GB Group (LON:GBGP) expects to report revenues and EBIT ahead of our forecasts on a strong performance from the fraud management and global electronic verification services. Net cash of £13.4m is also well ahead. This excellent momentum underpins our 12% organic revenue growth forecast in FY19, and the strong balance sheet provides additional support to the group’s buy-and-build strategy.
GBG expects FY18 revenues of £119.7m, up 37% y-o-y (2% ahead of our forecast) and EBITA of approximately £26m, 12% ahead of our forecast. Organic revenue growth of 17% is enhanced by the inclusion of a £3.5m perpetual licence sale within ID Scan in H1; recognising this over a three-year period converts to an underlying growth rate of 15% and implies a pick-up in underlying growth from 12% in H1 to 17% in H2. Mix effects and the recognition of said licence meant at 21.8% the operating margin was ahead of management’s targeted trend margin of 20%. Year-end net cash of £13.4m was considerably better than forecast (£2.9m net debt), a combination of the better result, cash conversion, lower capital expenditure and cash tax as well as a lower final payment for PCA Predict.
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