
4. Segmental Information
The Group’s operating segments are internally reported to the Group’s Chief Executive Officer as three operating
segments: Location, Identity and Fraud. Included within ‘Unallocated’ is the revenue and profit of the Marketing Services
business (which was disposed in January 2021), as well as group operating costs such as compliance, finance, legal,
people team, information security, directors’ remuneration and PLC costs.
The measure of performance of those segments that is reported to the Group’s Chief Executive Officer is adjusted
therefore the investment has been recognised as a financial asset under IFRS 9.
operating profit, as defined in note 37.
Valuation and Asset Lives of Separately Identifiable Intangible Assets (both Judgement
and Estimate)
In accounting for acquisitions management are required to make judgements in relation to the identification of
separately identifiable intangible assets, the methodologies used to fair value these assets and the key inputs used in
the models require significant estimation. During the year, the Company acquired HooYu and in valuing the separately
identifiable intangible assets made specific judgements as to the appropriate methodology to be used to value the most
significant element of the transaction being the technology intangible asset. This has been done on a replacement cost
basis which was considered the most appropriate based on the characteristics of the transaction. The most significant
estimate within this methodology was the mark-up applied to the historic internally capitalised costs during the
development of the technology to equate these to a market participant replacement value. This estimate was based on
consideration of the rates GBG pay development contractors against salary averages.
3. Revenue
Revenue disclosed in the Consolidated Statement of Profit or Loss is analysed as follows:
Licence
Transactional
Services
Revenue
Finance revenue
Total revenue
2021
£’000
61,350
141,278
15,031
217,659
120
2020
£’000
71,543
112,079
15,479
199,101
143
217,779
199,244
Information on segment assets and liabilities is not regularly provided to the Group’s Chief Executive Officer and is
therefore not disclosed below.
Changes to Segmental Analysis for 31 March 2021 Disclosure
During the year to 31 March 21 the Group implemented a new financial system which has enabled transactions to
be analysed differently. As a result, the segmental analysis for the year to 31 March 21 includes changes to the
classification of revenue between segments and revenue types when compared to the 31 March 20 analysis. As this
analysis was not available for the year to 31 March 20 it has not been possible to restate the comparative period,
however an estimate of their impact has been detailed below:
n
n
n
Revenue from Location products in VIX Verify have been able to be reclassified from the Identity segment to the
Location segment (2020: estimate of £2,700,000 split between Licence - £1,700,000, Transactional - £975,000
and Services - £25,000)
Revenue from Location products in the UK have been reclassified between Licence, Transactional and Services
revenue. The estimated impact on 2020 revenue is an increase of £590,000 in 2020 Location Licence revenue,
£385,000 increase in 2020 Location transactional revenue and £975,000 reduction in 2020 Location services
revenue
Revenue for professional services in the Asia Pacific Fraud business has previously been bundled with the
associated Licence revenue. This element has now been separated and presented within Services revenue (2020:
estimate of £5,400,000)
Representation of 31 March 2020 Disclosure
The amendments to the presentation of the segmental information for the year ended 31 March 2020 is due to the
evolution in the go-to-market strategy of the Datacare part of the business, and the subsequent change in how this
is reported internally. Previously Datacare was included within the Unallocated segment whereas it is now presented
in Location. The values that have been represented in the year to 31 March 2020 are as follows: revenue £1,689,000,
adjusted operating profit £49,000.
142
Annual Report and Accounts 2021
Annual Report and Accounts 2021
143
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
4. Segmental Information continued
5. Operating Profit
Year ended 31 March 2021
Licence
Transactional
Services
Total revenue
Adjusted operating profit
Fraud
£’000
19,609
133
6,749
26,491
5,332
Identity
£’000
4,653
121,130
2,302
128,085
47,746
37,088
20,015
2,567
59,670
19,472
Amortisation of acquired intangibles
(749)
(12,295)
(4,331)
Location
£’000
Unallocated
£’000
–
–
3,413
3,413
(14,654)
(296)
(5,170)
448
Total
£’000
61,350
141,278
15,031
217,659
57,896
(17,671)
(5,170)
448
120
(1,360)
(7,385)
26,878
Total
£’000
71,543
112,079
15,479
199,101
47,945
(19,008)
(4,541)
(1,552)
–
–
–
–
–
–
4,583
35,451
15,141
(19,672)
35,503
–
–
–
–
–
–
–
–
–
120
(1,360)
(7,385)
(Represented)
Location
£’000
(Represented)
Unallocated
£’000
Fraud
£’000
33,563
–
1,943
35,506
13,444
Identity
£’000
7,135
95,489
2,784
105,408
33,626
30,845
16,590
4,045
51,480
14,601
–
–
–
–
–
–
–
–
6,707
6,707
(13,726)
(361)
(4,541)
(1,552)
12,967
19,455
10,602
(20,180)
22,844
143
(2,361)
(3,562)
143
(2,361)
(3,562)
17,064
Revenues from
external customers
Non-current assets
2021
£’000
77,302
78,998
23,636
37,723
217,659
2020
£’000
87,814
52,386
19,063
39,838
199,101
2021
£’000
123,338
223,843
39,695
12
2020
£’000
126,945
259,558
37,374
48
386,888
423,925
Share-based payments charge
Exceptional items
Operating profit
Finance revenue
Finance costs
Income tax expense
Profit for the year
Year ended 31 March 2020
Licence
Transactional
Services
Total revenue
Adjusted operating profit
Share-based payments charge
Exceptional items
Operating profit
Finance revenue
Finance costs
Income tax expense
Profit for the year
Geographical Information
United Kingdom
United States of America
Australia
Others
Total
Amortisation of acquired intangibles
(477)
(14,171)
(3,999)
The geographical revenue information above is based on the location of the customer.
Non-current assets for this purpose consist of plant and equipment and intangible assets and excludes the deferred tax
asset.
This is stated after charging:
Research and development costs recognised as an operating expense
Other Technology related costs recognised as an operating expense
Total Technology related costs recognised as an operating expense
Depreciation of property, plant and equipment (note 14)
Depreciation of right-of-use assets (note 15)
Expense relating to short term leases
Expense relating to low value leases
Expected credit losses of trade receivables (note 27)
Loss on disposal of plant and equipment
Amortisation of intangible assets (note 16)
Foreign exchange loss
The above information does not include exceptional items which have been disclosed in note 7.
6. Auditor’s Remuneration
Audit of the financial statements1
Other fees to auditor - other assurance services
- tax compliance services
2021
£’000
14,970
12,968
27,938
1,433
1,838
514
5
25
–
17,914
188
2020
£’000
16,821
13,043
29,864
1,760
1,850
447
5
2,532
260
19,192
69
2021
£’000
661
123
–
784
Restated*
2020
£’000
311
72
10
393
1
*
£273,000 (2020: £208,000) of this relates to the Company.
The Audit of the financial statements for the Company for the year-ended 31 March 2020 has been increased by £49,000 from the amount disclosed in
the 2020 Annual Report. This is to reflect amounts paid in respect of the 31 March 2020 audit that were agreed and paid subsequent to the publication
of those accounts.
7. Exceptional Items
(a) Costs associated with team member reorganisations
(b) Impairment of goodwill (note 16 & 35)
(c) Acquisition related costs
(d) Recognition of payroll tax credit
(e) Fair value adjustments to contingent consideration (note 36)
(f) Foreign exchange movement on contingent consideration (note 36)
(g) Profit on disposal of businesses (note 35)
2021
£’000
(441)
(154)
(862)
747
(697)
452
1,403
448
2020
£’000
(555)
–
(26)
–
(829)
(142)
–
(1,552)
(a) Costs associated with team member reorganisations relate to exit costs of personnel leaving the business on
an involuntary basis, either as a result of integrating acquisitions or due to reorganisations within our operating
divisions. Due to the nature of these costs, management deem them to be exceptional in order to better reflect our
underlying performance. Exit costs outside of these circumstances are treated as an operating expense.
144
Annual Report and Accounts 2021
Annual Report and Accounts 2021
145
OverviewStrategic ReportGovernanceFinancial Statements
Notes To The Accounts continued
7. Exceptional Items continued
8. Team Member Costs and Directors’ Emoluments
(b) During the year £79,000 (2020: £nil) has been recognised as an impairment expense relating to the goodwill in the
e-Ware Interactive cash generating unit, and £75,000 relating to the goodwill in the Transactis cash generating unit.
Refer to note 17 for further details.
(c) Acquisition related costs of £862,000 (2020: £26,000) include legal and professional advisor costs directly
attributable to the transactions and exclude operating or integration costs relating to an acquired business. Also
includes costs which were incurred as part of a potential acquisition. In the current year these costs related to fees
in relation to the acquisition of HooYu Investigate and the investment in Credolabs. In the prior year the costs relate
to the final acquisition costs relating to the acquisition of Idology Inc. Due to the size and nature of these costs,
management consider that they would distort the Group’s underlying business performance.
(d) In the first half of the year to 31 March 2021, a previously unrecognised payroll tax credit in the State of Georgia of
£747,000 was recognised on the balance sheet, with a corresponding credit being recognised in exceptional items.
Previously there was uncertainty over the Group’s eligibility to this credit, but this has now been confirmed. As and
when the Group receives the benefit of this asset an equivalent amount is due to the sellers of IDology. On this basis
the contingent consideration liability was increased by £747,000 with a corresponding exceptional item charge.
(e) Subsequent to the recognition of the additional contingent consideration of £747,000 referred to in (d) above, in
December 2020 the Group agreed to settle this liability with the sellers early, in exchange for a reduction of £50,000
in the amount payable. Therefore, the net exceptional cost in the year related to this was £697,000. As detailed in
note 36, under the terms of the IDology Inc acquisition the sellers are entitled to the benefit of the tax losses of the
business at the date of the acquisition as and when GBG utilises them to reduce cash tax payments. On acquisition
GBG recognised a Deferred Tax Asset (DTA) in relation to these losses which were expected to be utilised in future
years and so the valuation of the DTA was based on the prevailing federal tax rate of 21%. An equivalent contingent
consideration liability reflected that the benefit of this DTA is due to the sellers. On 27 March 2020 in the United
States the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress and signed into
law by President Trump. This Act included the entitlement for tax losses to now be carried back for up to five years.
As the tax rate in the United States in the period 2014-2018 was 35% the value of these losses had increased. In
the year to 31 March 2020 GBG recorded an increase in the value of the DTA related to this new law with the benefit
recognised within the income tax charge in the income statement (the DTA was then reclassified to a current tax
asset as a cash refund was available). The related increase in the liability to the sellers has been recognised as
an exceptional item in the year to 31 March 2020 (£829,000) as it arose outside of the 12-month hindsight period
permitted for adjustments to the acquisition accounting. A further agreed increase to the deferred consideration
was recognised during the year to 31 March 2021 of £749,000.
(f) The contingent consideration liability is based on the US Dollar value of the losses and deferred tax asset. As a
result, the liability was retranslated at the balance sheet date with a gain of £452,000 (2020: loss £142,000) being
treated as an exceptional item.
(g) During the year, the business disposed of its Marketing Services and Employ and Comply businesses. Intangible
assets, property plant and equipment, and trading balances were disposed of as part of these transactions and
deducted from the proceeds received which has resulted in an overall profit on disposal. The profit recognised on
disposal of Employ and Comply is £2,578,000. The loss on disposal of Marketing Services is £1,175,000. Refer to
note 35 for further details.
a) Team Member Costs (including Directors)
Wages and salaries including commission and bonuses
Social security costs
Other pension costs
Share-based payments
Group
Company
2021
£’000
69,301
6,140
2,799
5,170
Restated
2020*
£’000
2021
£’000
67,946
42,362
6,126
2,770
4,541
4,488
1,509
4,341
Restated
2020*
£’000
40,313
4,550
1,495
4,271
83,410
81,383
52,700
50,629
*
The components of costs included within this note has been expanded in the current year to include share based payments, bonus costs and
commission. As a result, the prior year information has been restated to be consistent.
The average monthly number of team members during the year within each category was as follows:
Technology
General and administration
Sales and marketing
Group
Company
2021
£’000
352
135
560
Restated
2020*
£’000
355
120
547
1,047
1,022
2021
£’000
235
103
360
698
2020
£’000
226
97
364
687
* Categorisation of team members have changed in the year following the implementation of the new finance systems and as such the comparatives
have been adjusted to be consistent. The overall total remains the same.
b) Directors’ Emoluments
Wages and salaries
Pension
Bonuses
Aggregate gains made by Directors on the exercise of share options
The remuneration for the highest paid Director was as follows:
Wages and salaries
Bonus
2021
£’000
1,526
74
1,448
3,048
2,611
2021
£’000
606
723
1,329
2020
£’000
1,513
74
1,449
3,036
5,936
2020
£’000
607
723
1,330
The highest paid Director has reached the maximum level permitted for a personal pension plan and receives a direct
The tax impact of the exceptional items was a tax charge of £818,000 (2020: tax deduction of £969,000 which was
payment in lieu of his pension entitlement, which was £88,253 (2020: £90,353). The number of share options granted
principally in relation to the increase in the deferred tax asset of £829,000 related to the IDology tax losses).
during the year for the highest paid Director was 173,267 (2020: 206,136) and the number of share options exercised
during the year was 241,000 (2020: 200,000).
146
Annual Report and Accounts 2021
Annual Report and Accounts 2021
147
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
9. Finance Revenue
Bank interest receivable
Interest income on multi-year contracts
10. Finance Costs
Bank interest payable
Interest on long service award
Amortisation of bank loan fees
Lease liability interest
11. Taxation
a) Tax on Profit
The tax charge in the Consolidated Statement of Profit or Loss for the year is as follows:
Current income tax
UK corporation tax on profit for the year
Amounts underprovided/(overprovided) in previous years
Foreign tax
Deferred tax
Origination and reversal of temporary differences
Amounts underprovided in previous years
Impact of change in tax rates
Tax charge in the Statement of Comprehensive Income
2021
£’000
20
100
120
2021
£’000
957
12
193
198
2020
£’000
143
–
143
2020
£’000
1,911
13
192
245
1,360
2,361
2021
£’000
3,841
(388)
8,958
12,411
2020
£’000
2,760
120
1,903
4,783
b) Reconciliation of the Total Tax Charge
The profit before tax multiplied by the standard rate of corporation tax in the UK would result in a tax charge as
explained below:
Consolidated profit before tax
Consolidated profit before tax multiplied by the standard rate of corporation tax in
the UK of 19% (2020: 19%)
Effect of:
Permanent differences
Non-taxable income
Rate changes
Recognition of previously unrecognised deferred tax assets
Utilisation of losses
Deferred tax release on disposals
Prior year items
Research and development tax relief
Patent Box relief
Share option relief
Effect of higher taxes on overseas earnings
Total tax charge reported in the Consolidated Statement of Profit or Loss
2021
£’000
2020
£’000
34,263
20,626
6,510
3,919
157
–
(100)
(261)
–
480
(77)
(69)
(579)
39
1,285
7,385
347
(489)
(1,283)
–
(14)
–
996
(880)
(545)
9
1,502
3,562
The Group is entitled to current year tax relief of £1,316,000 (2020: £811,000), calculated at a tax rate of 19% (2020:
19%), in relation to the statutory deduction available on share options exercised in the year.
c) Deferred Tax – Group
Deferred Tax Asset
The recognised and unrecognised potential deferred tax asset of the Group is as follows:
Recognised
Unrecognised
(5,217)
(2,625)
Decelerated capital allowances
311
(120)
(5,026)
7,385
876
528
(1,221)
3,562
Share options
Long service award
Accrued bonuses
Provision for bad debt
Other temporary differences
Leases
Capital losses
Trading losses
The movement on the deferred tax asset of the Group is as follows:
Opening balance – as reported
IFRS 16 transition adjustment
Opening balance – restated
Acquired on acquisition
Foreign currency adjustments
Origination and reversal of temporary differences
2021
£’000
1,278
3,112
273
558
189
2020
£’000
1,259
1,848
233
522
368
1,888
1,420
228
–
150
429
–
215
7,676
6,294
2021
£’000
2020
£’000
–
–
–
–
–
–
–
429
410
839
2021
£’000
6,294
–
6,294
–
83
1,299
7,676
–
–
–
–
–
–
–
429
2,866
3,295
2020
£’000
8,222
326
8,548
–
11
(2,265)
6,294
148
Annual Report and Accounts 2021
Annual Report and Accounts 2021
149
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
11. Taxation continued
The movement on the deferred tax asset of the Company is as follows:
The deferred tax asset has been recognised to the extent it is anticipated to be recoverable out of future taxable profits
based on profit forecasts for the foreseeable future. The utilisation of the unrecognised deferred tax asset in future
periods will reduce the future tax rate below the standard rate. The Group has unrecognised deductible temporary
differences of £2,914,000 (2020: £15,084,000) and unrecognised capital losses of £2,257,000 (2020: £2,257,000).
Refer to 11e below for details of movement in the year.
Opening balance – as reported
IFRS 16 transition adjustment
Opening balance – restated
Origination and reversal of temporary differences
2021
£’000
3,867
–
3,867
866
4,733
2020
£’000
3,094
59
3,153
714
3,867
Deferred Tax Liability
The deferred tax liability of the Group is as follows:
Intangible assets
Land and buildings
Leases
Accelerated capital allowances
The movement on the deferred tax liability of the Group is as follows:
Opening balance
IFRS 16 transition adjustment
Opening balance – restated
Acquisitions
Foreign currency adjustments
Origination and reversal of temporary differences
Impact of change in tax rates
d) Deferred Tax – Company
Deferred Tax Asset
2021
£’000
21,518
159
183
260
2020
£’000
26,553
186
277
139
22,120
27,155
2021
£’000
27,155
–
27,155
1,000
(1,532)
(4,398)
(105)
22,120
2020
£’000
29,548
189
29,737
–
713
(3,823)
528
27,155
The recognised and unrecognised potential deferred tax asset of the Company is as follows:
Decelerated capital allowances
Share options
Long service award
Provision for bad debt
Other temporary differences
Leases
Capital losses
Trading losses
Recognised
Unrecognised
2021
£’000
1,279
3,041
84
83
101
–
–
145
2020
£’000
1,259
1,839
105
308
310
46
–
–
4,733
3,867
2021
£’000
2020
£’000
–
–
–
–
–
–
429
405
834
–
–
–
–
–
–
429
2,866
3,295
The deferred tax asset has been recognised to the extent it is anticipated to be recoverable out of future taxable profits
based on profit forecasts for the foreseeable future. The utilisation of the unrecognised deferred tax asset in future
periods will reduce the future tax rate below the standard rate. The Company has unrecognised deductible temporary
differences of £2,894,000 (2020: £15,084,000) and unrecognised capital losses of £2,757,000 (2020: £2,257,000).
Refer to 11e below for details of movement in the year.
Deferred Tax Liability
The deferred tax liability of the Company is as follows:
Intangible assets
Land and buildings
The movement on the deferred tax liability of the Company is as follows:
Opening balance
Origination and reversal of temporary differences
Acquisition
Impact of change in tax rates
e) Tax Losses
2021
£’000
4,447
108
4,555
2021
£’000
4,474
(919)
1,000
–
4,555
2020
£’000
4,362
112
4,474
2020
£’000
5,020
(1,014)
–
468
4,474
The Group has carried forward trading losses at 31 March 2021 of £2,914,000 (2020: £15,591,000). To the extent that
these losses are available for offset against future trading profits of the Group, it is expected that the future effective
tax rate would be below the standard rate. The reduction in the trading losses is due to a provisional assessment that
80% of the losses related to the Marketing Services business would no longer be available following the disposal of
part of that business (detailed in note 35). This assessment will be finalised as part of the submission of the UK tax
return for the year to 31 March 2021.
There were also capital losses carried forward at 31 March 2021 of £2,257,000 (2020: £2,257,000), which should be
available for offset against future capital gains of the Group to the extent that they arise.
f) Change in United States Deferred Tax Rates
The tax rate in applied in the calculation of deferred tax assets and liabilities in the United States has been updated
to reflect forecast changes in the effective State tax rate that will apply to these businesses based on the location of
customers and business activities. For IDology Inc the rate is 24.9% (2020: 25.2%and for Loqate Inc the rate is 25.8%
(2020: 21.0%).
g) Future Change in United Kingdom Tax Rate
On 3 March 2021 the UK Government announced that effective 1 April 2023 the UK corporation rate will increase
from 19% to 25%. As this change had not been substantively enacted at 31 March 2021, UK deferred tax assets and
liabilities have continued to be based on a rate of 19%.
150
Annual Report and Accounts 2021
Annual Report and Accounts 2021
151
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
11. Taxation continued
h) Unremitted earnings
The Group’s foreign subsidiaries have net unremitted earnings of £31,150,000 (2020: £26,979,000), resulting in
temporary differences of £21,000 (2020: £Nil) that may be payable as withholding tax if dividends were declared. No
deferred tax has been provided in respect of these differences since the timing of the reversals can be controlled and it
is probable that the temporary differences will not reverse in the foreseeable future.
12. Dividends Paid and Proposed
Declared and paid during the year
Interim dividend for FY21 paid in January 2021: 3.00p (final dividend for FY19 paid in
August 2019: 2.99p)
Proposed for approval at AGM (not recognised as a liability at 31 March)
Final dividend for 2021: 3.40p (2020: 0p)
2021
£’000
2020
£’000
5,885
5,782
6,674
–
£2,000 (2020: £21,000) was received during the year relating to dividends paid on forfeited shares. The total net cash
impact of dividends during the year was therefore £5,883,000 (2020: £5,761,000).
13. Earnings Per Ordinary Share
Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company from
continuing operations by the basic weighted average number of ordinary shares in issue during the year.
Profit attributable to equity holders of the Company
13.8
26,878
8.8
2021
pence per
share
2021
£’000
2020
pence per
share
2020
£’000
17,064
Diluted
Diluted earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders
from continuing operations by the weighted average number of ordinary shares outstanding during the year plus the
weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary
shares into ordinary shares.
Basic weighted average number of shares in issue
Dilutive effect of share options
Diluted weighted average number of shares in issue
2021
No.
2020
No.
195,224,730 193,630,621
3,281,173
3,144,641
198,505,903 196,775,262
2021
pence per
share
2021
£’000
2020
pence per
share
2020
£’000
Profit attributable to equity holders of the Company from
continuing operations
13.5
26,878
8.7
17,064
Adjusted
Adjusted earnings per share is defined as adjusted operating profit less net finance costs and tax divided by the basic
weighted average number of ordinary shares of the Company.
Adjusted operating profit
Less net finance costs
Less tax
Adjusted earnings
Basic
2021
pence per
share
Diluted
2021
pence per
share
29.7
(0.6)
(3.9)
25.2
29.2
(0.6)
(3.8)
24.8
2021
£’000
57,896
(1,240)
(7,385)
49,271
Basic
2020
pence per
share
Diluted
2020
pence per
share
24.8
(1.1)
(1.9)
21.8
24.4
(1.1)
(1.9)
21.4
2020
£’000
47,945
(2,218)
(3,562)
42,165
14. Property, Plant and Equipment
Group
Cost
At 1 April 2019
Additions
Disposals
Foreign currency adjustment
At 31 March 2020
Additions
Disposals (other than sale of businesses)
Sale of business disposals
Foreign currency adjustment
At 31 March 2021
Depreciation and impairment
At 1 April 2019
Provided during the year
Disposals
Foreign currency adjustment
At 31 March 2020
Provided during the year
Disposals (other than sale of businesses)
Sale of business disposals
Foreign currency adjustment
At 31 March 2021
Net book value
At 31 March 2021
At 31 March 2020
At 1 April 2019
Property
£’000
Plant and
equipment
£’000
1,251
–
–
–
1,251
–
–
–
–
8,541
1,653
(881)
(94)
9,219
455
(145)
(514)
(46)
Total
£’000
9,792
1,653
(881)
(94)
10,470
455
(145)
(514)
(46)
1,251
8,969
10,220
42
19
–
–
61
19
–
–
–
80
1,171
1,190
1,209
4,935
1,741
(875)
(45)
5,756
1,414
(145)
(504)
(87)
6,434
2,535
3,463
3,606
4,977
1,760
(875)
(45)
5,817
1,433
(145)
(504)
(87)
6,514
3,706
4,653
4,815
152
Annual Report and Accounts 2021
Annual Report and Accounts 2021
153
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
14. Property, Plant and Equipment continued
15. Right-of-use assets
Company
Cost
At 1 April 2019
Additions
Disposals
At 31 March 2020
Additions
Disposals (other than sale of businesses)
Sale of business disposals
At 31 March 2021
Depreciation and impairment
At 1 April 2019
Provided during the year
Disposals
At 31 March 2020
Provided during the year
Disposals (other than sale of businesses)
Sale of business disposals
At 31 March 2021
Net book value
At 31 March 2021
At 31 March 2020
At 1 April 2019
Property
£’000
Plant and
equipment
£’000
Total
£’000
7,372
858
(872)
7,358
226
(145)
(514)
6,925
3,569
1,214
(872)
3,911
6,139
858
(872)
6,125
226
(145)
(514)
5,692
3,545
1,195
(872)
3,868
900
911
(145)
(504)
4,119
1,573
2,257
2,594
(145)
(504)
4,173
2,752
3,447
3,803
1,233
–
–
1,233
–
–
–
1,233
24
19
–
43
11
–
–
54
1,179
1,190
1,209
Group
Cost
At 1 April 2019
Additions
Disposals
Foreign currency adjustment
At 31 March 2020
Additions
Disposals (other than sale of business)
Sale of business disposals
Foreign currency adjustment
At 31 March 2021
Depreciation and impairment
At 1 April 2019
Provided during the year
Disposals
Foreign currency adjustment
At 31 March 2020
Provided during the year
Disposals (other than sale of businesses)
Sale of business disposals
Foreign currency adjustment
At 31 March 2021
Net book value
At 31 March 2021
At 31 March 2020
At 1 April 2019
Right of use
assets
£’000
8,840
1,837
(295)
(265)
Total
£’000
8,840
1,837
(295)
(265)
10,117
10,117
504
(912)
(704)
(91)
504
(912)
(704)
(91)
8,914
8,914
3,674
1,850
(180)
3,674
1,850
(180)
6
6
5,350
1,838
(910)
(444)
(151)
5,350
1,838
(910)
(444)
(151)
5,683
5,683
3,231
4,767
5,166
3,231
4,767
5,166
154
Annual Report and Accounts 2021
Annual Report and Accounts 2021
155
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
15. Right-of-use assets continued
Company
16. Intangible Assets
Group
Cost
At 1 April 2019 and 31 March 2020
Disposals (other than sale of businesses)
Sale of business disposals
At 31 March 2021
Depreciation and impairment
At 1 April 2019
Provided during the year
At 31 March 2020
Provided during the year
Disposals (other than businesses)
Sale of business disposals
At 31 March 2021
Net book value
At 31 March 2021
At 31 March 2020
At 1 April 2019
Right of use
assets
£’000
4,691
(781)
Total
£’000
4,691
(781)
(704)
(704)
3,206 3,206
1,918
675
2,593
561
(781)
(444)
1,929
1,277
2,098
2,773
1,918
675
2,593
561
(781)
(444)
1,929
1,277
2,098
2,773
The underlying class of assets and their net book values are leasehold property Group £3,216,000 (2020: £4,760,000),
Company £1,277,000 (2020: £2,093,000) and equipment Group £15,000 (2020: £7,000) Company £nil (2020: £5,000).
Customer
relationships
£’000
Software
technology
£’000
Non-
complete
clauses
£’000
Total
acquired
intangibles
£’000
Goodwill
£’000
Purchased
software
£’000
Internally
developed
software
£’000
Total
£’000
118,060
32,648
5,378
156,086 298,032
2,253
1,771
458,142
2,075
527
194
2,796 5,230
1
software
Disposals
–
–
–
–
–
–
(695)
(695)
–
–
At 31 March 2020
120,135
33,175
4,877
158,187 303,262
(5,577)
(1,400)
(434)
(7,411)
(14,369)
–
–
–
4,620
645
5,265
141
–
–
–
–
–
–
–
–
–
183
(259)
2,178
(2)
–
283
(705)
–
–
8,027
183
(559)
(1,513)
1,212 464,839
–
–
–
–
–
(21,782)
5,406
283
(705)
(8,817)
disposals
(4,842)
(1,446)
(6,288)
(2,529)
–
At 31 March 2021
109,716
34,949
5,088
149,753 286,505
1,754
1,212 439,224
16,670
11,391
1,048
29,109
(77)
(43)
18
(102)
12,231
5,723
1,054
19,008
–
–
(695)
(695)
28,824
17,071
1,425
47,320
(783)
(391)
(138)
(1,312)
11,682
5,070
919
17,671
–
–
–
–
–
–
–
–
–
(4,821)
–
–
–
–
–
–
–
154
–
–
1,638
1,749
32,496
2
–
(100)
162
22
19,192
–
(559)
(1,254)
1,802
1,212
50,334
(3)
243
–
(705)
–
–
–
–
–
–
(1,315)
17,914
154
(705)
(4,821)
Cost
At 1 April 2019
Foreign currency
adjustment
Additions – purchased
Foreign currency
adjustment
Additions – business
combinations (note 35)
Additions – purchased
software
Disposals (other than
sale of businesses)
Sale of business
Amortisation and
impairment
At 1 April 2019
Foreign currency
adjustment
Amortisation during the
year
Disposals
At 31 March 2020
Foreign currency
adjustment
Amortisation during the
year
Impairment
Disposals (other than
sale of businesses)
Sale of business
156
Annual Report and Accounts 2021
Annual Report and Accounts 2021
157
At 31 March 2021
36,348
20,304
2,206
58,858
154
1,337
1,212
61,561
Net book value
At 31 March 2021
At 31 March 2020
At 1 April 2019
73,368
91,311
101,390
14,645
16,104
21,257
2,882
3,452
4,330
90,895 286,351
110,867 303,262
126,977 298,032
417
376
615
–
–
377,663
414,505
22 425,646
disposals
(3,375)
(1,446)
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
16. Intangible Assets continued
16. Intangible Assets continued
Data Discoveries Holdings Limited
Capscan Parent Limited
DecTech Solutions Pty Ltd
CDMS Limited
Loqate Inc
ID Scan Biometrics Limited
Postcode Anywhere (Holdings) Limited
VIX Verify Global Pty Limited
IDology Inc
Carrying
Value of
Customer
Relationship
£’000
Remaining
Amortisation
Period
Years
9
275
1,321
267
844
2,057
15,126
5,550
47,919
73,368
0.25
0.58
3.08
3.58
4.08
5.25
6.08
7.50
7.83
Goodwill arose on the acquisition of GB Mailing Systems Limited, e-Ware Interactive Limited, Data Discoveries Holdings
Limited, Capscan Parent Limited, DecTech Solutions Pty Ltd, CDMS Limited, Loqate Inc., ID Scan Biometrics Limited,
Postcode Anywhere (Holdings) Limited, VIX Verify Global Pty Limited, IDology Inc and Investigate 2020 Limited. Under
IFRS, goodwill is not amortised and is tested annually for impairment (note 17).
Company
Cost
Customer
relationships
£’000
Software
technology
£’000
Non-
complete
clauses
£’000
Total
acquired
intangibles
£’000
Goodwill
£’000
Purchased
software
£’000
Internally
developed
software
£’000
Total
£’000
At 1 April 2019
26,078
7,818
461
34,357
110,115
2,198
2,353 149,023
Additions – purchased
software
Hive-up adjustment1
Disposals
–
(54)
–
–
–
–
At 31 March 2020
26,024
7,818
–
–
(194)
267
–
(54)
(194)
–
–
–
183
–
–
–
183
(54)
(259)
(559)
(1,012)
34,109
110,115
2,122
1,794 148,140
Additions – business
combinations
Additions- purchased
software
Disposals (other than
sale of businesses)
Sale of business
disposals
–
–
–
–
4,620
645
5,265
141
–
–
–
–
–
–
–
–
–
–
283
(705)
–
–
–
–
5,406
283
(705)
(4,286)
(4,286)
–
The impairment of £154,000 is in respect of:
At 31 March 2021
26,024
12,438
912
39,374 105,970
1,700
1,794 148,838
n
n
£75,000 for the Transactis CGU. Following the disposal of part of the Marketing Services business detailed in note
35, the future cash flows from the remaining part of the Marketing Services business were not sufficient to support
the carrying value of the acquired goodwill.
£79,000 for the E-Ware Interactive CGU. As detailed in the 2020 Annual Report, the remaining value in use was
based on a single remaining customer from the acquisition. During the current year this customer cancelled their
contract and as a result the full amount of goodwill in the Group was impaired.
Amortisation and
impairment
At 1 April 2019
Reclassification
Amortisation during
the year
Disposals
2,983
2,695
102
(102)
2,878
2,498
–
–
At 31 March 2020
5,963
5,091
289
–
162
(194)
257
5,967
–
5,538
(194)
11,311
–
–
–
–
–
–
–
–
1,575
2,342
9,884
–
171
–
–
–
11
5,720
(559)
(753)
1,746
1,794
14,851
–
242
–
(705)
1,283
417
376
623
–
–
–
–
–
4,899
6,112
(705)
1,794
25,157
–
123,681
– 133,289
11
139,139
Reclassification
Amortisation during
the year
Impairment
Disposals (other than
sale of businesses)
At 31 March 2021
Net book value
At 31 March 2021
At 31 March 2020
At 1 April 2019
–
–
–
–
2,878
1,715
64
4,657
–
–
–
–
–
–
–
–
6,112
–
8,841
6,806
321
15,968
6,112
17,183
20,061
23,095
5,632
2,727
5,123
591
10
172
23,406
99,858
22,798
110,115
28,390
110,115
158
Annual Report and Accounts 2021
Annual Report and Accounts 2021
159
1
This is a correction to the opening acquired cost in respect of the hive-up of IDScan Biometrics Limited in the year to 31 March 2018. The other side to
this entry is within ‘Other Reserves’ within equity.
OverviewStrategic ReportGovernanceFinancial Statements
Notes To The Accounts continued
16. Intangible Assets continued
Carrying Amount of Goodwill and Acquired Intangible Assets Allocated to CGUs
ID Scan Biometrics Limited
Postcode Anywhere (Holdings) Limited
Carrying
Value of
Customer
Relationship
£’000
Remaining
Amortisation
Period
Years
2,057
15,126
17,183
5.25
6.08
Goodwill arose on the acquisition of ID Scan Biometrics Limited, Postcode Anywhere (Holdings) Limited and Investigate
2020 Limited. Under IFRS, goodwill is not amortised and is tested annually for impairment (note 17).
The impairment of £6,112,000 is in respect of:
n
n
£6,052,000 for the Transactis CGU. Following the disposal of part of the Marketing Services business detailed in
note 35, the future cashflows from the remaining part of the Marketing Services business were not sufficient to
support the carrying value of the Acquired Goodwill.
£60,000 for the e-Ware Interactive CGU. As detailed in the 2020 Annual Report, the remaining value in use was
based on a single remaining customer from that acquisition. During the current year this customer cancelled their
contract and as a result the full amount of goodwill in the Company was impaired.
17. Impairment Testing of Goodwill
Goodwill and intangible assets acquired through business combinations has been allocated for impairment testing
purposes to nine CGUs as follows:
n Fraud Unit (represented by the Fraud operating segment excluding the CAFs Unit)
n
Identity Unit (represented by the Identity operating segment excluding the IDology Unit and the VIX Verify Unit)
Group
Fraud Unit
Identity Unit
Location Unit
CAFS Unit
Loqate Unit
VIX Verify Unit
IDology Unit
2021
Acquired
Intangibles
£’000
4,990
2,056
16,643
1,321
844
6,118
Goodwill
£’000
3,181
35,058
53,992
14,461
7,002
15,859
2020
Acquired
Intangibles
£’000
47
3,374
20,758
1,564
1,165
6,345
Goodwill
£’000
3,040
37,586
53,992
12,922
7,731
14,171
Total
£’000
8,171
37,114
70,635
15,782
7,846
21,977
Total
£’000
3,087
40,960
74,750
14,486
8,896
20,516
156,371
58,656
215,027
173,239
75,958
249,197
e-Ware Interactive Unit
Transactis Unit
–
427
–
267
–
694
79
502
286,351
90,895
377,246
303,262
–
1,656
110,867
79
2,158
414,129
Company
Fraud Unit
Goodwill
£’000
4,796
Identity Unit
35,082
Location Unit
59,286
CAFS Unit
Loqate Unit
VIX Verify Unit
IDology Unit
e-Ware
Interactive
Unit
–
–
–
–
–
2021
Acquired
Intangibles
£’000
4,980
2,056
16,370
–
–
–
–
–
–
Investments
£’000
Total
£’000
Goodwill
£’000
3,506
7,745
14,928
13,868
5,188
13,282
4,654
44,883
39,368
90,584
59,286
13,868
5,188
20,639
20,639
240,962
240,962
–
–
–
–
–
–
–
694
60
6,747
2020
Acquired
Intangibles
£’000
–
2,786
20,012
–
–
–
–
–
–
Investments
£’000
153
7,745
14,928
13,868
5,188
Total
£’000
4,807
49,899
94,226
13,868
5,188
20,639
20,639
240,962
240,962
–
–
60
6,747
n Location Unit (represented by the Location operating segment excluding the Loqate Unit)
Transactis Unit
694
n CAFs Unit (part of the Fraud operating segment)
n Loqate Unit (part of the Location operating segment)
n VIX Verify Unit (part of the Identity operating segment)
n
IDology Unit (part of the Identity operating segment)
n e-Ware Interactive Unit (included in Other operating segment)
n Transactis Unit (included in Other operating segment)
Where there are no indicators of impairment on the goodwill and acquired intangibles arising through business
combinations made during the year they are tested for impairment no later than at the end of the year.
99,858
23,406
306,836
430,100
110,115
22,798
303,483
436,396
*
Investments are presented net of £2,288,000 of equity investments held at Fair Value through Other Comprehensive Income.
Key Assumptions Used in Value in Use Calculations
The Group prepares cash flow forecasts using budgets and forecasts approved by the Directors covering a five-year
period and an appropriate extrapolation of cash flows beyond this using a long-term average growth rate. The long-term
average growth rate is not greater than the average long-term retail growth rate in the territory where the CGU is based
UK – 1.9%; USA – 2.2%; Australia – 3.0% (2020: UK – 1.8%; USA – 1.8%; Australia – 2.5%).
The key assumptions for value in use calculations are those regarding the forecast cash flows, discount rates and
growth rates. The Directors estimate discount rates using pre-tax rates that reflect current market assessments of the
time value of money and the risks specific to the individual CGU. Growth rates reflect long-term growth rate prospects
for the economy in which the CGU operates.
160
Annual Report and Accounts 2021
Annual Report and Accounts 2021
161
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
17. Impairment Testing of Goodwill continued
Fraud Unit
Identity Unit
Location Unit
CAFS Unit
Loqate Unit
Vix Verify Unit
Idology Unit
Transactis Unit
2021
2020
Pre-tax
discount rate
%
Growth rate
(in perpetuity)
%
Pre-tax
discount rate
%
Growth rate
(in perpetuity)
%
11.1%
11.1%
11.1%
13.7%
12.0%
13.7%
12.0%
11.1%
1.9%
1.9%
1.9%
3.0%
2.2%
3.0%
2.2%
–
10.7%
10.7%
10.7%
14.3%
12.8%
14.3%
12.8%
10.7%
1.8%
1.8%
1.8%
2.5%
1.8%
2.5%
1.8%
–
The sensitivity analysis below is related to the Group. Information on the sensitivities for the Company have been
included in instances where there is either an impairment or where a reasonably possible change in assumptions could
result in an impairment.
In the case of the Fraud CGU, the annual impairment review as at 31 March 2021 indicated that the recoverable amount
exceeded the carrying value of the CGU by £56,117,000. The sensitivities which result in the recoverable amount
equalling the carrying value can be summarised as follows:
n an absolute increase of 64.1% in the pre-tax weighted average cost of capital from 11.1% to 75.2%; or
n a reduction of 87% in the forecast profit margins; and
In the case of Loqate CGU, the annual impairment review as at 31 March 2021 indicated that the recoverable amount
exceeded the carrying value of the CGU by £50,085,000. The sensitivities which result in the recoverable amount
equalling the carrying value can be summarised as follows:
n an absolute increase of 67.4% in the pre-tax weighted average cost of capital from 12.0% to 79.4%; or
n an increase in the GBP/USD exchange rate from 1.36 to 10.04; or
n a reduction of 86% in the forecast profit margins.
In the case of the VIX Verify CGU, the annual impairment review as at 31 March 2021 indicated that the recoverable
amount exceeded the carrying value of the CGU by £22,629,000. The sensitivities which result in the recoverable
amount equalling the carrying value can be summarised as follows:
n an absolute increase of 10.9% in the pre-tax weighted average cost of capital from 13.7% to 24.6%; or
n an increase in the GBP/AUD exchange rate from 1.79 to 3.63; or
n a reduction of 51% in the forecast profit margins.
In the case of the IDology CGU, the annual impairment review as at 31 March 2021 indicated that the recoverable
amount exceeded the carrying value of the CGU by £57,487,000. The sensitivities, which result in the recoverable
amount equalling the carrying value, can be summarised as follows:
n
an absolute increase of 2.5% in the pre-tax weighted average cost of capital from 12.0% to 14.5% (which is
considered reasonably possible); or
n an increase in the GBP/USD exchange rate from 1.36 to 1.72; or
n a reduction of 21% in the forecast profit margins.
In the case of the Identity CGU, the annual impairment review as at 31 March 2021 indicated that the recoverable
amount exceeded the carrying value of the CGU by £148,690,000. The sensitivities, which result in the recoverable
amount equalling the carrying value, can be summarised as follows:
The carrying value of the IDology CGU in the Company is £25,935,000 higher than in the Group and therefore the
headroom in the Company is £31,552,000. The sensitivities, which result in the recoverable amount equalling the
carrying value in the Company, can be summarised as follows:
n an absolute increase of 35.8% in the pre-tax weighted average cost of capital from 11.1% to 46.9%; or
n
an absolute increase of 1.2% in the pre-tax weighted average cost of capital from 12.0% to 13.2% (which is
n a reduction of 80% in the forecast profit margins.
In the case of the Location CGU, the annual impairment review as at 31 March 2021 indicated that the recoverable
amount exceeded the carrying value of the CGU by £203,725,000. The sensitivities which result in the recoverable
amount equalling the carrying value can be summarised as follows:
n an absolute increase of 25.5% in the pre-tax weighted average cost of capital from 11.1% to 36.6%; or
n a reduction of 74% in the forecast profit margins.
In the case of CAFs CGU, the annual impairment review as at 31 March 2021 indicated that the recoverable amount
exceeded the carrying value of the CGU by £14,976,000. The sensitivities which result in the recoverable amount
equalling the carrying value can be summarised as follows:
n an absolute increase of 8.7% in the pre-tax weighted average cost of capital from 13.7% to 22.4%; or
n an increase in the GBP/AUD exchange rate from 1.79 to 3.49; or
n a reduction of 49% in the forecast profit margins.
considered reasonably possible); or
n an increase in the GBP/USD exchange rate from 1.36 to 1.54; or
n a reduction of 12% in the forecast profit margins.
In the case of the Transactis CGU, this originated with the acquisition of CDMS Limited which formed part of the
Marketing Services business that was disposed during the year. Part of the intangible assets within the CGU were
disposed of and the remaining goodwill and intangibles were subject to an impairment review. Due to the disposal of
a number of contracts impairment review as at 31 March 2021 indicated that the recoverable amount based on value
in use exceeded the carrying value of the CGU in the Group by £75,000, based on a discount rate of 11.1%. This was
therefore recorded as an impairment which has been allocated against the goodwill balance of the CGU. Following the
impairment there is no headroom and therefore a reduction in the future cashflows would result in a further impairment.
An impairment of £6,052,000 has been recorded in the Company in respect of the Transactis CGU on the same basis
as for the Group. The difference in value is due to the previous amortisation of the intangible assets in the Group
which have reduced the carrying value, whereas in the Company accounts the carrying value is in goodwill which is not
amortised.
In the case of the e-Ware Interactive CGU, as detailed in the 2020 Annual Report, the remaining value in use was based
on a single remaining customer from that acquisition. During the current year this customer cancelled their contract
and as a result the full amount of goodwill (£79,000) was impaired in the Group. The carrying value of £60,000 in the
Company was also fully impaired.
Based on the impairment reviews performed, with the exception of the Transactis CGU and e-Ware Interactive CGU , no
impairment has been identified.
162
Annual Report and Accounts 2021
Annual Report and Accounts 2021
163
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
18. Investments
Group
Cost
At 1 April
Acquisition of investment1
At 31 March
Company
Cost
At 1 April
Acquisition of subsidiary undertakings2
Addition1
At 31 March
Provision for impairment
At 1 April
At 31 March
Net book value
At 31 March
2021
£’000
–
2,288
2,288
2021
£’000
2020
£’000
–
–
–
2020
£’000
305,947
305,940
3,353
2,288
7
–
311,588
305,947
2,464
2,464
2,464
2,464
309,124
303,483
1
2
During the year an investment was made into CredoLab Pte Ltd by the Group (and Company) and on initial recognition the Group (and Company) have
elected to designate the equity instrument as Fair Value through Other Comprehensive Income
See note 35 for detail of business combinations in the period
The Company accounts for its investments in subsidiaries using the cost model. The Company holds 100% of the ordinary
share capital of all investments as follows:
Name of company
Proportion
of voting
rights and
shares held
Country of
incorporation
Registered office address
Capscan Parent Limited
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
Capscan Limited1
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
Data Discoveries
100%
United Kingdom 25 Bothwell Street, 2nd Floor, Glasgow, G2 6NL
Chester CH4 9GB
Chester CH4 9GB
Holdings Limited
Data Discoveries Limited1
100%
Managed Analytics Limited1 100%
100%
e-Ware Interactive Limited
United Kingdom 25 Bothwell Street, 2nd Floor, Glasgow, G2 6NL
United Kingdom 25 Bothwell Street, 2nd Floor, Glasgow, G2 6NL
United Kingdom The Foundation, Herons Way, Chester Business Park,
Chester CH4 9GB
GB Mailing Systems Limited 100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
Citizensafe Limited
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
Chester CH4 9GB
Chester CH4 9GB
Farebase Limited
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
TMG.tv Limited
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
CRD (UK) Limited
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
Chester CH4 9GB
Chester CH4 9GB
Postcode Anywhere
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
Chester CH4 9GB
Chester CH4 9GB
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
Chester CH4 9GB
(Holdings) Limited
Postcode Anywhere
(Europe) Limited
Postcode Anywhere
(North America) Limited
GBG (Australia) Holding
Pty Ltd
GBG (Australia) Pty Ltd1
100%
Australia
100%
Australia
VIX Verify Global Pty Ltd1
100%
Australia
GBG (Malaysia) Sdn Bhd1
100%
Malaysia
GBG (Europe) SL1
100%
Spain
迪安科1
100%
China
Chester CH4 9GB
Co Sec Consulting Pty Ltd, 59 Gipps Street, Collingwood,
VIC 3066
Co Sec Consulting Pty Ltd, 59 Gipps Street, Collingwood,
VIC 3066
Co Sec Consulting Pty Ltd, 59 Gipps Street, Collingwood,
VIC 3066
Level 7 Menara Millenium, Jalan Damanlela Pusat Bandar,
Damansara Heights, 50490 Kuala Lumpur, Wilayah
Persekutuan
08002-Barcelona, Edifici The Triangle, 4th Floor, Placa de
Catalunya, Barcelona, Spain
Room 1714, Building 4, China Investment Center, No.9
164
Annual Report and Accounts 2021
Annual Report and Accounts 2021
165
Loqate Inc.
Loqate Limited1
100%
100%
IDology Inc.
100%
ID Scan Biometrics Limited 100%
Guangan Road, Fengtai District, Beijing, China
United States
805 Veterans Blvd Ste 305, Redwood City CA 94063
United Kingdom The Foundation, Herons Way, Chester Business Park,
United States
United Kingdom The Foundation, Herons Way, Chester Business Park,
Chester CH4 9GB
900 Old Roswell Lakes, Parkway, Suite 310, 30076
IDscan Research Bilisim
100%
Turkey
Teknolojileri Sanayi Ve
Ticaret Limited Sirketi
UAB IDscan Biometrics R&D 100%
Chester CH4 9GB
Mersin Universitesi Çiftlikköy Kampüsü, Teknopark İdari
Bina No: 106 Yenişehir – Mersin
Lithuania
Kauno m. Kauno m. I. Kanto g. 18-4B Lithuania
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
18. Investments continued
Name of company
Transactis Limited1
Proportion
of voting
rights and
shares held
Country of
incorporation
Registered office address
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
Chester CH4 9GB
Inkfish Limited1
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
GBG ANZ Pty Ltd1
100%
Australia
GreenID Limited1
100%
New Zealand
Mastersoft Group Pty Ltd1
100%
Australia
Mastersoft (New Zealand)
Ltd1
100%
New Zealand
100%
Australia
100%
Singapore
VIX Verify International Pty
Ltd1
GBG (Singapore) Pte Ltd
– changed name from VIX
Verify Singapore Pte Ltd on
13 May 2020
VIX Verify SA (Pty) Ltd1
Chester CH4 9GB
Co Sec Consulting Pty Ltd, 58 Gipps Street, Collingwood,
Victoria 3066, Australia
Moore Stephens Markhams Wellington Limited, Level 11
Sovereign House, 34-42 Manners Street, Wellington 6011,
New Zealand
Co Sec Consulting Pty Ltd, 58 Gipps Street, Collingwood,
Victoria 3066, Australia
Moore Stephens Markhams Wellington Limited, Level 11
Sovereign House, 34-42 Manners Street, Wellington 6011,
New Zealand
Co Sec Consulting Pty Ltd, 58 Gipps Street, Collingwood,
Victoria 3066, Australia
C/O S.S. Corporate Management Pte. Ltd, 138 Cecil Street,
#12-01A Cecil Court, 069538 Singapore
100%
South Africa
C/O Eversheds Sutherland, 3rd Floor, 54, Melrose Boulevard,
PT Fraud Solutions
100%
Indonesia
Melrose Arch, Melrose North, 2196, Johannesburg, South
Africa
Karinda Building, 2nd Floor, Suite 4, RT/RW.004/002 ,
JL.Palmerah Selatan No. 30A, Kel. Gelora, Kec. Tanah Abang,
Central Jakarta, Indonesia
Proportion of
voting rights
and shares
held
Country of
incorporation
Registered office address
0.32%
10.53%
United States 215 Park Avenue South New York, NY 10003 United States
111 North Bridge Road #08-18, Peninsula Plaza, Singapore
Singapore
179098
Name of company
Payfone Inc.1,2
CredoLab Pte Ltd
1
2
held indirectly.
held at zero value
19. Trade and Other Receivables
Trade receivables
Prepayments
Accrued income
Group
Company
2021
£’000
2020
£’000
45,283
52,496
8,211
5,123
7,855
6,203
2021
£’000
27,551
4,573
502
58,617
66,554
32,626
2020
£’000
36,993
3,847
450
41,290
Included in prepayments are £361,000 of loan arrangement fees relating to the revolving credit facility which have
been reclassified from loans. In the prior year £361,000 of unamortised loan arrangement fees were included in the net
borrowings figure. See note 22.
20. Cash
Cash at bank and in hand
Group
Company
2021
£’000
21,135
2020
£’000
27,499
2021
£’000
11,947
2020
£’000
15,031
Investigate 2020 Ltd
100%
United Kingdom The Foundation, Herons Way, Chester Business Park, Chester
CH4 9GB
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates.
At 31 March 2021, £5,400,000 of cash from the disposal of the Employ and Comply business was held by lawyers and
was received into a GBG bank account on 1 April 2021. However, as the cash was held on behalf of GBG and that the
disposal was completed on 31 March 2021, it is appropriate that the cash has been recognised as being received.
The following dormant investments were dissolved during the period:
Fastrac Limited1
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
GB Information
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
Management Limited
GB Datacare Limited
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
Chester CH4 9GB
Chester CH4 9GB
TelMe.com Limited
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
Chester CH4 9GB
Safer Clubbing At Night
100%
United Kingdom The Foundation, Herons Way, Chester Business Park,
Network (Scan Net) Ltd
DataSan Pty Ltd1
100%
Australia
Chester CH4 9GB
Co Sec Consulting Pty Ltd, 58 Gipps Street, Collingwood,
Chester CH4 9GB
Victoria 3066, Australia
During the year, PCA Predict Inc. merged into Loqate Inc.
GB Group plc also hold branches in Germany and New Zealand.
The Company accounts for its non-listed equity investments as financial instruments designated at fair value through
OCI. The Company holds the following non-listed equity investment:
166
Annual Report and Accounts 2021
Annual Report and Accounts 2021
167
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
21. Equity Share Capital
Group and company
Authorised
2021
£’000
2020
£’000
22. Loans
Bank Loans
In February 2019, the Group refinanced its existing revolving credit facility and the total facility was increased to
196,303,554 (2020: 194,193,861) ordinary shares of 2.5p each
4,908
4,855
£110,000,000, with a further £30,000,000 accordion option. This facility was due to expire in February 2022, however a
Issued
Allotted, called up and fully paid
Share premium
Number of shares in issue at 1 April
Issued in relation to acquisition of subsidiary
Issued in relation to acquisition of financial instrument
Issued in relation to intangible asset acquisition
Issued on exercise of share options
Number of shares in issue at 31 March
4,908
267,627
272,535
4,855
261,648
266,503
2021
No.
2020
No.
194,193,861
192,850,117
446,784
321,882
–
–
–
7,352
1,341,027
1,336,392
196,303,554
194,193,861
2021
Share
Premium
£’000
Share Capital
£’000
Total
£’000
Share Capital
£’000
2020
Share
Premium
£’000
Total
£’000
1 April
4,855
261,648 266,503
4,821
261,149
265,970
Consideration in exchange for
acquisition of financial instrument
Consideration in exchange for
acquisition of subsidiary
Fair value of assets received on
acquisition of intangible asset
Consideration received on exercise of
8
11
–
2,280
2,288
646
657
–
–
–
–
–
–
–
–
–
43
43
share options
34
3,053
3,087
34
456
490
Number of shares in issue at 31 March
4,908
267,627 272,535
4,855
261,648
266,503
During the year to 31 March 2021, an investment was made into CredoLab Pte Ltd by the Group (and Company) and the
consideration was in the form of 321,882 shares in the Company.
During the period, the HooYu acquisition was funded by the issue of 446,784 shares in the Company. Please refer to
note 35 for details. In addition to the £657,000 recognised within Share Capital and Share Premium, in accordance with
the requirements of section 612 of the Companies Act 2006, £3,343,000 has been recognised within the Merger Relief
reserve.
During the year to 31 March 2020, 7,352 shares were issued as final consideration in relation to the purchase of an
intangible asset. The fair value of the asset was £43,000.
Share Forfeiture
Under Article 43 of GBG’s Articles of Association if, for a period of at least 12 years, the Company has been unable to
trace a shareholder and dividends have remained uncashed, the shares will be forfeited. Those shares become an asset
of the Company and can be sold on the open market, with the net proceeds being “employed in the business of the
Company or invested in such investments as the Board may think fit”.
Following an extensive exercise in conjunction with the Company’s Registrar to trace missing shareholders, in
December 2020 338,217 shares in the Company were forfeited and subsequently sold on the open market. This
resulted in a cash receipt of £2,578,000 net of fees and commissions related to the forfeiture programme.
In addition, unclaimed dividends related to the forfeited shares totalling £63,000 were repaid to the Company.
Both the receipt from the sale of the forfeited shares and the unclaimed dividends have been recognised directly
retained earnings, totalling £2,641,000.
one-year extension was agreed in January 2021. An arrangement fee of £192,500 was paid in relation to the extension.
The facility now expires in February 2023. This loan fee, along with the remaining loan fees for the original facility have
been reclassified to prepayments due to the loan value being nil at 31 March 2021 and the net position is therefore an
asset rather than a liability. Consideration has been given as to whether this meets the definition of a debt modification
or extinguishment in line with IFRS 9 and on the basis that the terms remained the same it has been accounted for as a
modification.
During the current financial year there have been no further drawdowns on this facility. Repayments totalling
£62,500,000 have been made during the year.
The debt bears an initial interest rate of LIBOR + 1.50%. This interest rate is subject to an increase of 0.25% should the
business exceed certain leverage conditions.
Opening bank loan
Repayment of borrowings
Loan fees paid for extension
Amortisation of loan fees
Foreign currency translation adjustment
Reclassification of loan fees to prepayments
Closing bank loan
Analysed as:
Amounts falling due within 12 months
Amounts falling due after one year
Analysed as:
Bank loans
Unamortised loan fees
Intercompany Loans
Opening intercompany loan
New borrowings
Closing intercompany loan
Analysed as:
Amounts falling due within 12 months
Amounts falling due after one year
Group
Company
2021
£’000
62,139
(62,500)
(193)
193
–
361
–
2020
£’000
86,888
(24,914)
–
192
(27)
–
62,139
2021
£’000
62,139
2020
£’000
85,447
(62,500)
(23,500)
(193)
193
–
361
–
–
192
–
–
62,139
– –
– –
–
–
–
–
–
62,139
62,139
62,500
(361)
62,139
–
–
–
–
–
62,139
62,139
62,500
(361)
62,139
Group
Company
2021
£’000
2020
£’000
–
–
–
–
–
–
–
–
–
–
–
–
2021
£’000
4,156
5,669
9,825
–
9,825
9,825
2020
£’000
–
4,156
4,156
–
4,156
4,156
Interest is charged on intercompany loans at a rate of 3.0% per annum. The loans are unsecured, and repayable within
2 years.
168
Annual Report and Accounts 2021
Annual Report and Accounts 2021
169
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
23. Lease liabilities
26. Long Service Award
At 1 April
Additions
Disposals (other than sale of business)
Sale of business disposals
Accretion of interest
Payments
Foreign currency adjustment
At 31 March
Analysed as:
Amounts falling due within 12 months
Amounts falling due after one year
24. Trade and Other Payables
Group
Company
2021
£’000
5,725
504
–
(291)
198
52
3,936
1,650
2,286
3,936
2020
£’000
6,076
1,878
2021
£’000
2,682
–
(299)
–
–
(291)
245
81
(785)
(132)
–
2020
£’000
3,407
–
–
–
107
(832)
–
5,725
1,687
2,682
2,012
3,713
5,725
704
983
1,687
704
1,978
2,682
(2,252)
(2,043)
Trade payables
Amounts owed to subsidiary undertakings
Other taxes and social security costs
Accruals
25. Provisions
Provisions can be analysed as follows:
Dilapidation provision (see below)
Long service award (see note 26)
Dilapidation provision
At 1 April
Disposed as part of businesses
Provided in year
Foreign exchange adjustment
Closing balance
Group
Company
2021
£’000
6,345
–
4,202
30,520
41,067
2020
£’000
10,403
–
5,299
24,939
40,641
2021
£’000
2,122
23,124
3,229
20,821
49,296
2020
£’000
6,670
20,622
4,751
15,704
47,747
Group
Company
2021
£’000
404
606
1,010
465
(111)
45
5
404
2020
£’000
465
551
1,016
–
465
465
2021
£’000
2020
£’000
355
442
797
421
(111)
45
–
355
421
422
843
–
421
421
This provision relates to the estimated cost of restoration work required upon termination of leasehold property
agreements. The estimated level of provision required was reassessed during the year which has led to the recognition
of additional provisions being recognised. The timing of the outflows is not expected to occur in the following 12
months and as such has been disclosed as a non-current liability. The Group do not expect the final payments to differ
materially from those amounts provided.
The Group provides long service awards, providing employees with a benefit after they attain a set period of service
with the Group, for example 10 or 20 years. For these benefits, IAS 19 requires a liability to be held on the Group’s
balance sheet.
At 1 April
Past service cost
Service cost
Benefits taken
Actuarial (gain)/loss during the year
Net interest charge
At 31 March
Group
Company
2021
£’000
2020
£’000
551
–
89
(4)
(42)
12
606
528
–
100
(21)
(69)
13
551
2021
£’000
422
43
(4)
(28)
9
442
2020
£’000
395
–
74
(21)
(36)
10
422
The following table lists the inputs to the valuation of the long service award for the years ended 31 March 2021 and 31
March 2020.
Discount rate (%)
Salary increases (%)
2021
1.5
3.7
2020
2.2
3.0
Employee turnover (% probability of leaving depending on age)
2 - 20%
2 – 20%
27. Financial Instruments and Risk Management
The Group’s activities expose it to a variety of financial risks including: market risk (including foreign currency risk and
cash flow interest rate risk), credit risk, liquidity risk and capital management. The Group’s overall risk management
programme considers the unpredictability of financial markets and seeks to reduce potential adverse effects on the
Group’s financial performance. The Group does not currently use derivative financial instruments to hedge foreign
exchange exposures.
Credit Risk
Credit risk is managed on a Group basis except for credit risk relating to accounts receivable balances which each
entity is responsible for managing. Credit risk arises from cash and cash equivalents, as well as credit exposures from
outstanding customer receivables. Management assesses the credit quality of the customer, taking into account its
financial position, past experience and other factors. For those sales considered higher risk, the Group operates a
policy of cash in advance of delivery. The Group regularly monitors its exposure to bad debts in order to minimise
exposure. Credit risk from cash and cash equivalents is managed via banking with well-established banks with a strong
credit rating.
Covid-19 Assessment
The single largest impact on the Group’s credit risk profile continues to be the Covid-19 pandemic. Although the
immediate business impact of the pandemic is better understood there remains uncertainty over the ultimate impact on
credit risk because in many countries a range of government stimulus and protection packages continue to be available.
It is expected that once these packages are reduced or removed there will be a higher level of business failures and
defaulting on debts in some of the sectors to which GBG trades in.
170
Annual Report and Accounts 2021
Annual Report and Accounts 2021
171
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
27. Financial Instruments and Risk Management
continued
Given the uncertainty how government strategies will evolve on these protection packages it has not been possible to
fully reflect the anticipated economic impacts in the underlying assumptions in a mechanistic approach. The Group
has responded by calculating an additional level of provision to overlay the normal ECL calculation. This overlay has
been based on management judgement taking into account an analysis of trade receivables broken down into customer
sectors, using internal and external forecasts to assess the sectors which are likely to see the biggest impact of the
pandemic, and comparing cash receipts received in the past twelve months for customers in these sectors against pre-
pandemic historical averages. In the current year, the overlay applied to the provision is less than that of the prior year,
due to the provision brought forward from the prior period not being fully utilised yet.
The maximum exposure to credit risk at the reporting dates is the carrying value of each class of financial assets as
disclosed below:
Year ended 31 March 2021
Trade receivables
Allowance for unrecoverable amounts
Group
Company
2021
£’000
48,883
(3,600)
45,283
2020
£’000
56,561
(4,065)
52,496
2021
£’000
30,716
(3,165)
27,551
2020
£’000
40,712
(3,719)
36,993
Expected credit loss allowance for trade receivables
The Group applies the IFRS 9 simplified approach to measuring expected credit loses which uses a lifetime expected
loss allowance for all trade receivables and contract assets. To measure the expected credit losses, trade receivables
have been grouped based on shared credit risk characteristics and days past due. The provision rates are based on days
past due, historical information relating to counterparty default rates and external credit ratings where available. The
following table provides an analysis of the Group’s credit risk exposure on trade receivables using a provision matrix to
Company - 31 March 2021
Gross carrying amount
Expected credit loss
Net carrying amount
% of total
Company - 31 March 2020
Gross carrying amount
Expected credit loss
Net carrying amount
% of total
Current
£’000
18,066
276
17,790
65%
Current
£’000
21,283
875
20,408
55%
Trade receivables
Days past due
< 30 days
£’000
31 - 60 days
£’000
61 - 90 days
£’000
> 90 days
£’000
6,597
322
6,275
23%
1,597
107
1,490
5%
455
71
384
1%
4,001
2,389
1,612
6%
Trade receivables
Days past due
< 30 days
£’000
31 - 60 days
£’000
61 - 90 days
£’000
> 90 days
£’000
8,690
265
8,425
23%
3,323
192
3,131
9%
1,774
188
1,586
4%
5,642
2,199
3,443
9%
100%
Total
£’000
30,716
3,165
27,551
100%
Total
£’000
40,712
3,719
36,993
Set out below is the movement in the allowance for expected credit losses of trade receivables:
Balance at 1 April
Increase in provision
Covid-19 provision
Write-offs
Release
Foreign exchange
Group
Company
2021
£’000
2020
£’000
4,065 2,127
1,924
28
(512)
(1,927)
22
3,600
2,208
731
(600)
(407)
6
4,065
2021
£’000
3,719
1,829
(51)
(405)
(1,927)
–
3,165
2020
£’000
1,733
2,158
608
(525)
(255)
–
3,719
measure expected credit losses.
Group - 31 March 2021
Gross carrying amount
Expected credit loss
Net carrying amount
% of total
Group - 31 March 2020
Gross carrying amount
Expected credit loss
Net carrying amount
% of total
Current
£’000
30,280
338
29,942
66%
Current
£’000
31,638
921
30,717
59%
Trade receivables
Days past due
< 30 days
£’000
31 - 60 days
£’000
61 - 90 days
£’000
> 90 days
£’000
9,125
338
8,787
19%
3,246
188
3,058
7%
1,269
128
1,141
3%
4,963
2,608
2,355
Total
£’000
48,883
3,600
45,283
The amount disclosed in note 5, relates to the increase in provision, Covid-19 provision and the amount released in the
year.
Sensitivities
A change in the expected credit loss percentage applied to each ageing category of 1% would have the following
5%
100%
impact on the overall provision at the year-end:
n Group - increase/decrease of 1% in rates £489,000 (2020: £566,000)
n Company – increase/decrease of 1% in rates £307,000 (2020: £407,000).
Trade receivables
Days past due
< 30 days
£’000
31 - 60 days
£’000
61 - 90 days
£’000
> 90 days
£’000
11,073
286
10,787
20%
4,151
221
3,930
7%
2,610
239
2,371
5%
Total
£’000
56,561
4,065
52,496
7,089
2,398
4,691
9%
100%
172
Annual Report and Accounts 2021
Annual Report and Accounts 2021
173
OverviewStrategic ReportGovernanceFinancial Statements
Notes To The Accounts continued
27. Financial Instruments and Risk Management
continued
Foreign Currency Risk
The Group and Company’s foreign currency exposure arises from:
n Transactions (sales/purchases) denominated in foreign currencies;
n Monetary items (mainly cash receivables and borrowings) denominated in foreign currencies; and
n
Investments in foreign operations, whose net assets are exposed to foreign currency translation.
The Group and Company has currency exposure on its investments in foreign operations in the United States of
America. In terms of sensitivities, the effect on equity of a 10% increase in the US Dollar and Sterling exchange rate
would be a decrease in equity of £1,117,000 (2020: £1,084,000 decrease). The effect on equity of a 10% decrease in
the US Dollar and Sterling exchange rate would be an increase of £914,000 (2020: £887,000 increase).
The Group and Company has currency exposure on its investments in foreign operations in Australia. In terms of
sensitivities, the effect on equity of a 10% increase in the Australian Dollar and Sterling exchange rate would be a
decrease of £6,044,000 (2020: £5,324,000 decrease). The effect on equity of a 10% decrease in the Australian Dollar
and Sterling exchange rate would be an increase of £4,945,000 (2020: £4,356,000 increase).
The exposure to transactional foreign exchange risk within each company is monitored and managed at both an entity
and a Group level. The following table demonstrates the sensitivity of the Group and Company’s foreign currency
exposure on the net monetary position at 31 March 2021:
Foreign Currency Exposure - Group
USD Rate
EUR Rate
AUD Rate
MYR Rate
CNY Rate
Change in rate
Effect on profit before tax (£'000s)
Change in rate
Effect on profit before tax (£'000s)
+10%
£(1,159)
-10%
£1,417
+10%
£(132)
-10%
£162
+10%
£(644)
-10%
£787
+10%
£(78)
-10%
£90
+10%
£(113)
-10%
£138
Foreign Currency Exposure - Company
USD Rate
EUR Rate
AUD Rate
MYR Rate
CNY Rate
Change in rate
Effect on profit before tax (£'000s)
Change in rate
Effect on profit before tax (£'000s)
+10%
(22)
-10%
27
+10%
(91)
-10%
111
+10%
(58)
-10%
71
+10%
–
-10%
–
+10%
–
-10%
–
The Group’s and Company’s exposure to foreign currency changes for all other currencies is not material.
Cash Flow Interest Rate Risk
The Group has financial assets and liabilities, which are exposed to changes in market interest rates. Changes in
interest rates impact primarily on deposits and loans by changing their future cash flows (variable rate). Management
does not currently have a formal policy of determining how much of the Group’s exposure should be at fixed or variable
rates and the Group does not use hedging instruments to minimise its exposure. However, at the time of taking new
loans or borrowings, management uses its judgement to determine whether it believes that a fixed or variable rate would
be more favourable for the Group over the expected period until maturity. In terms of sensitivities, the effect on profit
before taxation of an increase/decrease in the basis points on floating rate borrowings of 25 basis points would be £nil
following the full repayment of loan facilities (2020: £110,000).
Liquidity Risk
Cash flow forecasting is performed on a Group basis by the monitoring of rolling forecasts of the Group’s liquidity
requirements to ensure that it has sufficient cash to meet operational needs and surplus funds are placed on deposit
and available at very short notice. The maturity date of the Group’s loans are disclosed in note 22.
The table below summarises the maturity profile of the Group’s and Company’s financial liabilities based on contractual
undiscounted payments and includes contractual interest payments:
Group
Year ended 31 March 2021
Loans (note 22)
Contingent consideration (note 36)
Lease liabilities (note 23)
Trade and other payables (note 24)
Year ended 31 March 2020
Loans (note 22)
Contingent consideration (note 36)
Lease liabilities (note 23)
Trade and other payables (note 24)
Company
Year ended 31 March 2021
Loans (note 22)
Contingent consideration (note 36)
Lease liabilities (note 23)
Trade and other payables (note 24)
Year ended 31 March 2020
Loans (note 22)
Contingent consideration (note 36)
Lease liabilities (note 23)
Trade and other payables (note 24)
Capital Management
On
demand
£’000
Less than
12 months
£’000
–
–
–
10,547
10,547
–
3,662
1,650
30,520
35,832
On
demand
£’000
Less than
12 months
£’000
–
–
–
10,403
10,403
–
6,179
2,012
30,238
38,429
On
demand
£’000
Less than
12 months
£’000
–
–
–
5,351
5,351
–
3,662
704
43,945
48,311
On
demand
£’000
Less than
12 months
£’000
–
–
–
11,421
11,421
–
6,179
704
36,325
43,208
1 to 5
years
£’000
–
–
2,286
–
2,286
1 to 5
years
£’000
62,139
–
3,713
–
65,852
1 to 5
years
£’000
–
–
983
–
983
1 to 5
years
£’000
62,139
–
1,978
–
Total
£’000
–
3,662
3,936
41,067
48,665
Total
£’000
62,139
6,179
5,725
40,641
114,684
Total
£’000
–
3,662
1,687
49,296
54,645
Total
£’000
62,139
6,179
2,682
47,746
64,117
118,746
The Group and Company manages its capital structure in order to safeguard the going concern of the Group and
Company and maximise shareholder value. The capital structure of the Group and Company consists of debt, which
includes loans disclosed in note 22, cash and cash equivalents and equity attributable to equity holders of the
Company, comprising issued capital, reserves and retained earnings.
The Group and Company may maintain or adjust its capital structure by adjusting the amount of dividend paid to
shareholders, returning capital to shareholders, issuing new shares or selling assets to reduce debt.
174
Annual Report and Accounts 2021
Annual Report and Accounts 2021
175
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
27. Financial Instruments and Risk Management
continued
In order to achieve this overall objective, the Group and Company’s capital management, amongst other things, aims
to ensure that it meets financial covenants attached to borrowings. Breaches in meeting the financial covenants would
permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of
any borrowings in the current period.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March
2021 and 31 March 2020.
Financial Instruments: Classification and Measurement
Set out below is an overview of financial instruments, other than cash and short-term deposits, held by the Group at 31
March:
2021
Fair value
through profit
or loss
£’000
Loans and
receivables
£’000
Fair value
through OCI
£’000
Loans and
receivables
£’000
2020
Fair value
through profit
or loss
£’000
Fair value
through OCI
£’000
–
45,283
45,283
45,283
2,286
–
2,286
41,067
1,650
–
–
42,717
45,003
–
–
–
–
–
–
–
–
–
–
3,662
3,662
3,662
2,288
–
2,288
2,288
–
–
–
–
–
–
–
–
–
52,496
52,496
52,496
3,713
62,139
65,852
40,641
2,012
–
–
42,653
108,505
–
–
–
–
–
–
–
–
–
6,179
6,179
6,179
–
–
–
–
–
–
–
–
–
–
–
–
Financial assets:
Investments
Trade and other receivables
Total current
Total
Financial liabilities:
Lease liabilities
Loans
Total non-current
Trade and other payables
Lease liabilities
Loans
Contingent consideration
Total current
Total
All financial assets and liabilities have a carrying value that approximates to fair value. The Group does not have any
derivative financial instruments.
Financial Assets
Trade and other receivables exclude the value of any prepayments or accrued income. Trade and other payables
exclude the value of deferred income.
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. Trade receivables are non-
interest bearing and are generally on 14 to 60-day terms.
Financial Liabilities
The Group and Company has a three-year revolving credit facility agreement expiring in February 2023 which is subject
to a limit of £110,000,000. The facility bears an initial interest rate of LIBOR +1.50%.
The Group and Company is subject to a number of covenants in relation to its borrowings which, if breached, would
result in loan balances becoming immediately repayable. These covenants specify certain maximum limits in terms of
the following:
n Leverage
n
Interest cover
At 31 March 2021 and 31 March 2020, the Group or Company was not in breach of any bank covenants.
Financial Liabilities: Interest Bearing Loans and Borrowings
Non-current interest bearing loans and borrowings
£110,000,000 revolving credit facility
LIBOR + 1.5
Feb 2023
Total non-current interest bearing loans and borrowings
Total interest-bearing loans and borrowing
–
–
Interest rate
%
Maturity
2021
£’000
2020
£’000
62,139
62,139
62,139
Fair Values of Financial Assets and Liabilities
The Group and Company classifies fair value measurement using a fair value hierarchy that reflects the significance of
inputs used in making measurements of fair value. The fair value hierarchy has the following levels:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
For financial instruments that are recognised at the fair value on a recurring basis, the Group and Company determines
whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest
level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
At 31 March 2021
Valuation
Technique
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Financial asset at fair value through other
comprehensive income
Investment in CredoLab Pte Ltd (note 18)
Financial liability at fair value through profit and loss
Contingent consideration (note 36)
At 31 March 2020
Financial liability at fair value through profit and loss
Contingent consideration
Present value
of expected
future cash
flow
–
–
2,288
2,288
Present value
of expected
future cash
flow
–
–
3,662
3,662
Valuation
Technique
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Present value
of expected
future cash
The facilities are secured by way of an all asset debenture.
flow
–
–
6,179
6,179
176
Annual Report and Accounts 2021
Annual Report and Accounts 2021
177
OverviewStrategic ReportGovernanceFinancial Statements
Notes To The Accounts continued
28. Changes in Liabilities Arising from Financing
Activities
Group
Current liabilities
Interest bearing loans
Lease liabilities
Non-current liabilities
Interest bearing loans
Lease liabilities
1 April 2020
£’000
Cash
flows
£’000
Foreign
exchange
movement
£’000
Other
movement
£’000
New
leases
£’000
31 March
2021
£’000
–
–
2,012
(2,252)
62,139
(62,500)
3,713
–
–
–
–
52
52
–
1,890
361
–
–
–
–
1,650
–
Company
Current liabilities
Interest bearing loans
Lease liabilities
Non-current liabilities
Interest bearing loans
Lease liabilities
Total liabilities arising from financing
activities
88,854
(24,332)
Cash
flows
£’000
Foreign
exchange
movement
£’000
1 April 2019
£’000
Other
movement
£’000
New
leases
£’000
31 March
2020
£’000
–
666
–
(832)
85,447
(23,500)
2,741
–
–
–
–
–
–
–
870
192
(763)
299
–
–
–
–
–
–
704
62,139
1,978
64,821
Total liabilities arising from financing
activities
67,864
(64,752)
(1,983)
504
2,286
Other movement represents the reclassification of non-current interest-bearing loans to current interest-bearing loans.
268
504
3,936
Other movement in lease liabilities includes interest, disposals and the reclassification of non-current lease liabilities to
current lease liabilities.
Other movement in interest bearing loans represents additional loan fees paid during the year and amortisation of those
loan fees.
Other movement in lease liabilities includes interest, disposals and the reclassification of non-current lease liabilities to
current lease liabilities.
Group
Current liabilities
Interest bearing loans
Lease liabilities
Non-current liabilities
Interest bearing loans
Lease liabilities
Total liabilities arising from financing
Cash
flows
£’000
Foreign
exchange
movement
£’000
1 April 2019
£’000
Other
movement
£’000
New
leases
£’000
31 March
2020
£’000
1,441
352
(1,414)
(2,043)
85,447
(23,500)
5,724
–
(27)
26
–
(158)
–
2,841
–
836
–
2,012
192
–
62,139
(2,895)
1,042
3,713
29. Share-based Payments
Group and Company
The Group operates Executive Share Option Schemes under which Executive Directors, managers and team members
of the Company are granted options over shares.
Executive Share Option Scheme
Options are granted to Executive Directors and employees on the basis of their performance. Options are granted at the
full market value of the Company’s shares at the time of grant and are exercisable between three and ten years from the
date of grant. The options vest on the third anniversary of the grant subject to the Company’s earnings per share (‘EPS’)
growth being greater than the growth of the Retail Prices Index (‘RPI’) over a three-year period prior to the vesting date.
There are no cash settlement alternatives.
activities
92,964
(26,957)
(159)
138
1,878
67,864
Executive Share Option Scheme (Section C Scheme)
Other movement in interest bearing loans represents amortisation on loan fees.
Other movement in lease liabilities includes interest, disposals and the reclassification of non-current lease liabilities to
current lease liabilities.
Company
Current liabilities
Interest bearing loans
Lease liabilities
Non-current liabilities
Interest bearing loans
Lease liabilities
1 April 2020
£’000
Cash
flows
£’000
Foreign
exchange
movement
£’000
Other
movement
£’000
New
leases
£’000
31 March
2021
£’000
–
704
–
(785)
62,139
(62,500)
1,978
–
–
–
–
–
–
–
785
361
(995)
151
–
–
–
–
–
–
704
–
983
1,687
Total liabilities arising from financing
activities
64,821
(63,285)
Options are granted to Executive Directors and employees on the basis of their performance. Options are granted at the
full market value of the Company’s shares at the time of grant and are exercisable between three and ten years from the
date of grant. The percentage of an option that will vest and be capable of exercise will depend on the performance of
the Company. A minimum of 50% of the options will vest when the Total Shareholder Return (‘TSR’) performance of the
Company, as compared to the TSR of the FTSE Computer Services Sub-Sector over a three-year period, matches or
exceeds the median company. The percentage of shares subject to an option in respect of which that option becomes
capable of exercise will then increase on a sliding scale so that the option will become exercisable in full if top quartile
performance is achieved.
Executive Share Option Scheme (Section D Scheme)
Options are granted to Executive Directors and employees on the basis of their performance. Options are granted at
the full market value of the Company’s shares at the time of grant and are exercisable between three and ten years from
the date of grant. The vesting of awards under the Section D Scheme is subject to the achievement of a normalised EPS
growth at an annual compound rate of 20% over the performance period. The base year for the purposes of the EPS
target will be the financial year of the Company ended immediately prior to the grant of the award. The performance
period will be the three financial years following the base year. Section D Scheme options will only become exercisable
to the extent they have vested in accordance with the EPS target.
178
Annual Report and Accounts 2021
Annual Report and Accounts 2021
179
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
29. Share-based Payments continued
Share Matching Plan
In the year ended 31 March 2012, the Remuneration Committee introduced the Share Matching Plan. Participants who
invest a proportion of their annual cash bonus in GBG shares can receive up to a multiple of their original investment in
GBG shares, calculated on a pre-tax basis. Any matching is conditional upon achieving pre-determined Adjusted EPS
growth targets set by the Remuneration Committee for the following three years. Share Matching Plan options will only
become exercisable to the extent they have vested in accordance with the Adjusted EPS target.
For Share Matching Plan awards granted after 31 March 2020, 75% of the awards are subject to the Adjusted EPS
growth targets. The remaining 25% are subject to a Total Shareholder Return (TSR) measure against the peer group
(FTSE250). 25% of the TSR element vests at the median performance against the peer group and 100% of award vests
at upper quartile, i.e. the 75th percentile.
Compensatory Options
In the year ended 31 March 2018, the Remuneration Committee granted Compensatory Options to the Chief Executive
of the Company, as compensation for lost earnings and shares from his previous employer. The Compensatory Options
vest in equal tranches over a period of 12 and 24 months, on each anniversary of the date of grant, provided he still
holds the position of CEO of GBG on the respective dates. The Compensatory Options are valid for a period of 12
months from the vesting date.
GBG Sharesave Scheme
The Group has a savings-related share option plan, under which employees save on a monthly basis, over a three or
For the shares outstanding as at 31 March 2021, the weighted average remaining contractual life is 5.3 years (2020: 5.4
years).
The weighted average fair value of options granted during the year was 531.84pp (2020: 417.31p). The range of exercise
prices for options outstanding at the end of the year was 2.5p-739.0p (2020: 2.5p – 544.0p).
The fair value of equity-settled share options granted is estimated as at the date of grant using a binomial model, taking
into account the terms and conditions upon which the options were granted. The following table lists the inputs to the
model for the years ended 31 March 2021 and 31 March 2020.
Dividend yield (%)
Expected share price volatility (%)
Risk-free interest rate (%)
Lapse rate (%)
Expected exercise behaviour
Expected life of option (years)
Exercise price (p)
Weighted average share price (p)
2021
2020
0.3 – 0.6
0.5 – 0.8
30 – 40
-0.1 - 1.1
0 – 10.0
30 – 35
0.2 – 1.1
5.0 –10.0
See below
See below
0.8 – 5.2
2.3 – 5.2
2.50 – 739.0
2.5 – 544.0
768.80
598.45
Other than the Matching Scheme, LTIP and SAYE options, it is assumed that 50% of options will be exercised by
participants as soon as they are 20% or more “in-the-money” (i.e. 120% of the exercise price) and the remaining
50% of options will be exercised gradually at the rate of 10% per annum each year they remain at or above the 20%
“in-the-money”.
five year period, towards the purchase of shares at a fixed price determined when the option is granted. This price is
For the Matching Scheme, LTIP and SAYE options, it is assumed these are exercised at the earliest opportunity in full
usually set at a 20% discount to the market price at the time of grant. The option must be exercised within six months of
(i.e. Vesting Date) since the exercise price is a nominal amount and is therefore not expected to influence the timing of a
maturity of the savings contract, otherwise it lapses.
participant’s decision to exercise the options.
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not
necessarily be the actual outcome.
30. Profit Attributable to Members of the Parent
Company
The parent company’s profit for the financial year ended 31 March 2021 was £25,844,000 (2020: £23,271,000). As
permitted by Section 408 of Companies Act 2006, the profit and loss account of the parent company is not presented.
Performance Share Plan (PSP)
The Group operates a PSP for all employees, but it is intended that awards are made to senior management team
members below the executive director level. The plan was approved at the 2018 AGM. Awards are subject to a three-
year EPS performance condition. Employees can be granted awards of nil cost options with an aggregate value on date
of grant of up to 100% of base salary. The awards are subject to malus and clawback.
For Performance Share Plan awards granted after 31 March 2020, 75% of the awards are subject to the Adjusted EPS
growth targets. The remaining 25% are subject to a Total Shareholder Return (TSR) measure against the peer group
(FTSE250). 25% of the TSR element vests at the median performance against the peer group and 100% of award vests
at upper quartile, i.e. the 75th percentile.
The charge recognised from equity-settled share-based payments in respect of employee services received during the
year is £5,170,000 (2020: £4,541,000). Of this amount £4,341,000 (2020: £4,271,000) related to the Company.
The following table illustrates the number and weighted average exercise prices (‘WAEP’) of, and movements in, share
options during the year.
Outstanding as at 1 April
Granted during the year
Forfeited during the year
Cancelled during the year
Exercised during the year
Expired during the year
Outstanding at 31 March
Exercisable at 31 March
2021
No.
2021
WAEP
2020
No.
2020
WAEP
5,005,487
175.77p
4,626,400 147.84p
1,846,549
200.24p
1,807,066
(423,085)
256.94p
(23,197)
(1,341,027)
483.63p
230.72p1
(78,046)
(13,541)
(1,336,392)
(4,277)
356.77p
–
5,060,450
162.23p
5,005,487
27,940
359.81p
10,000
150.95p
301.55p
333.57p
36.56p2
–
175.77p
275.00p
1
2
The weighted average share price at the date of exercise for the options exercised was 768.80p
The weighted average share price at the date of exercise for the options exercised was 598.45p
180
Annual Report and Accounts 2021
Annual Report and Accounts 2021
181
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
31. Description of Reserves
Equity Share Capital
The balance classified as share capital includes the nominal value on issue of the Company’s equity share capital,
comprising 2.5p ordinary shares.
Share Premium
The balance classified as share premium includes the excess proceeds over the nominal amount received on the issue
of the Company’s equity share capital. Costs associated with the issue of new share capital have been offset against
this balance.
Merger Reserve
The balance on the merger reserve represents the fair value of the consideration given in excess of the nominal value of
the ordinary shares issued in the acquisition of GB Mailing Systems and Investigate 2020 Limited by the issue of shares.
Capital Redemption Reserve
The balance classified as capital redemption reserve includes the nominal value of own shares purchased back by the
Company and subsequently cancelled.
Other Reserve
The balance represents the profit from the date of acquisition to the date of hive-up into the Company of ID Scan
Biometrics Limited and Postcode Anywhere (Holdings) Limited, offset by amortisation of the identified intangibles and
unwinding of the associated deferred tax liabilities.
Foreign Currency Translation Reserve
The balance on the foreign currency translation reserve represents the accumulated balance on the translation of
foreign subsidiaries previously recognised through other comprehensive income.
32. Related Party Transactions
Transactions entered into and trading balances outstanding at 31 March are as follows:
Group
There were no transactions entered into, or outstanding at 31 March 2021 or 31 March 2020.
Company
Subsidiaries:
2021
Intercompany recharges
Central management recharges
Interest on intercompany loans
2020
Intercompany recharges
Central management recharges
Interest on intercompany loans
Investments:
2021
2020
Invoices
to related
parties
£’000
Invoices
from related
parties
£’000
7,496
4,006
–
17,051
2,367
–
–
–
8,269
–
359
8,422
–
13
–
–
Net amounts
owed to/
(by) related
parties
£’000
32,949
23,347
–
–
Intercompany recharges consist of recharges between entities for costs paid on behalf of other Group companies.
Terms and Conditions of Transactions with Related Parties
Sales and balances between related parties are made at normal market prices. Outstanding balances with entities other
than subsidiaries are unsecured, interest free and cash settlement is expected within 30 days of invoice. Terms and
conditions for transactions with subsidiaries are the same, with the exception that balances are placed on intercompany
accounts with no specified credit period. During the year ended 31 March 2021, the Group has not made any provision
for doubtful debts relating to amounts owed by related parties (2020: £nil).
Compensation of Key Management Personnel (including Directors)
Short-term employee benefits
Post-employment benefits
Fair value of share options awarded
33. Contingent Liability
Group
2021
£’000
2,974
74
2,862
5,910
2020
£’000
2,962
74
2,416
5,452
The Information Commissioner’s Office, the data industry regulator in the UK, announced in November 2018 that it was
conducting audits on a number of companies to understand the use of data in their services. GBG was included in this
review and is working with the Commissioner to continue to improve its privacy compliance. We will keep the market
informed of any material developments.
34. Subsequent Events
There were no events that require disclosure after 31 March 2021.
182
Annual Report and Accounts 2021
Annual Report and Accounts 2021
183
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
35. Acquisitions and Disposals
Group and Company
Acquisition of Investigate 2020 Ltd
On 14 December 2020, GB Group plc acquired the entire share capital of Investigate 2020 Limited (HooYu Investigate)
following a transfer of assets from HooYu Limited into HooYu Investigate. HooYu Investigate uses leading database
and UX technologies to improve the productivity of an investigation process. The Investigate product complements
GBG’s existing Connexus portfolio. Consideration for the purchase was £4,000,000 in GB Group plc (‘GBG’) shares
(446,784 new ordinary shares of 2.5p each). This consideration was assigned £3,352,675 for the shares of Investigate
2020 Limited and £647,325 to settle the loan due to HooYu Limited after the transfer of the assets from Hooyo Limited
into HooYu Investigate. Following completion of the purchase, the assets were immediately hived up into GB Group
plc. The Consolidated Statement of Profit or Loss includes the results for the three-and-a-half-month period since the
acquisition of Investigate 2020 Ltd.
The provisional fair value of the identifiable assets and liabilities of HooYu Investigate as at the date of acquisition was:
Assets
Technology intellectual property
Non-compete agreements
Hardware
Prepayments
Deferred income
Deferred tax liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition
Total purchase consideration transferred
Purchase consideration:
Share purchase
Settlement of loan to HooYu Limited
Total purchase consideration
Analysis of cash flows on acquisition:
Transaction costs of the acquisition (included in cash flows from operating activities)
Net cash acquired with the subsidiary
Cash paid
Acquisition of subsidiaries, net of cash acquired (included in cash flows from investing activities)
Net cash outflow
Provisional
fair value
recognised
on acquisition
£’000
4,620
645
3
20
(429)
(1,000)
3,859
141
4,000
3,353
647
4,000
(189)
–
–
–
(189)
From the date of acquisition, HooYu Investigate contributed £249,000 of revenue and £303,000 of losses to profit
before tax from continuing operations of the Group. If the combination had taken place at the beginning of the year,
revenue would have been £218,406,000 and profit before tax for the Group would have been £33,344,000.
Disposal of Marketing Services
On 13 January 2021 GBG sold part of its Marketing Services division to HH Global Interactive Limited (‘HHG’). The
Marketing Service business has existed within GBG for nearly 20 years and was supplemented by the acquisition of the
entire issued share capital of CDMS Limited, (trading as Transactis) in November 2014. Immediately upon acquisition
the trade and assets of Transactis were hived-up into GB Group plc.
The current contracts within the Marketing Services were a combination of customers that stem either from pre-
Transactis, were acquired in the Transactis acquisition or were won afterwards as part of the combined business. Post
hive-up it was considered one business from an operational and go-to-market perspective.
Customer Relationships that have been sold in the transaction totalling of £1,093,000 have been derecognised in the
Group.
A goodwill balance of £502,000 in the Group and £6,747,000 in the Company was held in respect of the Marketing
Services business. This has been fully assigned to the area of the business retained using a fair value approach. As
detailed in note 17, this goodwill was impaired by £75,000 in the Group and £6,053,000 in the Company.
As this area of the business did not constitute a major line of business, single geographical area of operation, and was
not part of a co-ordinated plan to dispose of a separate major line, the disposal has not been treated as a discontinued
operation in line with IFRS 5.
The calculation of the loss on disposal has been detailed below for both the Group and the Company.
Consideration - cash
Migration costs1
Net proceeds/(payment)
Intangible assets disposed – Customer Relationship Asset
Accruals
Net book value of assets and liabilities disposed
Transaction costs of the disposal – paid
Loss on disposal
Impairment of Acquired Goodwill
Group
£’000
Company
£’000
10
(65)
(55)
1,093
(11)
1,082
38
(1,175)
(75)
10
(65)
(55)
–
(11)
(11)
38
(82)
(6,053)
1
Migration costs were paid by the group to the purchaser and as such have been included in the net payment amount.
Revenue of £1,075,000 (2020: £4,319,000) from the disposed Marketing Services business has been deducted from
total group revenue in the calculation of organic growth.
Disposal of Employ and Comply
On 31 March 2021 GBG disposed of its Employ & Comply (E&C) business to First Advantage Europe Limited (‘FADV’).
There is no contingent or deferred consideration recognised as part of this business combination.
The E&C business was made up of three previous acquisitions that operated as one business:
GB Group plc issued 446,784 ordinary shares as consideration for the business combination. The fair value of the
shares is calculated with reference to the quoted price of the shares of the Company at the date of acquisition, which
was £8.953 per share. The fair value of the consideration given was therefore £4,000,000. £658,000 of the total
consideration was recognised within the share capital and share premium with £3,342,000 recognised within the
merger relief reserve in accordance with the requirements of section 612 of the Companies Act 2006.
Transaction costs of £189,000 were incurred and included within exceptional expenses. There were no directly
attributable share issue costs recognised on this issue.
n Advanced Checking Services Limited (acquired in 2011)
n
tmg.tv Limited (acquired in 2012)
n CRD (UK) Limited (acquired in 2013)
E&C is included within the Identity operating segment in note 4.
184
Annual Report and Accounts 2021
Annual Report and Accounts 2021
185
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
35. Acquisitions and Disposals continued
37. Alternative Performance Measures
The full amount of goodwill and intangibles related to the acquisitions that make up the E&C business has been
Management assess the performance of the Group using a variety of alternative performance measures. In the
disposed of.
In respect of the Company, the full amount of Acquired Goodwill attributable to those businesses in the Company have
been included in the calculation of the profit on disposal.
As this area of the business did not constitute a major line of business, single geographical area of operation, and was
not part of a co-ordinated plan to dispose of a separate major line, the disposal has not been treated as a discontinued
operation in line with IFRS 5.
Consideration - cash*
Net proceeds
Goodwill
Acquired intangible assets – Customer Relationship Asset
Right-of-use assets
Plant and equipment
Prepayments
Deferred revenue
Dilapidation provision
Lease liability
Net book value of assets and liabilities disposed
Transaction costs of the disposal – accrued
Profit on disposal
Group
£’000
5,400
5,400
2,529
374
260
10
7
(76)
(111)
(291)
2,702
120
2,578
Company
£’000
5,400
5,400
4,286
–
260
10
7
(76)
(111)
(291)
4,085
120
1,195
*
At 31 March 2021 the cash was held by Lawyers and was received into a GBG bank account on 1 April 2021. However, as the cash was held on behalf of
GBG and that the disposal was completed on 31 March 2021 it is appropriate that the cash has been recognised as being received.
Revenue of £5,584,000 (2020: £6,739,000) from the disposed Employ and Comply business has been deducted from
total group revenue in the calculation of organic growth.
There were no business combinations during the year to 31 March 2020.
36. Contingent Consideration
Group and Company
At 1 April
Recognition on the acquisition of subsidiary undertakings1&2
Foreign exchange - realised
Foreign exchange - unrealised2
Settlement discount (see note 7e)2
Settlement of consideration
At 31 March
Analysed as:
Amounts falling due within 12 months
Amounts falling due after one year
At 31 March
2021
£’000
6,179
747
–
(452)
(50)
(2,762)
3,662
3,662
-
3,662
2020
£’000
5,287
829
7
142
–
(86)
6,179
6,179
–
6,179
1
2
The amount recognised on acquisition of subsidiary undertakings in the year to 31 March 2021 is in respect of IDology (refer to note 7d for further details).
Included in Consolidated Cash Flow Statement within fair value adjustment on contingent consideration line totalling £245,000 (2020: £971,000).
The contingent consideration at 31 March 2021 is in respect to the pre-acquisition tax losses within IDology Inc. As and when GBG receives a cash benefit
from these losses, either through a reduction in tax payments or through a tax refund, an amount equal to this cash benefit is due to the sellers.
discussion of the Group’s reported operating results, alternative performance measures are presented to provide
readers with additional financial information that is regularly reviewed by management. However, this additional
information presented is not uniformly defined by all companies including those in the Group’s industry. Accordingly,
it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, certain
information presented is derived from amounts calculated in accordance with IFRS but is not itself an expressly
permitted GAAP measure. Such measures are not defined under IFRS and are therefore termed ‘non-GAAP’
measures and should not be viewed in isolation or as an alternative to the equivalent GAAP measure.
The Group’s income statement and segmental analysis separately identify trading results before certain items. The
directors believe that presentation of the Group’s results in this way is relevant to an understanding of the Group’s
financial performance, as such items are identified by virtue of their size, nature or incidence. This presentation
is consistent with the way that financial performance is measured by management and reported to the Board and
assists in providing a meaningful analysis of the trading results of the Group. In determining whether an event or
transaction is presented separately, management considers quantitative as well as qualitative factors such as the
frequency or predictability of occurrence. Examples of charges or credits meeting the above definition and which
have been presented separately in the current and/or prior years include amortisation of acquired intangibles, share-
based payments charges, acquisition related costs and business restructuring programmes. In the event that other
items meet the criteria, which are applied consistently from year to year, they are also presented separately.
The following are the key non-GAAP measures used by the Group:
Organic Growth
Organic growth is defined by the Group as year-on-year continuing revenue growth, excluding acquisitions which are
included only after the first anniversary following their purchase and disposed businesses.
Constant Currency
Constant currency means that non-Pound Sterling revenue in the comparative period is translated at the same
exchange rate applied to the current year non-Pound Sterling revenue. This therefore eliminates the impact of
fluctuations in exchange rates on underlying performance.
Group revenue
Revenue from acquisitions up to their first anniversary
Revenue from disposals (see note 35)
Organic revenue
Constant currency adjustment
Organic revenue at constant currency
2021
£’000
2020
£’000
Growth
%
217,659
199,101
(249)
–
(6,659)
(11,058)
210,751
188,043
–
(100)
210,751
187,943
9.3
(0.1)
2.9
12.1
–
12.1
186
Annual Report and Accounts 2021
Annual Report and Accounts 2021
187
OverviewStrategic ReportGovernanceFinancial Statements Notes To The Accounts continued
37. Alternative Performance Measures continued
Adjusted Earnings
Adjusted Operating Profit
Adjusted operating profit means operating profit before amortisation of acquired intangibles, share-based payment
charges and exceptional items.
Operating profit
Amortisation of acquired intangibles
Share-based payment charges
Exceptional items
Adjusted Operating Profit
Adjusted Operating Profit Margin
Adjusted operating profit margin Adjusted Operating Profit as a percentage of revenue.
Adjusted Operating Profit
Group revenue
Adjusted Operating Profit Margin
2021
£’000
35,503
17,671
5,170
(448)
57,896
2020
£’000
22,844
19,008
4,541
1,552
47,945
2021
£’000
57,896
217,659
26.6%
2020
£’000
47,945
199,101
24.1%
Operating Profit Before Exceptional Items
Adjusted operating profit less amortisation of acquired intangibles and share-based payments charge.
Adjusted Operating Profit
Amortisation of acquired intangibles
Share-based payment charges
Operating profit before exceptional items
Adjusted EBITDA
2021
£’000
57,896
(17,671)
(5,170)
35,055
2020
£’000
47,945
(19,008)
(4,541)
24,396
Adjusted EBITDA means Adjusted Operating Profit before depreciation and amortisation of non-acquired intangibles.
Adjusted Operating Profit
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of non-acquired intangibles
Adjusted EBITDA
2021
£’000
57,896
1,433
1.838
243
61,410
2020
£’000
47,945
1,760
1,850
184
51,739
Adjusted earnings represents Adjusted Operating Profit less net finance costs and income tax charges. Refer to note 13
for calculation.
Adjusted Earnings Per Share (‘Adjusted EPS’)
Adjusted EPS represents adjusted earnings divided by a weighted average number of shares in issue, and is disclosed to
indicate the underlying profitability of the Group. Refer to note 13 for calculation.
Earnings Per Share Growth
This is calculated as the growth in year on year earnings per share on both an adjusted and unadjusted basis.
Net Debt/Cash
This is calculated as cash and cash equivalent balances less outstanding external loans. Unamortised loan arrangement
fees are netted against the loan balance in the financial statements but are excluded from the calculation of net cash/
debt.
Cash and cash equivalents
Loans on balance sheet
Unamortised loan arrangement fees
External Loans
Net (Debt)/Cash
Cash Conversion %
2021
£’000
21,135
(361)
361
–
21,135
2020
£’000
27,499
62,139
361
62,500
(35,001)
This is calculated as cash generated from operations in the Consolidated Cash Flow Statement, adjusted to exclude
cash payments for exceptional items, as a percentage of Adjusted EBITDA
Cash generated from operations before tax payments (from Consolidated Cash Flow
Statement)
Total exceptional items
Non-cash exceptional items
Cash generated from operations before tax payments and exceptional items paid
Adjusted EBITDA
Cash Conversion %
2021
£’000
2020
£’000
72,631
48,498
(448)
1,202
73,385
61,410
119.5%
1,552
(771)
49,279
51,739
95.2%
188
Annual Report and Accounts 2021
Annual Report and Accounts 2021
189
OverviewStrategic ReportGovernanceFinancial Statements Useful Information
Website
The investors section of the Company's website, www.gbgplc.com, contains detailed information on news, press
releases, key financial information, annual and interim reports, share price information, dividends and key contact
details. Our share price is also available on the London Stock Exchange website. The following information is a summary
and readers are encouraged to view the website for more detailed information.
Dividend Reinvestment Plan
The Company offers a Dividend Reinvestment Plan that enables shareholders to reinvest cash dividends into additional
shares in the Company. Application forms can be obtained from Equiniti.
Share Scams
Shareholders should be aware that fraudsters may try and use high pressure tactics to lure investors into share scams.
Information on share scams can be found on the Financial Conduct Authority’s website, www.fca.org.uk/scams
Financial Calendar 2021
Annual General Meeting
Announcement of 2021 half year results
29 July 2021
December 2021
Shareholder Enquiries
GBG’s registrar, Equiniti, can deal with any enquiries relating to your shareholding, such as a change of name or address
or a replacement of a share certificate. Equiniti’s Shareholder Contact Centre can be contacted by telephone on 0371
38 2365 (international callers: +44 (0)121 415 7161) between 8.30am and 5.30pm Monday to Friday, excluding public
holidays in England and Wales. You can also access details of your shareholding and a range of other shareholder
services by registering at www.shareview.co.uk.
Company Secretary &
Registered Office
Nominated Advisor
and Broker
Solicitors
Squire Patton Boggs (UK) LLP
Annabelle Burton
GB Group plc
The Foundation, Herons Way
Chester Business Park
Chester
CH4 9GB
United Kingdom
Peel Hunt LLP
Moor House
120 London Wall
London
EC2Y 5ET
(Registered in England & Wales,
Auditor
Number 2415211)
T: +44 (0)1244 657333
E: enquiries@gbgplc.com
W: www.gbgplc.com
Ernst & Young LLP
20 Chapel Street
Liverpool
L3 9AG
1 Spinningfields
1 Hardman Square
Manchester
M3 3EB
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
190
Annual Report and Accounts 2021
GBG
The Foundation
Herons Way
Chester Business Park
Chester
CH4 9GB
United Kingdom
gbgplc.com