GB Group: Business As Usual
Edison | Jun 08, 2017 04:49AM ET
Following April’s trading update, GB Group (LON:GBGP) FY17 results held no major surprises, with the fraud, risk management and location services continuing to underpin strong growth. The incoming CEO plans to continue to execute the group’s internationalisation strategy and investment will be managed to maintain EBITA margins at c 20% over the medium term; while marginally lower than our FY19 assumption, we raise our EPS forecasts by c 4% in FY18 and c 2% in FY19 reflecting a lower expected tax rate.
Tax boost to FY17 earnings
Revenues of £87.5m (+19% y-o-y, of which 12% was organic) and EBITA of £17.0m (+27%) were in line with April’s trading update. The group benefited from a tax credit (versus the 21% tax charge we had forecast) as a result of movements to its deferred tax asset and the increased use of patent box tax relief, which boosted the group’s earnings; adjusting for this, adjusted EPS was in line with our forecast. All service lines – bar ID Engage, which is experiencing some competitive pressure – grew strongly, particularly the fraud and risk management products. A dividend of 2.35p (+13% y-o-y) has been proposed
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