56,191

42,577

11,991

12,982

1,544

1,430

1,438

1,369

72

66

1,131

1,231

2,641

Principal Activities and Business Review

Group Vision and Strategy

Review of the Business

Relationships

Treasury Policy and Financial Risk

Use of non-GAAP Measures in the Group Financial Statements

Financial

Non-Financial

Performance against KPIs

Revenue

Gross profit

Group operating profit

Profit before tax

Earnings per share

IFRS 15 transition adjustment

Balance at 1 April 2017

Balance at 31 March 2018 (As Reported)

Balance at 31 March 2018 (Restated)

Balance at 31 March 2019

Current assets

Total assets

Equity and liabilities

Capital and reserves

Share premium

Merger reserve

Total equity attributable to equity holders of the parent

Non-current liabilities

Loans

Long service award

Trade and other payables

Deferred tax liability

Current liabilities

Total liabilities

Total equity and liabilities

Current assets

Total assets

Equity and liabilities

Capital and reserves

Share premium

Merger reserve

Total equity attributable to equity holders of the parent

Current liabilities

Total liabilities

Total equity and liabilities

Cash generated from operations

Income tax paid

Net cash generated from operating activities

Cash flows from/(used in) investing activities

Net cash flows used in investing activities

Cash flows from/(used in) financing activities

Net cash flows from financing activities

Cash and cash equivalents at the end of the period

Cash generated from operations

Income tax paid

Net cash generated from operating activities

Cash flows from/(used in) investing activities

Net cash flows used in investing activities

Cash flows from/(used in) financing activities

Net cash flows from financing activities

Cash and cash equivalents at the end of the period

Transactional services - forfeitures

Notes to the Accounts

Share-based Payment Transactions

Chairman's Statement

Chief Executive's Statement

Finance Review

Key Performance Indicators

Notes to the Accounts

Share-based Payment Transactions

1. Corporate Information

GB Group plc ('the Company'), its subsidiaries and associates (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 Finance Review.

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 17.

These consolidated financial statements have been approved for issue by the Board of Directors on 5 June 2019.

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.

2. Accounting Policies

Basis of Preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS's) as adopted by the European Union and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. 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 2019 and the Group and Company have applied the same policies throughout the year.

Changes to accounting policies

The following new IFRS standards relevant to the Company have been adopting in these financial statements:

(i) IFRS 15 Revenue from Contracts with Customers: Replaces IAS 18 Revenue and IAS 11 Construction Contracts. The core principle of IFRS 15 is that revenue reflects the transfer of goods or services to customers in an amount that reflect the consideration to which an entity expects to be entitled. The recognition of such revenue is in accordance with five steps to: identify the contract; identify the performance obligations; determine the transaction price; allocate the transaction price to the performance obligations; and recognised revenue when the performance obligations are satisfied. The impact of adopting IFRS 15 is detailed below.

(ii) IFRS 9 Financial Instruments: The Group has adopted IFRS 9 'Financial Instruments' with a date of initial application of 1 April 2018. IFRS 9 'Financial Instruments' replaces IAS 39 and impacts upon the classification and measurement of financial instruments and will require certain additional disclosures. Management have confirmed that there are no changes as a result of adopting IFRS 9. The following areas were identified as the main items of interest to the Group:

Credit losses

IFRS 9 replaced the existing incurred loss model with a forward looking expected credit loss model. The expected credit losses on these trade receivable and contract assets are estimated using a provision matrix based on the Group's historical credit loss experience, adjusted for management judgement concerning factors that are specific to the receivables, general economic conditions and assessment of the current as well as the forecast direction of conditions at the reporting date based on reasonable and supportable information that is available, without undue cost or effort to obtain. Due to the exemption in IFRS 9, there is no requirement to restate comparative periods in the year of initial application and as a consequence, any adjustments to the carrying amounts of financial assets or liabilities are to be recognised at 1 April 2018. The change from an incurred loss model under IAS 39 to an expected loss model has not had a material impact and no adjustment is required at 1 April 2018.

Modifications to financial liabilities

Under both IAS 39 and IFRS 9, when the terms of a financial liability are modified, for example, where the maturity date is extended, an entity must consider whether that modification is substantial or non-substantial. Under IAS 39, the Group did not recognise any gain or loss at the time of a non-substantial modification. However, under IFRS 9 it is a requirement to recognise a gain or loss at the time of the non-substantial modification. On transition to IFRS 9, this change in policy was applied retrospectively to all financial liabilities that were still recognised at the date of the initial application. There was no material impact and therefore no adjustment is required at 1 April 2018.

(iii) Amendment to IFRS 2 'Classification and Measurement of Share-based Payment Transactions': the amendments are intended to clarify the standard in relation to the accounting for cash-settled share-based payment transaction that include a performance obligation, the classification of share-based payment transactions with net settlement features, and the accounting for modifications of share-based payment transactions from cash-settled to equity-settled.

2. Accounting Policies

(iv) IFRIC 22 'Foreign Currency Transactions and Advance Consideration': The interpretation addresses foreign currency transactions or parts of transactions where (i) there is consideration that is denominated or priced in a foreign currency; (ii) the entity recognises a prepayment asset or a deferred income liability in respect of that consideration, in advance of the recognition of the related asset, expense or income; and (iii) the prepayment asset or deferred income liability is non-monetary. The Interpretations Committee came to the following conclusions: The date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt.

(v) Amendment to IAS 40 'Transfers of Investment Property': the amendments are intended to clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a chance in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use.

Apart from IFRS 15, none of these pronouncements has had any impact for amounts recognised in these financial statements. The Group has adopted IFRS 15 from 1 April 2018 using the modified retrospective method of adoption, details of the impact are set out below. In accordance with the new five step model, revenue is recognised to the extent that it is probable that economic benefits will flow to the Group and the revenue can be measured reliably.

The following table provides information about areas of revenue recognition where there has been a change under IFRS 15 compared to the treatment that would have been applied under IAS 18.

Type of product / service	Description of the product or service	Treatment under IAS 18	Revised treatment under IFRS 15
Software licences - data disk sales within Fraud, Risk & Compliance segment	Customers are provided with a physical disk of data that they can use over an agreed licence period. During the licence period they are provided with new data disks containing updates to that data on a regular basis. The frequency of changes in the data provided in these disks and the uses of this data by the customer makes it important that they are using up-to-date data.	The revenue is apportioned between the data disk and the post-contract support, which incorporates providing the data updates. The revenue for the data disk is recognised upon delivery to the customer as that was considered to be when the risks and rewards of ownership have passed which was the criteria under IAS 18. The revenue for the post-contract support was recognised evenly over the licence period.	Under IFRS 15 revenue recognition is now based on the transfer of control of goods or services to a customer, rather than just the transfer of risks and rewards which was the case under IAS 18. Control is defined as "the ability to direct the use of and obtain substantially all of the remaining benefits from the asset". Due to the relative importance of the data updates to the customer's use of the data disk, it is considered that control over the full licence period does not pass on delivery of the initial data disk. This is because they require the future updates to that data to be able to obtain the benefits of it. We consider that the delivery of each data disk containing the updates meet the criteria 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". Consequently, the revenue for the full licence period is recognised over time as each data disk is delivered, rather than all upfront on delivery of the original data disk.
Software licences - data disk sales within Customer Location & Intelligence segment - multi year deals	Customers are provided with a physical disk of data that they can use over an agreed licence period of more than one year. During the licence period they are provided with new data disks containing data updates on a regular basis. In contrast to Fraud, Risk & Compliance data disks, the data within the customer location and intelligence data disks changes less frequently and so the updates are not considered as critical to the customer.	The revenue is apportioned between the data disk and the post-contract support, which incorporates providing the data updates. In the majority of cases GBG multi-year contracts were not paid upfront and were invoiced and paid annually. The timeframe between each invoice meant that the criteria in IAS 18 that it is 'probable that any future economic benefit associated with the item of revenue will flow to the entity' was assessed not to be met and so the revenue was recognised in line with the invoicing - i.e. one year at a time. The revenue for the post-contract support was recognised evenly over the licence period.	As the data updates are less critical to the customer, it is considered that the delivery of the original disk and the data updates are separate performance obligations. Under IFRS 15 the credit risk is not considered in the revenue recognition and so whilst there is a requirement to account for a financing component in the recognition profile, this is not a significant element of the overall revenue. Therefore, the full amount of revenue allocated to the data disk should be recognised upfront as the control criteria has been met. The revenue for the post-contract support continues to be recognised evenly over the licence period.
Transactional services - forfeitures	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.	Revenue was recognised based on the number of transactions used by the customer at each measurement date. Any remaining deferred revenue balance at the end of the contract period was recognised as revenue at that point.	Based on a review of forfeitures in previous years an estimate has been made of the expected percentage of transactions that will remain unused over their contracted life. This percentage is applied such that revenue for expected forfeitures is recognised at in proportion to the pattern of transactions performed by the customer.

Revenue from contracts with customers

Due to the transition method chosen by the Group in applying IFRS 15, comparative information throughout these financial statements has not been restated to reflect the requirements of the new standard.

The follow table summarise the impact, net of tax, of the transition to IFRS 15 on retained earnings at 1 April 2018.

							Impact of adopting IFRS 15 at 1 April 2018 £000

Retained earnings - as reported							41,652

Software licences - data disk sales within Fraud, Risk & Compliance segment							(1,929)
Software licences - data disk sales within Customer Location & Intelligence segment - multi-year deals							454
Transactional services - forfeitures							176
							(1,299)
Related tax							241
Impact at 1 April 2018							(1,058)
Retained earnings - restated							40,594

If reporting under IAS 18 for the period, revenue would have been £0.2 million lower, and operating profit £0.2 million lower. There was no material impact on the Group's statement of cash flows for the year ended 31 March 2019.

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 investee if, and only if, the Group has:

· power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

· exposure, or rights, to variable returns from its involvement with the investee; and

· the ability to use its power over the investee to affect its returns.

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 and circumstances in assessing whether it has power over an investee, including:

· the contractual arrangement with the other vote holders of the investee;

· rights arising from other contractual arrangements; and

· 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.

2. Accounting Policies continued

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, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

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 will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9 'Financial Instruments: Recognition and Measurement' (31 March 2019) and IAS 39 'Financial Instruments: Recognition and Measurement' (31 March 2018), are measured at fair value with the changes in fair value recognised in the statement of profit or loss. If the contingent consideration is classified as equity, it is not remeasured until it is finally settled within equity.

The Group applies IFRS 3 'Business Combinations' and as a consequence of the acquisition of the remaining 73.3% in 2015 of shares in Loqate, Inc., the area of the standard applicable to business combinations achieved in stages became relevant to the Group. If the 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.

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).

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.

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

2. Accounting Policies continued

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 Statement of Comprehensive Income in the year the item is derecognised.

Residual values and estimated remaining lives are reviewed annually.

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 Statement of Comprehensive Income 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.

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 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 Statement of Comprehensive Income. 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

Research costs are expensed as incurred. An intangible asset arising from development expenditure on an individual project is recognised only when the Group can demonstrate the technical feasibility of completing the intangible 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:

Technology based assets - over 2 to 5 years

Brands and trademarks - over 2 to 3 years

Customer relationships - over 10 years

2. Accounting Policies continued

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.

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

Financial assets are classified at initial recognition and subsequently as measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.

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.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

· Financial assets at amortised cost (debt instruments)

· Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)

· Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)

· 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.

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 financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows

And

• 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.

2. Accounting Policies continued

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

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily 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

• 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

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

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.

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 that there is no realistic prospect of recovery.

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.

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.

2. Accounting Policies continued

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 above, net of any outstanding bank overdrafts.

Borrowings

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.

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 Statement of Comprehensive Income 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.

Pensions

The Group does not have a contributory pension scheme. Payments are made to individual private defined contribution pension arrangements. Contributions are charged in the Statement of Comprehensive Income as they become payable.

Revenue Recognition

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 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.

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 of a series of distinct goods and services that are substantially the same and have the same pattern of transfer to the customer.

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 required to determine and estimate an appropriate standalone selling price.

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.

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.

On-premise installation or data disk - Customer Location & Intelligence segment

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 to apply the algorithms to. 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

2. Accounting Policies continued

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, Risk & Compliance 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 delivery of the initial data disk and then subsequent disks containing the updates meet the criteria 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 time as each software update is delivered.

b) Transactional

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.

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 forfeitures is recognised at 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.

2. Accounting Policies continued

This assessment of control requires some judgement in particular in relation to certain service contracts. An example is the provision of certain employment screening services where the Group may be assessed to be 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:

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; or

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). 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.

Exceptional Items

The Group presents as exceptional items on the face of the Statement of Comprehensive Income 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.

Dividends

Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders.

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.

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 Statement of Comprehensive Income 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).

2. Accounting Policies continued

Leases

Assets funded through finance leases and similar hire purchase contracts are capitalised as property, plant and equipment, where the Group assumes substantially all of the risks and rewards of ownership. Upon initial recognition, the leased asset is measured at the lower of its fair value and the present value of the minimum lease payments. Future instalments under such leases, net of financing costs, are included within interest-bearing loans and borrowings. Rental payments are apportioned between the finance element, which is included in finance costs, and the capital element which reduces the outstanding obligation for future instalments so as to give a constant charge on the outstanding obligation.

All other leases are accounted for as operating leases and the rental charges are charged to the Consolidated Statement of Comprehensive Income on a straight-line basis over the life of the lease.

Lease incentives are primarily rent-free periods. Lease incentives are amortised over the lease term against the relevant rental expense.

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.

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:

· 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.

· 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 not Applied

The IASB and IFRIC have issued the following Standards and Interpretations with an effective and adoption date after the date of these financial statements:

International Accounting Standards (IAS/IFRS)		Effective date

IFRS 16	Leases	1 January 2019
IFRIC 23	Uncertainty over Income Tax Treatments	1 January 2019
IFRS 9	Prepayment Features with Negative Compensation - Amendments to IFRS 9	1 January 2019
IAS 28	Long-term Interests in Associates and Joint Ventures - Amendments to IAS 28	1 January 2019

IFRS 16 'Leases' replaces IAS 17 Leases, IFRIC 4 Determining whether an arrangement contains a lease, SIC-15 Operating Lease Incentives and SIC-27 Evaluating the Substance of Transactions involving the Legal Form of a Lease. IFRS 16 sets out principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard included two recognition exemptions for lessess - leases of low-value assets and short-term leases. At the commencement date of a lease, a lessee will recognised a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term (i.e. the right of use asset). Lessees will be required to separately recognise the interest expense on the lease liability and depreciation expense on the right of use asset. Lessees will be also required to remeasure the lease liability upon the occurrence of certain events. The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right of use asset.

IFRS 16 is effective for annual periods beginning on or after 1 January 2019 and will be adopted by the Group on 1 April 2019.

The Group has entered into a number of long-term leases in respect of land and buildings. The Group is continuing to evaluate the full impact of the accounting changes that will arise under IFRS 16. To see the volume of operating leases, see note 26 for more information. The following changes to lessee accounting will have an impact as follows:

· There is expected to be an increase in assets, specifically right-of-use assets will be recorded for assets that are leased by the Group; currently no lease assets are included on the Group's consolidated statement of financial position for operating leases.

· There is expected to be an increase in debt as liabilities will be recorded for future lease payments in the Group's consolidated statement of financial position for the 'reasonably certain' period of the lease, which may include future lease periods for which the Group has extension options. Currently liabilities are generally not recorded for future operating lease payments, which are disclosed as commitments. The amount

2. Accounting Policies continued

of lease liabilities will not equal the lease commitments that will be reported in the operating lease commitments note in the 2019 Annual Report, but may not be dissimilar.

· Operating lease expenditure will be reclassified and split between depreciation and finance costs, resulting in an increase in EBITDA. Lease expenses will be for depreciation of right-of-use assets and interest on lease liabilities; interest will typically be higher in the early stages of a lease and reduce over the term. Currently operating lease rentals are expensed on a straight-line basis over the lease term within operating expenses.

· Operating lease cash flows are currently included within operating cash flows in the consolidated statement of cash flows; under IFRS 16 these will be recorded as cash flows from financing activities reflecting the repayment of lease liabilities (borrowings) and related interest.

When IFRS 16 is adopted, it can be applied either on a fully retrospective basis, requiring the restatement of the comparative periods presented in the financial statements, or with the cumulative retrospective impact of IFRS 16 applied as an adjustment to equity on the date of adoption; when the latter approach is applied it is necessary to disclose the impact of IFRS 16 on each line item in the financial statements in the reporting period. Depending on the adoption method that is utilised, certain practical expedients may be applied on adoption. The Group currently expect to adopt the full retrospective method to provide consistency when looking at comparative results.

Judgements and Key Sources of Estimation Uncertainty

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from 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:

Impairment of Goodwill

The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy stated earlier in note 2. 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.

Management are required to make judgements regarding the timing and amount of future cash flows applicable to the CGU, based on current budgets and forecasts, and extrapolated for an appropriate period taking into account growth rates and expected changes to sales and operating costs. Management estimate the appropriate discount rate using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the business or the individual CGU.

An analysis of the Group's goodwill and the assumptions used to test for impairment are set out in note 16.

Deferred Tax Assets

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 that the Group would generate future taxable profits against which certain decelerated tax losses, tax losses and other temporary differences could be relieved. Within that forecast, management considered the total amount of tax losses available across the Group and the relative restrictions in place for loss streaming and made a judgement not to recognise deferred tax assets on losses of £16,367,000 (2018: £16,367,000). The total amount of deferred tax assets that management had forecast as available at the year-end based on these forecasts and estimates was higher than the previous year and as a result the Group has increased the total value of the deferred tax asset being recognised. The carrying value of the recognised deferred tax asset at 31 March 2019 was £8,222,000 (2018: £4,212,000) and the unrecognised deferred tax asset at 31 March 2019 was £3,166,000 (2018: £3,356,000). 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 instruments at the date at which they are granted. Judgement is required in determining the most appropriate valuation model for a grant of equity instruments, depending on the terms and conditions of the grant. Management are also required to use judgement in determining the most appropriate inputs to the valuation model including expected life of the option, volatility and dividend yield. The assumptions and models used are disclosed in note 27.

Long Service Award

An actuarial model is used to value long service awards in accordance with IAS 19. Management are required to use judgement in determining the most appropriate inputs to the valuation model. The assumptions and models used are disclosed in note 24.

Revenue Recognition

Under IFRS 15 revenue is recognised when control passes to the customer. Control is defined as "the ability to direct the use of and obtain substantially all of the remaining benefits from the asset". In respect of software licences delivered either through a local installation or on a data disk there is a judgement as to when the customer is in control of obtaining substantially all the remaining benefits of the asset. It was considered by management that in certain agreements the relative importance of the data updates provided during the software licence period are a key factor in assessing when control passes. In the Fraud, Risk & Compliance division, certain updates are considered a critical part of the licence and therefore revenue is recognised when each software update is delivered. In the Customer & Location Intelligence segment there are less frequent changes in the data being used and it is considered less critical to the use of the software by the customer. Therefore, the revenue for these software licences is recognised on initial installation.

2. Accounting Policies continued

Valuation and Asset Lives of Separately Identifiable Intangible Assets

In determining the fair value of intangible assets arising on acquisition, management are required to make judgements regarding the timing and amount of future cash flows applicable to the businesses being acquired, discounted using an appropriate discount rate.

Such judgements are based on current budgets and forecasts, extrapolated for an appropriate period taking into account growth rates and expected changes to selling prices and operating costs. During the year, the Company acquired VIX Verify and IDology and in valuing the separately identifiable intangible assets made specific judgements as to the life of those assets. The most significant of those were the estimated useful lives of the customer relationship and technology IP assets of 10 and 5 years, respectively. Judgements were made on these lives with reference to both historical indicators within the acquired business such as customer or technology lifecycles along with estimates of the impact on such lives that convergence of technology and relationships would have over time.

3. Revenue

Revenue disclosed in the Consolidated Statement of Comprehensive Income is analysed as follows:


	2019	2018
	£'000	£'000

Licence	75,322	64,143
Transactional	56,191	42,577
Services	11,991	12,982
Revenue	143,504	119,702

Finance revenue	31	37
Total revenue	143,535	119,739

4. Segmental Information

The Group's operating segments are internally reported to the Group's Chief Executive Officer as two operating segments: Fraud, Risk & Compliance - which provides ID Verification, ID Compliance & Fraud Solutions, ID Trace & Investigate and ID Employ & Comply; and Customer & Location Intelligence - which provides ID Location Intelligence and ID Engage Solutions. The measure of performance of those segments that is reported to the Group's Chief Executive Officer is adjusted operating profit, being profits before amortisation of acquired intangibles, share-based payment charges, exceptional items, net finance costs and tax, as shown below.

Information on segment assets and liabilities is not regularly provided to the Group's Chief Executive Officer and is therefore not disclosed below.

	Fraud, Risk & Compliance	Customer & Location Intelligence	Unallocated	2019
Year ended 31 March 2019	£'000	£'000	£'000	£'000
Licence	39,781	35,541	-	75,322
Transactional	45,459	10,732	-	56,191
Services	2,373	9,618	-	11,991
Total revenue	87,613	55,891	-	143,504
Adjusted operating profit	20,417	12,633	(1,019)	32,031
Amortisation of acquired intangibles	(5,163)	(5,153)	-	(10,316)
Share-based payments charge	-		(2,287)	(2,287)
Exceptional items	-		(4,003)	(4,003)
Operating profit	15,254	7,480	(7,309)	15,425
Finance revenue			31	31
Finance costs			(720)	(720)
Income tax charge			(2,583)	(2,583)
Profit for the year				12,153

VIX Verify Global Pty Ltd ('VIX Verify') and IDology Inc. ('IDology'), which were acquired during the year, are reported within the Fraud, Risk & Compliance segment.

	Fraud, Risk & Compliance	Customer & Location Intelligence	Unallocated	2018
Year ended 31 March 2018	£'000	£'000	£'000	£'000
Licence	34,884	29,259	-	64,143
Transactional	32,388	10,189	-	42,577
Services	2,495	10,487	-	12,982
Total revenue	69,767	49,935	-	119,702
Adjusted operating profit	16,049	11,458	(1,196)	26,311
Amortisation of acquired intangibles	(2,940)	(4,945)	-	(7,885)
Share-based payments charge	-	-	(2,375)	(2,375)
Exceptional items	-	-	(2,143)	(2,143)
Operating profit	13,109	6,513	(5,714)	13,908
Finance revenue			37	37
Finance costs			(545)	(545)
Income tax charge			(2,746)	(2,746)
Profit for the year				10,654

Postcode Anywhere (Holdings) Limited ('PCA'), which was acquired in 2017/18, is reported within the Customer & Location Intelligence segment.

Geographical Information

	Revenues from external customers			Non-current assets
	Underlying*
	2019	2018	2018	2019	2018
	£'000	£'000	£'000	£'000	£'000

United Kingdom	79,368	78,471	76,138	133,059	147,778
United States of America	20,525	11,836	11,836	254,071	163
Australia	10,241	2,559	2,559	39,789	17,797
Others	33,370	26,836	26,836	54	334
Total	143,504	119,702	117,369	426,973	166,072

* As highlighted in the October 2017 trading update, organic revenue growth in the year to 31 Match 2018 included £3.5 million from the sale of a material perpetual licence to a leading European bank in September 2017, paid upfront. Had this particular transaction been a fully delivered, three-year agreement, payable in annual instalments (as is normal), then our revenue recognition policies at the time would have only recognised one third of this value. This revenue was within the United Kingdom classification in the above table.

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.

5. Operating Profit

This is stated after charging/(crediting):	2019	2018
	£'000	£'000

Research and development costs recognised as an expense ¹	10,370	9,516
Depreciation of property, plant and equipment	1,544	1,430
Amortisation/impairment of intangible assets	10,821	8,832
Foreign exchange (gain)/loss	(35)	177
Operating lease payments - land and buildings	2,235	1,596
- other	19	18

¹The prior year cost has been restated to reflect the correct retranslation of international costs.

6. Auditor's Remuneration

	2019	2018
	£'000	£'000

Audit of the financial statements ¹	266	166

Other fees to auditor - other assurance services	25	24
- tax compliance services	2	25
- tax advisory services	21	13
	314	228
¹ £136,000 (2018: £133,000) of this relates to the Company.

7. Exceptional Items

	2019	2018
	£'000	£'000

Acquisition related costs (note 31)	3,747	750
Costs associated with staff reorganisations	256	508
Fair value adjustments to contingent consideration (note 32)	-	885
	4,003	2,143

Transaction costs of £3,747,000 include those related to the acquisition of VIX Verify (£449,000) and IDology (£2,391,000) (note 31). In prior periods, transaction costs primarily related to the acquisition of PCA (£735,000) (note 31). Such costs include those directly attributable to the transaction including legal and professional advisors and exclude operating or integration costs relating to an acquired business. The balance of costs relate to potential acquisitions that were either aborted or are not complete at the date of these financial statements. Due to the size and nature of these costs, management consider that they would distort the Group's underlying business performance.

As part of the Group's strategy to grow through acquisition it is essential that acquired businesses are restructured to integrate them fully into the Group's operations and deliver anticipated returns. Costs associated with staff reorganisations in both years relate primarily to exit costs of personnel leaving the business on an involuntary basis during the integration and restructuring period in order to implement more suitable post completion staff structures. In order to give a suitable representation of underlying earnings it is appropriate to show these costs as exceptional along with any other items which are exceptional in nature.

Fair value adjustments to contingent consideration in the year to 31 March 2018 relate to the acquisition of IDscan and include £421,000 relating to a contingent purchase price adjustment along with a £457,000 charge relating to the partial unwinding of the discounting relating to the contingent consideration (note 32). This charge arises because contingent consideration due to be paid at a future date is discounted for the time value of money at the point of initial recognition and over the passage of time, this discount unwinds within the Consolidated Statement of Comprehensive Income. These are non-cash items.

The tax impact of the exceptional costs was £77,000 (2018: £116,000).

8. Staff Costs and Directors' Emoluments

	Group		Company
a) Staff Costs	2019	2018	2019	2018
	£'000	£'000	£'000	£'000

Wages and salaries	41,719	41,162	31,392	27,033
Social security costs	4,858	4,904	4,352	3,504
Other pension costs	1,956	1,668	1,486	1,080
	48,533	47,734	37,230	31,617

Included in wages and salaries is a total charge of share-based payments of £2,287,000 (2018: £2,375,000) which arises from transactions accounted for as equity-settled share-based payment transactions.

The average monthly number of employees during the year within each category was as follows:

Group Company

	2019	2018	2019	2018
	No.	No.	No.	No.

Research and development	367	241	227	117
Production	42	117	42	44
Selling and administration	475	416	388	311
	884	774	657	472

b) Directors' Emoluments	2019	2018
	£'000	£'000

Wages and salaries	1,438	1,369
Pension	72	66
Bonuses	1,131	1,231
	2,641	2,666

Aggregate gains made by Directors on the exercise of options	2,467	954

The remuneration for the highest paid Director was as follows:

	2019	2018
	£'000	£'000

Wages and salaries	589	492
Bonus	527	527
	1,116	1,019

The highest paid Director has reached the maximum level permitted for a personal pension plan and receives a direct payment in lieu of his pension entitlement, which was £84,000 (2018: £84,000). The number of share options granted during the year for the highest paid Director was 128,853 (2018: 1,400,000) and the number of share options exercised during the year was 200,000 (2018: nil).

9. Finance Revenue

	2019	2018
	£'000	£'000
Bank interest receivable	31	37

	31	37

10. Finance Costs

	2019	2018
	£'000	£'000
Bank loan fees and interest	720	545

	720	545

11. Taxation

a) Tax on Profit
The tax charge in the Consolidated Statement of Comprehensive Income for the year is as follows:
	2019	2018
	£'000	£'000
Current income tax
UK corporation tax on profit for the year	2,765	2,926
Amounts underprovided/(overprovided) in previous years	(292)	67
Foreign tax	2,158	1,403
	4,631	4,396
Deferred tax
Origination and reversal of temporary differences	(1,868)	(1,540)
Amounts underprovided/(overprovided) in previous years	26	-
Impact of change in tax rates	(206)	(110)
	(2,048)	(1,650)

Tax charge in the Statement of Comprehensive Income	2,583	2,746
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:

	2019	2018
	£'000	£'000

Consolidated profit before tax	14,736	13,400

Consolidated profit before tax multiplied by the standard rate of corporation tax in the UK of 19% (2018: 19%)	2,800	2,546

Effect of:
Permanent differences	1,094	560
Non-taxable income	(11)	-
Rate changes	(120)	(179)
Utilisation of losses	-	(59)
Prior year items	(266)	63
Research and development tax relief	(492)	(353)
Patent Box relief	(460)	(382)
Share option relief	(67)	-
Recognition of unrecognised deferred tax assets	(698)	(104)
Effect of higher taxes on overseas earnings	803	654
Total tax charge reported in the Statement of Comprehensive Income	2,583	2,746

The Group is entitled to current year tax relief of £1,023,000 (2018: £954,000), calculated at a tax rate of 19% (2018: 19%), in relation to the statutory deduction available on share options exercised in the year.

c) Tax Losses

The Group has carried forward trading losses at 31 March 2019 of £30,561,000 (2018: £17,329,000). 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. There were also capital losses carried forward at 31 March 2019 of £2,257,000 (2018: £2,257,000), which should be available for offset against future capital gains of the Group to the extent that they arise.

d) Deferred Tax - Group Deferred Tax Asset The recognised and unrecognised potential deferred tax asset of the Group is as follows:
Recognised			Unrecognised
	2019	2018	2019	2018
	£'000	£'000	£'000	£'000

Decelerated capital allowances	1,283	1,633	-	-
Share options	1,627	1,479	-	-
Other temporary differences	1,664	831	-	-
Capital losses	-	-	384	573
Trading losses	3,648	269	2,782	2,783

	8,222	4,212	3,166	3,356

The movement on the deferred tax asset of the Group is as follows:
	2019	2018
	£'000	£'000

Opening balance - as reported	4,212	4,044
IFRS 15 transition adjustment	241	-
Opening balance - restated	4,453	4,044

Acquired on acquisition	3,955	440
Foreign currency adjustments	(73)	11
Origination and reversal of temporary differences	24	(415)
Impact of change in tax rates	(137)	132

	8,222	4,212

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 £16,367,000 (2018: £16,367,000) and unrecognised capital losses of £2,257,000 (2018: £3,372,000).

Deferred Tax Liability

The deferred tax liability of the Group is as follows:
	2019	2018
	£'000	£'000

Intangible assets	29,378	8,148
Land and buildings	108	112
Accelerated capital allowances	62	-

	29,548	8,260
The movement on the deferred tax liability of the Group is as follows:
	2019	2018
	£'000	£'000

Opening balance	8,260	4,441
Acquisition of intangibles in subsidiaries	23,913	5,676
Foreign currency adjustments	(359)	(67)
Origination and reversal of temporary differences	(1,923)	(1,548)
Impact of change in tax rates	(343)	(242)

	29,548	8,260

f) Change in corporation tax rate

A reduction in the UK corporation tax rate to 17% with effect from 1 April 2020 was enacted in the Finance Act 2016. The reductions in future rates to 17% have been used in the calculation of the UK's deferred tax assets and liabilities as at 31 March 2019.

12. Dividends Paid and Proposed

	2019 £'000	2018 £'000

Declared and paid during the year
Final dividend for 2018: 2.65p (2017: 2.35p)	4,049	3,582


Proposed for approval at AGM (not recognised as a liability at 31 March)
Final dividend for 2019: 2.99p (2018: 2.65p)	5,766	4,047

13. Earnings Per Ordinary Share

Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the basic weighted average number of ordinary shares in issue during the year.

	2019 pence per share	2019 £'000	2018 pence per share	2018 £'000

Profit attributable to equity holders of the Company	7.7	12,153	7.1	10,654

Diluted

Diluted earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders 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.

	2019	2018
	No.	No.

Basic weighted average number of shares in issue	158,051,687	150,552,605
Dilutive effect of share options	2,754,605	2,704,644
Diluted weighted average number of shares in issue	160,806,292	153,257,249

2019

pence per

2019

£'000

2018

pence per

2018

£'000

Profit attributable to equity holders of the Company

7.6

12,153

7.0

10,654

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.

	Basic 2019 pence per share	Diluted 2019 pence per share	2019 £'000	Basic 2018 pence per share	Diluted 2018 pence per share	2018 £'000

Adjusted operating profit	20.3	19.9	32,031	17.5	17.2	26,311
Less net finance costs	(0.4)	(0.4)	(689)	(0.3)	(0.3)	(508)
Less tax	(1.7)	(1.6)	(2,583)	(1.9)	(1.9)	(2,746)
Adjusted earnings	18.2	17.9	28,759	15.3	15.0	23,057

14. Property, Plant and Equipment Group
	Land and buildings	Plant and equipment	Total
	£'000	£'000	£'000
Cost
At 1 April 2017	-	5,041	5,041
Acquired on acquisition	1,251	341	1,592
Additions	-	1,902	1,902
Disposals	-	(189)	(189)
Foreign currency adjustment	-	(152)	(152)
At 31 March 2018	1,251	6,943	8,194

Acquired on acquisition	-	231	231
Additions	-	1,453	1,453
Disposals	-	(51)	(51)
Foreign currency adjustment	-	(35)	(35)
At 31 March 2019	1,251	8,541	9,792


Depreciation and impairment
At 1 April 2017	-	2,185	2,185
Provided during the year	20	1,410	1,430
Disposals	-	(55)	(55)
Foreign currency adjustment	-	(66)	(66)
At 31 March 2018	20	3,474	3,494

Provided during the year	22	1,522	1,544
Disposals	-	(46)	(46)
Foreign currency adjustment	-	(15)	(15)
At 31 March 2019	42	4,935	4,977


Net book value
At 31 March 2019	1,209	3,606	4,815
At 31 March 2018	1,231	3,469	4,700
At 1 April 2017	-	2,856	2,856

The net book value in respect of assets held under finance leases and hire purchase agreements is £nil (2018: £nil).

14. Property, Plant and Equipment continued

Company	Land and buildings	Plant and equipment	Total
	£'000	£'000	£'000
Cost
At 1 April 2017	-	3,565	3,565
Acquired on acquisition^{1, 2}	1,233	777	2,010
Additions	-	585	585
At 31 March 2018	1,233	4,927	6,160

Additions	-	1,214	1,214
Disposals	-	(2)	(2)
At 31 March 2019	1,233	6,139	7,372

Depreciation and impairment
At 1 April 2017	-	1,590	1,590
Provided during the year	2	854	856
At 31 March 2018	2	2,444	2,446

Provided during the year	22	1,103	1,125
Disposals	-	(2)	(2)
At 31 March 2019	24	3,545	3,569

Net book value
At 31 March 2019	1,209	2,594	3,803
At 31 March 2018	1,231	2,483	3,714
At 1 April 2017	-	1,975	1,975

¹On 28 February 2018, the trade, assets and liabilities of Postcode Anywhere (Holdings) Limited and Postcode Anywhere (Europe) Limited were transferred to the Company.

²On 31 March 2018, the trade assets and liabilities of ID Scan Biometrics Limited were transferred to the Company.

The net book value in respect of assets held under finance leases and hire purchase agreements is £nil (2018: £nil).

15. Intangible Assets

Group	Customer relationships £'000	Other acquired intangibles £'000	Total acquired intangibles £'000	Goodwill £'000	Purchased software £'000	Internally developed software £'000	Total £'000
Cost
At 1 April 2017	21,776	10,928	32,704	75,598	1,908	1,771		111,981
Foreign currency adjustment	(715)	(291)	(1,006)	(2,230)	(2)	-		(3,238)
Additions - business combinations	24,865	6,102	30,967	43,097	-	-		74,064
Additions - purchased software	-	-	-	-	212	-		212
At 31 March 2018	45,926	16,739	62,665	116,465	2,118	1,771		183,019

Foreign currency adjustment	(1,078)	(328)	(1,406)	(2,625)	30	-		(4,001)
Additions - business combinations	73,212	21,615	94,827	178,651	-	-		273,478
Additions - purchased software	-	-	-	-	172	-		172
Disposals	-	-	-	-	(67)	-		(67)
At 31 March 2019	118,060	38,026	156,086	292,523	2,253	1,771		452,633

Amortisation and impairment
At 1 April 2017	6,668	4,598	11,266	-	755	1,207		13,228

Foreign currency adjustment	(218)	(193)	(411)	-	(2)	-		(413)
Amortisation during the year	4,419	3,466	7,885	-	442	505		8,832
At 31 March 2018	10,869	7,871	18,740	-	1,195	1,712		21,647

Foreign currency adjustment	22	31	53	-	(5)	-		48
Amortisation during the year	5,779	4,537	10,316	-	468	37		10,821
Disposals	-	-	-	-	(20)	-		(20)
Reclassification	-	-	-	-	-	-		-
At 31 March 2019	16,670	12,439	29,109	-	1,638	1,749		32,496

Net book value
At 31 March 2019	101,390	25,587	126,977	292,523	615	22		420,137
At 31 March 2018	35,057	8,868	43,925	116,465	923	59		161,372
At 1 April 2017	15,108	6,330	21,438	75,598	1,153	564		98,753

· The customer relationships intangible asset acquired through the acquisition of Capscan Parent Limited has a carrying value of £1,218,000 and a remaining amortisation period of 2.6 years.

· The customer relationships intangible asset acquired through the acquisition of TMG.tv Limited has a carrying value of £383,000 and a remaining amortisation period of 3.6 years.

· The customer relationships intangible asset acquired through the acquisition of CRD (UK) Limited has a carrying value of £374,000 and a remaining amortisation period of 4.25 years.

· The customer relationships intangible asset acquired through the acquisition of DecTech Solutions Pty Ltd has a carrying value of £2,148,000 and a remaining amortisation period of 5.1 years.

· The customer relationships intangible asset acquired through the acquisition of CDMS Limited has a carrying value of £2,017,000 and a remaining amortisation period of 5.6 years.

· The customer relationships intangible asset acquired through the acquisition of Loqate Inc. has a carrying value of £1,331,000 and a remaining amortisation period of 6.1 years.

· The customer relationships intangible asset acquired through the acquisition of ID Scan Biometrics Limited has a carrying value of £2,839,000 and a remaining amortisation period of 7.25 years.

· The customer relationships intangible asset acquired through the acquisition of Postcode Anywhere (Holdings) Limited has a carrying value of £20,099,000 and a remaining amortisation period of 8.1 years.

· The customer relationships intangible asset acquired through the acquisition of VIX Verify Global Pty Limited has a carrying value of £4,013,000 and a remaining amortisation period of 9.5 years.

· The customer relationships intangible asset acquired through the acquisition of IDology Inc. has a carrying value of £63,639,000 and a remaining amortisation period of 9.9 years.

Intangible assets categorised as 'other acquisition intangibles' include assets such as non-compete clauses and software technology.

Goodwill arose on the acquisition of GB Mailing Systems Limited, e-Ware Interactive Limited, Data Discoveries Holdings Limited, Advanced Checking Services Limited ('ACS'), Capscan Parent Limited, TMG.tv Limited, CRD (UK) Limited, DecTech Solutions Pty Ltd, CDMS Limited, Loqate Inc., ID Scan Biometrics Limited, Postcode Anywhere (Holdings) Limited, VIX Verify Global Pty Limited and IDology Inc. Under IFRS, goodwill is not amortised and is tested annually for impairment (note 16).

15. Intangible Assets continued

Company	Customer relationships £'000	Other acquired intangibles £'000	Total acquired intangibles £'000	Goodwill £'000	Purchased software £'000	Internally developed software £'000	Total £'000
Cost
At 1 April 2017	-	-	-	-	1,901	1,737		3,638
Acquired on acquisition^{1, 2}	26,078	8,279	34,357	78,154	52	616		113,179
Additions - purchased software	-	-	-	-	145	-		145
At 31 March 2018	26,078	8,279	34,357	78,154	2,098	2,353		116,962

Acquired on acquisition	-	-	-	-	-	-		-
Additions - purchased software	-	-	-	-	167	-		167
Transfer from investments³	-	-	-	31,961	-	-		31,961
Disposals	-	-	-	-	(67)	-		(67)
At 31 March 2019	26,078	8,279	34,357	110,115	2,198	2,353		149,023

Amortisation and impairment
At 1 April 2017	-	-	-	-	752	1,185		1,937
Amortisation during the year	207	106	313	-	418	1,120		1,851
At 31 March 2017	207	105	313	-	1,170	2,305		3,788

Amortisation during the year	2,776	2,878	5,654	-	425	37		6,116
Disposals	-	-	-	-	(20)	-		(20)
At 31 March 2019	2,984	2,984	5,968	-	1,575	2,342		9,884

Net book value
At 31 March 2019	23,095	5,295	28,390	110,115	623	11		139,139
At 31 March 2018	25,871	8,173	34,044	78,154	928	48		113,174
At 1 April 2017	-	-	-	-	1,149	552		1,701

¹On 28 February 2018, the trade, assets and liabilities of Postcode Anywhere (Holdings) Limited and Postcode Anywhere (Europe) Limited were transferred to the Company.

²On 31 March 2018, the trade assets and liabilities of ID Scan Biometrics Limited were transferred to the Company. This included internally generated software assets, valued within IDscan's financial statements at £616,000, that were immediately written down to £nil within the Company, the assets having previously been valued at £nil within the Group accounts.

³A transfer between investments and goodwill has been made as the directors consider that this better reflects the nature of the non-current assets following hive-ups that occurred in previous years.

· The customer relationships intangible asset acquired through the acquisition of ID Scan Biometrics Limited has a carrying value of £2,839,000 and a remaining amortisation period of 7.25 years.

Intangible assets categorised as 'other acquisition intangibles' include assets such as non-compete clauses and software technology.

Goodwill arose on the acquisition of ID Scan Biometrics Limited and Postcode Anywhere (Holdings) Limited. Under IFRS, goodwill is not amortised and is tested annually for impairment (note 16).

16. Impairment Testing of Goodwill

Goodwill acquired through business combinations has been allocated for impairment testing purposes to five CGUs as follows:

§ Customer & Location Intelligence Unit (represented by the Customer & Location Intelligence operating segment excluding e-Ware and Loqate)

§ Fraud, Risk & Compliance Unit (represented by the Fraud, Risk & Compliance operating segment excluding CAFs)

§ e-Ware Interactive Unit (part of the Customer & Location Intelligence operating segment)

§ CAFs Unit (part of the Fraud, Risk & Intelligence operating segment)

§ Loqate Unit (part of the Customer & Location Intelligence operating segment)

This represents the lowest level within the Group at which goodwill is monitored for internal management purposes. In previous years other entities were identified as separate CGU's but following the transfer of the trade, assets and liabilities to the Company and the consequential integration of revenue streams these are now included within the appropriate group of CGU's.

Where there are no indicators of impairment on the goodwill arising through business combinations made during the year they are tested for impairment no later than at the end of the year.

Carrying Amount of Goodwill Allocated to CGUs	2019	2018
	£'000	£'000

Customer & Location Intelligence Unit	54,494	54,494
Fraud, Risk & Compliance Unit	216,296	40,626
e-Ware Interactive Unit	79	79
CAFs Unit	14,261	14,367
Loqate Unit	7,393	6,899

	292,523	116,465

Key Assumptions Used in Value in Use Calculations

The Group prepares cash flow forecasts using budgets and forecasts approved by the Directors covering a three-year period and an appropriate extrapolation of cash flows beyond this using a long-term average growth rate not greater than the average long-term retail growth rate in the territory where the CGU is based.

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.

	2019		2018
	Pre-tax WACC	Growth rate (in perpetuity)	Pre-tax WACC	Growth rate (in perpetuity)
	%	%	%	%

Customer & Location Intelligence Unit	10.4%	1.8%	9.0%	1.8%
Fraud, Risk & Compliance Unit	10.4%	1.8%	9.0%	1.8%
e-Ware Interactive Unit	10.4%	-	9.0%	-
CAFs Unit	15.1%	2.8%	16.2%	2.8%
Loqate Unit	11.3%	1.8%	12.5%	2.0%

In the case of the Customer & Location Intelligence CGU, the annual impairment review as at 31 March 2019 indicated that the recoverable amount exceeded the carrying value of the CGU by £97,321,000 (2018: £71,037,000) and that any decline in estimated value in use in excess of that amount would be liable to result in an impairment. The sensitivities, which result in the recoverable amount equalling the carrying value, can be summarised as follows:

· an absolute increase of 10% in the pre-tax weighted average cost of capital from 10% to 20%; or

· a reduction of 50% in the forecast profit margins.

In the case of the Fraud, Risk & Compliance CGU, the annual impairment review as at 31 March 2019 indicated that the recoverable amount exceeded the carrying value of the CGU by £259,452,000 (2018: £163,331,000) and that any decline in estimated value in use in excess of that amount would be liable to result in an impairment. The sensitivities, which result in the recoverable amount equalling the carrying value, can be summarised as follows:

· an absolute increase of 44% in the pre-tax weighted average cost of capital from 10% to 54%; or

· a reduction of 80% in the forecast profit margins.

In the case of the e-Ware Interactive CGU, the annual impairment review as at 31 March 2019 indicated that the recoverable amount exceeded the carrying value by £165,000 (2018: £137,000). In assessing the future recoverable amounts, forecast cash flows are assumed for a three-year period only on the basis that the recoverable amount is associated with only single remaining customer attributable to that acquisition. Any decline in estimated value in use in excess of that amount would be liable to result in an impairment. Since the value in use of the e-Ware Interactive CGU is based on a single client, its loss or a significant reduction in its cash flow would cause the carrying value of the unit to exceed its recoverable amount.

16. Impairment Testing of Goodwill continued

In the case of the CAFs CGU, the annual impairment review as at 31 March 2019 indicated that the recoverable amount exceeded the carrying value of by £15,637,000 (2018: £16,743,000) and that any decline in estimated value in use in excess of that amount would be liable to result in an impairment. The sensitivities, which result in the recoverable amount equalling the carrying value, can be summarised as follows:

· an absolute increase of 15% in the pre-tax weighted average cost of capital from 15% to 30%; or

· a reduction of 40% in the forecast profit margins.

In the case of the Loqate CGU, the annual impairment review as at 31 March 2019 indicated that the recoverable amount exceeded the carrying value of by £26,775,000 (2018: £28,217,000) and that any decline in estimated value in use in excess of that amount would be liable to result in an impairment. The sensitivities, which result in the recoverable amount equalling the carrying value, can be summarised as follows:

· an absolute increase of 25% in the pre-tax weighted average cost of capital from 13% to 38%; or

· a reduction of 75% in the forecast profit margins.

Based on the impairment reviews performed no impairment has been identified.

17. Investments

Group	2019 £'000	2018 £'000

Cost and net book value
At 1 April	-	-
Acquired through acquisition of subsidiary undertakings	419	-
Foreign currency adjustment	(8)	-
At 31 March	411	-

Company	2019 £'000	2018 £'000

Cost
At 1 April	76,310	104,096
Acquisition of subsidiary undertakings	235,744	73,877
Capital investment in subsidiary undertaking	20,639	-
Transfer to goodwill and intangibles¹	(31,961)	(101,663)
At 31 March	300,732	76,310

Provision for impairment
At 1 April	-	-
Charge for the year²	2,464	-
At 31 March	2,464	-

Net book value
At 31 March	298,268	76,310

¹A transfer between investments and goodwill has been made as the directors consider that this better reflects the nature of the non-current assets following hive-ups that occurred in previous years.

²The impairment charge for the year of £2,464,000 was following a dividend from Loqate Inc. out of its pre-acquisition reserves, which was recognised in the Company income statement.

17. Investments continued

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, Chester CH4 9GB
Capscan Limited ¹	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Data Discoveries Holdings Limited	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Data Discoveries Limited ¹	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Managed Analytics Limited ¹	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Fastrac Limited ¹	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
e-Ware Interactive Limited	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
GB Information Management Limited	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
GB Datacare Limited	100%	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, Chester CH4 9GB
Citizensafe Limited	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
TelMe.com Limited	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Farebase Limited	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
TMG.tv Limited	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
CRD (UK) Limited	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Postcode Anywhere (Holdings) Limited	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Postcode Anywhere (Europe) Limited	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Postcode Anywhere (North America) Limited	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
PCA Predict Inc.	100%	United States	National Registered Agents Inc., 106 Greentree Drive, Suite 101, Dover DE 19904
GBG (Australia) Holding Pty Ltd	100%	Australia	Co Sec Consulting Pty Ltd, 59 Gipps Street, Collingwood, VIC 3066
GBG (Australia) Pty Ltd ¹	100%	Australia	Co Sec Consulting Pty Ltd, 59 Gipps Street, Collingwood, VIC 3066
VIX Verify Global Pty Ltd¹	100%	Australia	Level 3, 20 Bond Street, Sydney NSW 2000
GBG (Malaysia) Sdn Bhd¹	100%	Malaysia	Level 7 Menara Millenium, Jalan Damanlela Pusat Bandar, Damansara Heights, 50490 Kuala Lumpur, Wilayah Persekutuan
GBG DecTech Solutions S.L¹	100%	Spain	08002-Barcelona, Edifici The Triangle, 4th Floor, Placa de Catalunya, Barcelona, Spain
迪安科¹	100%	China	Room 1714, Building 4, China Investment Center, No.9 Guangan Road, Fengtai District, Beijing, China
Loqate Inc.	100%	United States	805 Veterans Blvd Ste 305, Redwood City CA 94063
Loqate Limited ¹	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
IDology Inc.	100%	United States	2018 Powers Ferry Rd, Atlanta, GA 30339, USA
ID Scan Biometrics Limited	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
IDscan Research Bilisim Teknolojileri Sanayi Ve Ticaret Limited Sirketi	100%	Turkey	Mersin Universitesi Çiftlikköy Kampüsü, Teknopark İdari Bina No: 106 Yenişehir - Mersin
IDScan Research (Pty) Ltd	100%	South Africa	145, 5th Avenue, Franklin Roosevelt Park, Johannesburg, Gauteng, 2195 South Africa
UAB IDscan Biometrics R&D	100%	Lithuania	Kauno m. Kauno m. I. Kanto g. 18-4B Lithuania
Safer Clubbing At Night Network (Scan Net) Ltd	100%	United Kingdom	The Foundation, Herons Way, Chester Business Park, Chester CH4 9GB
Transactis Limited ¹	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, Chester CH4 9GB
VIX Verify Pty Ltd¹	100%	Australia	Co Sec Consulting Pty Ltd, 58 Gipps Street, Collingwood, Victoria 3066, Australia
GreenID Limited¹	100%	New Zealand	Moore Stephens Markhams Wellington Limited, Level 11 Sovereign House, 34-42 Manners Street, Wellington 6011, New Zealand
Mastersoft Group Pty Ltd¹	100%	Australia	Co Sec Consulting Pty Ltd, 58 Gipps Street, Collingwood, Victoria 3066, Australia
Mastersoft (New Zealand) Ltd¹	100%	New Zealand	Moore Stephens Markhams Wellington Limited, Level 11 Sovereign House, 34-42 Manners Street, Wellington 6011, New Zealand
DataSan Pty Ltd¹	100%	Australia	Co Sec Consulting Pty Ltd, 58 Gipps Street, Collingwood, Victoria 3066, Australia
VIX Verify International Pty Ltd¹	100%	Australia	Co Sec Consulting Pty Ltd, 58 Gipps Street, Collingwood, Victoria 3066, Australia
VIX Verify Singapore Pte Ltd¹	100%	Singapore	C/O S.S. Corporate Management Pte. Ltd, 138 Cecil Street, #12-01A Cecil Court, 069538 Singapore
VIX Verify SA (Pty) Ltd¹	100%	South Africa	C/O Eversheds Sutherland, 3rd Floor, 54, Melrose Boulevard, Melrose Arch, Melrose North, 2196, Johannesburg, South Africa

The Company accounts for its non-listed equity investments as financial assets designated at fair value through OCI. The Company holds the following non-listed equity investment:

Name of company

Proportion of voting rights and shares held

Country of incorporation

Registered office address

Payfone Inc. ¹

0.32%

United States

215 Park Avenue South New York, NY 10003 United States

¹ held indirectly.

18. Trade and Other Receivables

	Group		Company
	2019 £'000	2018 £'000	2019 £'000	2018 £'000

Trade receivables	45,996	33,503	31,586	27,965
Amounts owed from subsidiary undertakings	-	-	-	7
Prepayments and accrued income	8,878	4,466	4,313	3,379

	54,874	37,969	35,899	31,351

19. Cash

	Group		Company
	2018 £'000	2017 £'000	2018 £'000	2017 £'000

Cash at bank and in hand	21,189	22,753	7,791	14,778

	21,189	22,753	7,791	14,778

Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates.

20.	Equity Share Capital
		2019	2018
		£'000	£'000
	Authorised
	192,850,117 (2018: 147,663,704) ordinary shares of 2.5p each	3,692	3,692

	Issued
	Allotted, called up and fully paid	4,821	3,817
	Share premium	261,149	104,814
		265,970	108,631

		2019	2018
		No.	No.

	Number of shares in issue at 1 April	152,668,698	134,702,937
	Issued on placing	39,024,390	17,058,824
	Issued on exercise of share options	1,157,029	906,937
	Number of shares in issue at 31 March	192,850,117	152,668,698

During the year 39,024,390 (2018: 17,965,761) ordinary shares with a nominal value of 2.5p were issued for an aggregate cash consideration of £160,613,000 (2018: £58,408,000). The cost associated with the issue of shares in the year was £3,274,000 (2018: £1,740,000).

21. Loans

In April 2014, the Group secured an Australian Dollar three-year term loan of AUS$10,000,000. The debt bears an interest rate of +1.90% above the Australian Dollar bank bill interest swap rate ('BBSW'). This term loan was extended during the year from its original maturity of April 2017 to November 2019. Security on the debt is provided by way of an all asset debenture.

In October 2018, the Group drew down £10,000,000 from its existing revolving credit facility agreement in order to part fund the acquisition of VIX Verify. This drawdown took the borrowing on that facility to £17,000,000 at that date.

In February 2019, the Group refinanced its existing revolving facility and the total facility was increased to £110,000,000, with a further £30,000,000 accordion option. The facility now expires in February 2022. The existing liability of £17,000,000 was repaid at the point of the refinancing with a simultaneous drawdown of £101,000,000 (net increase of £84,000,000), which was used to part fund the IDology acquisition. A further repayment of £15,000,000 was made in March 2019.

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.

	Group		Company
	2019 £'000	2018 £'000	2019 £'000	2018 £'000

Opening bank loan	9,248	12,385	7,000	9,000
New borrowings (net of arrangement fee)	110,447	10,000	110,447	10,000
Repayment of borrowings	(32,804)	(12,839)	(32,000)	(12,000)
Foreign currency translation adjustment	(3)	(298)	-	-

Closing bank loan	86,888	9,248	85,447	7,000

Analysed as:
Amounts falling due within 12 months	1,441	797	-	-
Amounts falling due after one year	85,447	8,451	85,447	7,000

	86,888	9,248	85,447	7,000

Included within the closing bank loan balance above is £553,000 of unamortised loan arrangement fees (2018: £nil).

22. Trade and Other Payables

	Group		Company
	2019 £'000	2018 £'000	2019 £'000	2018 £'000

Trade payables	8,687	4,307	3,842	3,363
Amounts owed to subsidiary undertakings	-	-	23,952	23,361
Other taxes and social security costs	13,977	4,236	2,888	4,202
Accruals	10,844	19,007	15,782	14,829
Deferred income	36,637	28,347	28,056	23,786


	70,145	55,897	74,520	69,541

Analysed as:
Amounts falling due within 12 months	68,961	55,897	73,657	69,541
Amounts falling due after one year	1,184	-	863	-

	70,145	55,897	74,520	69,541

23. Provisions

	Group		Company
	2019 £'000	2018 £'000	2019 £'000	2018 £'000

Opening balance	25	35	25	35
Utilised	(25)	(10)	(25)	(10)

Closing balance	-	25	-	25

Provisions relate to the costs of dilapidation obligations on certain leasehold properties within the Group.

24. Long Service Award

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. These benefits were introduced in the year to 31 March 2019, and the service requirements have been applied retrospectively, therefore a liability has been recognised for a past service cost in income statement for the year to 31 March 2019.

	Group		Company
	2019 £'000	2018 £'000	2019 £'000	2018 £'000

At 1 April	-	-	-	-
Service cost	102	-	76	-
Net interest charge	9	-	7	-
Past service cost	349	-	261	-
Actuarial loss during the year	68	-	51	-

At 31 March	528	-	395	-

The following table lists the inputs to the valuation of the long service award for the years ended 31 March 2019 and 31 March 2018.

	2019	2018
Discount rate (%)	2.4	-
Salary increases (%)	3.5	-
Employee turnover (% probability of leaving depending on age)	2% - 20%	-

25. 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.

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 2019	Group		Company
	2019	2018	2019	2018
	£'000	£'000	£'000	£'000

Trade receivables	48,241	34,847	33,319	29,130
Allowance for unrecoverable amounts	(2,245)	(1,344)	(1,733)	(1,165)
	45,996	33,503	31,586	27,965

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 groups 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 measure expected credit losses.

31 March 2019	Trade receivables
		Days past due
	Current	< 30 days	30 - 60 days	61 - 90 days	> 90 days	Total
	£'000	£'000	£'000	£'000	£'000	£'000

Expected credit loss rate	2.3%	1.2%	6.6%	0.8%	27%	4.7%
Gross carrying amount	28,724	9,336	4,171	1,597	4,413	48,241
Expected credit loss	658	115	277	13	1,182	2,245

Set out below is the movement in the allowance for expected credit losses of trade receivables:

	Group	Company
	2019 £'000	2019 £'000

Balance at 1 April	1,344	1,165
Acquired on acquisition	196	-
Additional provisions	852	704
Write-offs	(151)	(136)
Foreign exchange	4	-
Balance at 31 March	2,245	1,733

Comparative information

In the prior year, the impairment of trade receivables was based on the incurred loss model. The information disclosed in the following tables relates the Group's credit risk exposure as disclosed under IFRS 7, per recognition and measurement under IAS 39 prior to the transition of IFRS by the Group on 1 April 2018.

31 March 2018	Trade receivables
	Neither past due nor impaired £'000	Days past due
	Neither past due nor impaired £'000	< 30 days £'000	30 - 60 days £'000	> 60 days £'000	Total £'000
Trade receivables	22,325	7,816	1,235	2,127	33,503

The credit quality of trade receivables that are neither past due nor impaired are assessed using a combination of historical information relating to counterparty's payment history, default rates and external credit ratings where available.

25. Financial Instruments and Risk Management continued

Impairment allowance for trade receivables

	Group	Company
	2018 £'000	2018 £'000

Balance at 1 April	681	367
Acquired on acquisition	-	604
Additional provisions	951	380
Write-offs	(244)	(186)
Foreign exchange	(44)	-
Balance at 31 March	1,344	1,165

Foreign Currency Risk

The Group's foreign currency exposure arises from:

· Transactions (sales/purchases) denominated in foreign currencies;

· Monetary items (mainly cash receivables and borrowings) denominated in foreign currencies; and

· Investments in foreign operations, whose net assets are exposed to foreign currency translation.

The Group has currency exposure on its investment in a foreign operation in Australia and partially offsets its exposure to fluctuations on the translation into Sterling by holding net borrowings in Australian Dollars. In terms of sensitivities, the effect on equity of a 10% increase in the Australian Dollar and Sterling exchange rate would be an increase of £3,555,000 (2018: £318,000 increase). The effect on equity of a 10% decrease in the Australian Dollar and Sterling exchange rate net of the effect of the net commercial investment hedge in the foreign operation would be a decrease of £2,908,000 (2018: £260,000 decrease).

The Group has currency exposure on its investment in a 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 an increase of £1,109,000 (2018: £247,000 increase). The effect on equity of a 10% decrease in the US Dollar and Sterling exchange rate would be a decrease of £907,000 (2018: £202,000 decrease).

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's foreign currency exposure on the net monetary position at 31 March 2019:

Foreign Currency Exposure	USD Rate	EUR Rate	AUD Rate
Change in rate	+10%	+10%	+10%
Effect on profit before tax (£000s)	£(27)	£(91)	£(39)

Change in rate	-10%	-10%	-10%
Effect on profit before tax (£000s)	£33	£111	£47

The Group'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 £110,000 (2018: £82,000).

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 21.

The table below summarises the maturity profile of the Group's financial liabilities based on contractual undiscounted payments and includes contractual interest payments:

Year ended 31 March 2019	On demand	Less than 12 months	1 to 5 years	Total
	£'000	£'000	£'000	£'000

Loans (note 21)	-	1,441	85,447	86,888
Contingent consideration (note 32)	-	79	-	79
Trade and other payables	8,687	24,503	-	33,190
	8,687	26,023	85,447	120,157

25. Financial Instruments and Risk Management continued

Year ended 31 March 2018	On demand	Less than 12 months	1 to 5 years	Total
	£'000	£'000	£'000	£'000

Loans (note 21)	-	1,148	8,661	9,809
Contingent consideration (note 32)	-	45	-	45
Trade and other payables	4,307	23,243	-	27,550
	4,307	24,436	8,661	37,404

Capital Management

The Group manages its capital structure in order to safeguard the going concern of the Group and maximise shareholder value. The capital structure of the Group consists of debt, which includes loans disclosed in note 21, cash and cash equivalents and equity attributable to equity holders of the Company, comprising issued capital, reserves and retained earnings.

The Group 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.

In order to achieve this overall objective, the Group'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 2019 and 2018.

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:

	2019			2018
	Loans and receivables	Fair value through OCI	Fair value profit or loss	Loans and receivables	Fair value through OCI	Fair value profit or loss
	£'000	£'000	£'000	£'000	£'000	£'000

Financial assets:
Non-listed equity investment	-	411	-	-	-	-
Trade and other receivables	45,996	-	-	33,503	-	-
Total current	45,996	411	-	33,503	-	-

Total	45,996	411	-	33,503	-	-

Financial liabilities:
Loans	85,447	-	-	8,451	-	-
Total non-current	85,447	-	-	8,451	-	-

Trade and other payables	33,508	-	-	27,550	-	-
Loans	1,441	-	-	797	-	-
Contingent consideration (note 32)	-	-	79	-	-	45
Total current	34,949	-	-	28,347	-	45

Total	120,396	-	79	36,798	-	45

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. All financial assets and liabilities have a carrying value that approximates to fair value. The Group does not have any derivative financial instruments.

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 has an Australian Dollar three-year term loan of AUS$10,000,000 maturing in November 2019. The debt bears an interest rate of +1.90% above the Australian Dollar bank bill interest swap rate ('BBSW').

25. Financial Instruments and Risk Management continued

The Group has a three year revolving credit facility agreement expiring in February 2022 which is subject to a limit of £110,000,000. The facility bears an initial interest rate of LIBOR +1.50%.

The facilities are secured by way of an all asset debenture.

The Group 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:

· Leverage

· Interest cover

At 31 March 2019 and 31 March 2018, the Group was not in breach of any bank covenants.

Financial liabilities: interest bearing loans and borrowings


	Interest rate	Maturity	2019	2018
	%		£'000	£'000
Financial liabilities
Current interest bearing loans and borrowings
AUD$10,000,000 secured bank loan	BBSW+1.9	Nov 2019	1,441	797
Total current interest-bearing loans and borrowings			1,441	797


Non-current interest bearing loans and borrowings
AUD$10,000,000 secured bank loan	BBSW+1.9	Nov 2019	-	1,451
£50,000,000 revolving credit facility	LIBOR + 1.5	Feb 2019	-	7,000
£110,000,000 revolving credit facility	LIBOR + 1.5	Feb 2022	85,447	-
Total non-current interest bearing loans and borrowings			85,447	8,451

Total interest bearing loans and borrowing			86,888	9,248

Fair values of financial assets and liabilities

The Group 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 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.

	Valuation Technique	Level 1	Level 2	Level 3	Total
At 31 March 2019		£'000	£'000	£'000	£'000
Equity instrument designated at fair value through OCI
Non-listed equity investment	Present value of expected future cash flow	-	-	411	411

Financial liability at fair value through profit and loss
Contingent consideration (note 32)	Present value of expected future cash flow	-	-	79	79


		Level 1	Level 2	Level 3	Total
At 31 March 2018	Valuation Technique	£'000	£'000	£'000	£'000
Financial liability at fair value through profit and loss
Contingent consideration (note 32)	Present value of expected future cash flow	-	-	45	45

25. Financial Instruments and Risk Management continued

								£000
Reconciliation of fair value measurement of non-listed equity investment classified as equity instrument designated at fair value through OCI:
1 April 2018								-
Acquired								419
Foreign exchange adjustment								(8)
Remeasurement recognised in OCI								-
31 March 2019								411

26. Obligations Under Leases

Payments made under operating leases are recognised in the income statement on a straight-line basis over the expected term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense over the term of the lease.


	Group		Company
Future minimum rentals payable under non-cancellable operating leases are as follows:	2019 £'000	2018 £'000	2019 £'000	2018 £'000

Not later than one year	2,142	1,339	902	720
After one year but not more than five years	3,235	1,342	1,548	373
After five years	-	-	-	-

	5,377	2,681	2,450	1,093

The Group leases various administrative offices and equipment under lease agreements which have varying terms and renewal rights.

27. Share-based Payments

Group and Company

The Group operates Executive Share Option Schemes under which Executive Directors, managers and staff of the Company are granted options over shares.

Executive Share Option Scheme

Executive Share Option Scheme (Section C 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 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.

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.

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.

27. Share-based Payments continued

GBG Sharesave Scheme

The Group has a savings-related share option plan, under which employees save on a monthly basis, over a three or five year period, towards the purchase of shares at a fixed price determined when the option is granted. This price is usually set at a 20% discount to the market price at the time of grant. The option must be exercised within six months of maturity of the savings contract, otherwise it lapses.

Performance Share Plan (PSP)

The Group operates a PSP for all employees, but it is intended that awards are made to senior management staff 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.

The charge recognised from equity-settled share-based payments in respect of employee services received during the year is £2,287,000 (2018: £2,375,000).

The following table illustrates the number and weighted average exercise prices ('WAEP') of, and movements in, share options during the year.

	2019 No.	2019 WAEP	2018 No.	2018 WAEP

Outstanding as at 1 April	4,997,800	148.39p	3,341,470	54.93p
Granted during the year	1,069,965	227.43p	2,616,007	233.04p
Forfeited during the year	(270,320)	201.84p	(37,435)	200.35p
Cancelled during the year	(11,461)	272.00p	(15,275)	217.01p
Exercised during the year	(1,157,029)	52.94p¹	(906,967)	44.94p²
Expired during the year	(2,555)	163.00p	-	-
Outstanding at 31 March	4,626,400	147.84p	4,997,800	148.39p

Exercisable at 31 March	2,601,043	76.15p	2,675,668	23.69p

¹ The weighted average share price at the date of exercise for the options exercised is 518.97p

² The weighted average share price at the date of exercise for the options exercised is 373.74p

For the shares outstanding as at 31 March 2019, the weighted average remaining contractual life is 4.7 years (2018: 4.0 years).

The weighted average fair value of options granted during the year was 440.40p (2018: 160.73p). The range of exercise prices for options outstanding at the end of the year was 2.8p - 481p (2018: 2.50p - 426p).

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 2019 and 31 March 2018.

	2019	2018
Dividend yield (%)	0.5 - 0.6	0.7 - 0.8
Expected share price volatility (%)	35	30
Risk-free interest rate (%)	0.7 - 1.1	0.2 - 0.8
Lapse rate (%)	5.0	5.0 - 10.0
Expected exercise behaviour	See below	See below
Market-based condition adjustment (%)	48.00	48.00
Expected life of option (years)	2.3 - 6.5	2.3 - 4.8
Exercise price (p)	2.50 - 462.0	2.50 - 426.0
Weighted average share price (p)	518.97	373.74

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".

For the Matching Scheme, LTIP and SAYE options, it is assumes these are exercised at the earliest opportunity in full (i.e. Vesting Date) since the exercise price is a nominal amount and is therefore not expected to influence the timing of a 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.

The market-based condition adjustment takes into account the likelihood of achieving market conditions, and allows for the fact that, if a Section C option vests, it does not always vest at 100%.

28. Profit Attributable to Members of the Parent Company

The parent company's profit for the financial year ended 31 March 2019 was £7,275,000 (2018: £5,153,000). As permitted by Section 408 of CA 2006, the profit and loss account of the parent company is not presented.

29. 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 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.

30. Related Party Transactions

During the year, the Group entered into transactions, in the ordinary course of business, with other related parties. Transactions entered into and trading balances outstanding at 31 March are as follows:

Group	Sales to related parties	Purchases from related parties	Net amounts owed to/(by) related parties
	£'000	£'000	£'000

Directors (see below):
2019	-	-	-
2018	-	-	-

Other related parties (see below):
2019	-	-	-
2018	6	-	-

Company	Sales to related parties	Purchases from related parties	Net amounts owed to/(by) related parties
	£'000	£'000	£'000

Subsidiaries:
2019	2,360	3,130	21,983
2018	3,535	2,049	23,354

Directors (see below):
2019	-	-	-
2018	-	-	-

Other related parties (see below):
2019	-	-	-
2018	6	-	-

During the year ending 31 March 2018, the Chairman of the Company incurred some expenses via his consultancy business Rasche Consulting Limited.

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 2019, the Group has not made any provision for doubtful debts relating to amounts owed by related parties (2018: £nil).

30. Related Party Transactions continued

Compensation of Key Management Personnel (including Directors)	Group and Company
	2019	2018
	£'000	£'000

Short-term employee benefits	4,117	2,944
Post-employment benefits	156	66
Fair value of share options awarded	1,829	2,983
	6,102	5,993

31. Business Combinations

Acquisitions in the Year Ended 31 March 2019

Group

Acquisition of VIX Verify Pty Limited

On 23 October 2018, the Group acquired 100% of the voting shares of VIX Verify Pty Limited ('VIX Verify'), an Australian provider of identity verification and location intelligence software, for a total consideration of £20,639,000. The acquisition of VIX Verify brings additional scale to the Group's identity verification and location intelligence solutions in Australia and New Zealand, two markets where the Group currently provides fraud detection solutions to customers. The Consolidated Statement of Comprehensive Income includes the results of VIX Verify for the six month period from the acquisition date.

The provisional fair value of the identifiable assets and liabilities of VIX Verify as at the date of acquisition was:

		Provisional fair value recognised on acquisition £'000
Assets
Technology intellectual property		1,148
Customer relationships		7,236
Non-compete agreements		31
Plant and equipment		79
Trade and other receivables		2,565
Cash		208
Trade and other payables		(3,956)
Deferred tax liabilities		(2,180)
Total identifiable net assets at fair value		5,131
Goodwill arising on acquisition		15,508
Total purchase consideration transferred		20,639

Purchase consideration:
Cash		20,639
Total purchase consideration		20,639

Analysis of cash flows on acquisition:
Transaction costs of the acquisition (included in cash flows from operating activities)		(449)

Net cash acquired with the subsidiary		208
Cash paid		(20,639)
Acquisition of subsidiaries, net of cash acquired (included in cash flows from investing activities)		(20,431)

Net cash outflow		(20,880)

The fair value of the acquired trade receivables amounts to £965,000. The gross amount of trade receivables is £1,004,000 with a provision of £39,000.

The goodwill recognised above is attributed to intangible assets that cannot be individually separated and reliably measured from VIX Verify due to their nature. These items include the capability for synergies from bringing the businesses together, combining propositions and capabilities that will help the business achieve accelerated consolidated growth from both cross-sell and up-sell. None of the goodwill is expected to be deductible for income tax purposes.

The transaction costs of £449,000 associated with this acquisition have been expensed and are included in exceptional items in the Consolidated Statement of Comprehensive Income and are part of operating cash flows in the Cash Flow Statement.

From the date of acquisition, VIX Verify has contributed £7,672,000 of revenue and operating profits of £1,333,000 to the Group. If the combination had taken place at the beginning of the period, the Group revenue and operating profits would have been £153,555,000 and £17,171,000, respectively.

31. Business Combinations continued

Acquisition of IDology Inc.

On 13 February 2019, the Group acquired 100% of the voting shares of IDology Inc. ('IDology'), a US-based provider of identity verification and fraud prevention services, for a total consideration of £235,743,000. The acquisition of IDology provides a strong foothold for Identity Verification and Fraud Prevention in North America, a key growth region for the Group. The Consolidated Statement of Comprehensive Income includes the results of IDology for the two month period from the acquisition date.

The provisional fair value of the identifiable assets and liabilities of IDology as at the date of acquisition was:

		Provisional fair value recognised on acquisition £'000
Assets
Technology intellectual property		16,076
Customer relationships		65,976
Non-compete agreements		4,360
Investments		419
Plant and equipment		152
Deferred tax asset		3,955
Trade and other receivables		4,436
Cash		1,033
Trade and other payables		(1,993)
Corporation tax liability		(82)
Deferred tax liabilities		(21,733)
Total identifiable net assets at fair value		72,600
Goodwill arising on acquisition		163,143
Total purchase consideration transferred		235,743

Purchase consideration:
Cash		235,664
Deferred consideration (note 32)		79
Total purchase consideration		235,743

Analysis of cash flows on acquisition:
Transaction costs of the acquisition (included in cash flows from operating activities)		(2,391)

Net cash acquired with the subsidiary		1,033
Cash paid		(235,664)
Acquisition of subsidiaries, net of cash acquired (included in cash flows from investing activities)		(234,631)

Net cash outflow		(237,022)

The fair value of the acquired trade receivables amounts to £2,772,000. The gross amount of trade receivables is £2,928,000 with a provision of £156,000.

The goodwill recognised above is attributed to intangible assets that cannot be individually separated and reliably measured from IDology due to their nature. These items include the capability for synergies from bringing the businesses together, combining propositions and capabilities that will help the business achieve accelerated consolidated growth from both cross-sell and up-sell. None of the goodwill is expected to be deductible for income tax purposes.

The transaction costs of £2,391,000 associated with this acquisition have been expensed and are included in exceptional items in the Consolidated Statement of Comprehensive Income and are part of operating cash flows in the Cash Flow Statement.

From the date of acquisition, IDology has contributed £4,284,000 of revenue and operating profits of £1,890,000 to the Group. If the combination had taken place at the beginning of the period, the Group revenue and operating profits would have been £173,212,000 and £28,529,000, respectively.

31. Business Combinations continued

Acquisitions in the Year Ended 31 March 2018

Group

Acquisition of Postcode Anywhere (Holdings) Limited

On 11 May 2017, the Company acquired 100% of the voting shares of Postcode Anywhere (Holdings) Limited ('PCA'), a provider of UK and International address validation and data quality services, for a total consideration of £73,852,423. The combination of the two businesses represents a highly complementary capability alongside GBG's existing ID registration solutions. The Consolidated Statement of Comprehensive Income includes the results of PCA for the eleven month period from the acquisition date.

The fair value of the identifiable assets and liabilities of PCA as at the date of acquisition was:

		Fair value recognised on acquisition £'000
Assets
Technology intellectual property		5,733
Customer relationships		24,865
Non-compete agreements		369
Land and buildings		1,251
Plant and equipment		341
Deferred tax assets		440
Trade and other receivables		1,763
Cash		10,949
Trade and other payables		(9,280)
Deferred tax liabilities		(5,676)
Total identifiable net assets at fair value		30,755
Goodwill arising on acquisition		43,097
Total purchase consideration transferred		73,852

Purchase consideration:
Cash		73,852
Total purchase consideration		73,852

Analysis of cash flows on acquisition:
Transaction costs of the acquisition (included in cash flows from operating activities)		(735)

Net cash acquired with the subsidiary		10,949
Cash paid		(73,852)
Acquisition of subsidiaries, net of cash acquired (included in cash flows from investing activities)		(62,903)

Net cash outflow		(63,638)

The fair value of the acquired trade receivables amounts to £1,763,000. The gross amount of trade receivables is £1,763,000. None of the trade receivables have been impaired and it is expected that the full contractual amounts can be collected.

The goodwill recognised above is attributed to intangible assets that cannot be individually separated and reliably measured from PCA due to their nature. These items include the capability for synergies from bringing the businesses together, combining propositions and capabilities that will help the business achieve accelerated consolidated growth from both cross-sell and up-sell. None of the goodwill is expected to be deductible for income tax purposes.

The transaction costs of £735,000 associated with this acquisition have been expensed and are included in exceptional items in the Consolidated Statement of Comprehensive Income and are part of operating cash flows in the Cash Flow Statement.

From the date of acquisition, PCA has contributed £15,193,000 of revenue and operating profits of £5,325,000 to the Group. If the combination had taken place at the beginning of the period, the Group revenue and operating profits would have been £121,141,000 and £14,754,000, respectively.

Contingent Consideration - IDscan

As part of the share sale and purchase agreement, a contingent consideration amount of up to £8,000,000 was agreed. This payment was subject to certain future revenue and EBITDA targets between 12 and 18 months from completion date. The obligation has been classed as a liability in accordance with the provisions of IAS 32. During the year, settlement of £7,460,000 was made resulting in a reduction in the contingent consideration liability on the balance sheet. At 31 March 2018, the value of the contingent consideration after partial unwinding of the discounting of £878,000 and a fair value adjustment to the contingent consideration of £495,000, was £45,000.

31. Business Combinations continued

Company

Acquisition of Postcode Anywhere (Holdings) Limited

On 28 February 2018, the Company acquired the trade, assets and liabilities of Postcode Anywhere (Holdings) Limited, and its subsidiary company Postcode Anywhere (Europe) Limited, for consideration set at book value for recognised assets and liabilities. Details of the assets and liabilities that were transferred to the Company were as follows:

		Fair value £'000
Assets
Property, plant and equipment		1,740
Trade and other receivables		18,676
Cash		1,404
Trade and other payables		(12,002)
Deferred tax liability		(74)
Corporation tax liabilities		(194)
Total purchase consideration transferred		9,550

The Directors believe that the fair values of the recognised assets and liabilities were equal to the book values. Consideration for the transfer was equal to the book value of total net assets and was settled through intercompany accounts. In addition to the recognised assets and liabilities in Postcode Anywhere (Holdings) and its subsidiary, on which the consideration for the acquisition was based, the Company has recognised goodwill of £43,097,000 and intangible assets of £27,837,000 reflecting the carrying values recognised in GB Group plc consolidated accounts. This results in a credit to the cost of investment of £64,302,000, intercompany payable of £9,550,000 and other reserves of £1,501,000.

The fair value of the acquired trade receivables amounts to £1,669,000. The gross amount of trade receivables is £1,669,000. None of the trade receivables have been impaired and it is expected that the full contractual amounts can be collected.

Acquisition of ID Scan Biometrics Limited

On 31 March 2018, the Company acquired the trade, assets and liabilities of ID Scan Biometrics Limited for consideration set at book value for recognised assets and liabilities. Details of the assets and liabilities that were transferred to the Company were as follows:

		Fair value £'000
Assets
Plant and equipment		271
Internally developed intangible assets		616
Purchased intangible assets		52
Investments		25
Inventory		399
Deferred tax assets		6
Trade and other receivables		8,352
Cash		1,096
Trade and other payables		(4,394)
Deferred tax liabilities		(117)
Total purchase consideration transferred		6,306

The Directors believe that the fair values of the recognised assets and liabilities were equal to the book values. Consideration for the transfer was equal to the book value of total net assets and was settled through intercompany accounts. In addition to the recognised assets and liabilities in ID Scan Biometrics Limited, on which the consideration for the acquisition was based, the Company has recognised goodwill of £35,057,000 and intangible assets of £6,520,000 reflecting the carrying values recognised in GB Group plc consolidated accounts. This results in a credit to the cost of investment of £37,361,000, intercompany payable of £6,306,000 and other reserves of £3,042,000.

The fair value of the acquired trade receivables amounts to £3,534,000. The gross amount of trade receivables is £4,138,000. None of the trade receivables have been impaired and it is expected that the full contractual amounts can be collected.

32. Contingent Consideration

Liabilities


Group	2019	2018
	£'000	£'000

At 1 April	45	7,122
Recognition on the acquisition of subsidiary undertakings	79	-
Fair value adjustment to contingent consideration	-	421
Amount forfeited by seller	-	(495)
Settlement of consideration	(45)	(7,460)
Unwinding of discount	-	457
At 31 March	79	45

The opening balance at 1 April 2018 represented contingent consideration amounts relating to the acquisition of IDscan. This amount was paid during the year.

The amount recognised on acquisition of subsidiary undertakings is in respect of IDology.

Company	2019	2018
	£'000	£'000

At 1 April	45	7,122
Recognition on the acquisition of subsidiary undertakings	79	-
Fair value adjustment to contingent consideration	-	421
Amount forfeited by seller	-	(495)
Settlement of consideration	(45)	(7,460)
Unwinding of discount	-	457
At 31 March	79	45

The fair value of contingent consideration is estimated having been determined from management's estimates of the range of outcomes to certain future revenue and EBITDA forecasts for periods between 12 and 18 months from completion date and their estimated respective likelihoods. The contractual cash flows are therefore based on future trading activity, which is estimated based on latest forecasts (Level 3 as defined by IFRS 13).

33. Alternative Performance Measures

Management assess the performance of the Group using a variety of alternative performance measures. In the 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 the first anniversary following their purchase.

Underlying Organic Growth

As highlighted in the October 2017 trading update, organic revenue growth in the year to 31 Match 2018 included £3.5 million from the sale of a material perpetual licence to a leading European bank in September 2017, paid upfront. Had this particular transaction been a fully delivered, three-year agreement, payable in annual instalments (as is normal), then our revenue recognition policies at the time would have only recognised one third of this value. This means revenues for 2018 would have been £117.4 million (the basis for underlying growth) rather than the reported £119.7 million.

Adjusted Operating Profit

Adjusted operating profit means profits before amortisation of acquired intangibles, share-based payment charges, exceptional items, net finance costs and tax.

Adjusted EBITDA

Adjusted EBITDA means operating profit before depreciation, amortisation, share-based payment charges, exceptional items, net finance costs and tax.

Adjusted Earnings

Adjusted earnings represents adjusted operating profit less net finance costs and tax.

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.

Net cash generated by operating activities before working capital movements

Net cash generated by operating activities before working capital movements means net cash generated from operations in the Consolidated Cash Flow Statement before the movement in provisions, inventories, trade and other receivables and trade and other payables.

	2019	2018	% change
Revenue	£143.5m	£119.7m	19.9%
Adjusted operating profit^†	£32.0m	£26.3m	21.7%
Adjusted basic earnings per share^‡	18.2p	15.3p	19.0%
Profit before tax	£14.7m	£13.4m	10.0%
Deferred income balance	£36.6m	£28.3m	29.2%
Net assets	£321.5m	£157.8m	103.8%
Net (debt)/cash^††	£(66.3)m	£13.5m	n/a
Dividend per share	2.99p	2.65p	12.8%

	Year ended 31 March
	2019	2018

Revenue growth ¹	19.9%	36.8%
Underlying organic growth at constant currency	11.5%	13.6%
Organic revenue growth	8.7%	17.3%
Fraud, Risk & Compliance revenue growth	25.6%	27.3%
Customer & Location Intelligence revenue growth	11.9%	52.8%

Adjusted operating profit (£'000)	32,031	26,311
Adjusted operating profit %	22.3%	22.0%

Adjusted EBITDA (£'000)	34,080	28,688
Adjusted EBITDA %	23.7%	24.0%

Earnings per share - basic	7.7p	7.1p
Earnings per share - adjusted basic	18.2p	15.3p

Net (Debt)/Cash (£'000)	(66,252)	13,505
Cash conversion %	92.7%	114.6%

Deferred income (£'000) ¹	36,637	28,347

International revenue as a percentage of total revenue	44.7%	34.4%

Employee engagement	> 90%	>80%

	Note	Equity share capital	Share premium	Merger reserve	Capital redemption reserve	Foreign currency translation reserve	Retained earnings	Total equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000

Balance at 1 April 2017		3,368	48,595	6,575	3	4,097	31,545	94,183

Profit for the period		-	-	-	-	-	10,654	10,654

Other comprehensive income		-	-	-	-	(3,206)	-	(3,206)


Total comprehensive income for the period		-	-	-	-	(3,206)	10,654	7,448

Issue of share capital	20	2,189	56,219	-	-	-	-	58,408

Share issue costs	20	(1,740)	-	-	-	-	-	(1,740)

Share-based payments charge	27	-	-	-	-	-	2,375	2,375

Tax on share options		-	-	-	-	-	660	660

Equity dividend	12	-	-	-	-	-	(3,582)	(3,582)

Balance at 31 March 2018 (As Reported)		3,817	104,814	6,575	3	891	41,652	157,752

IFRS 15 transition adjustment	2	-	-	-	-	-	(1,058)	(1,058)

Balance at 31 March 2018 (Restated)		3,817	104,814	6,575	3	891	40,594	156,694

Profit for the period		-	-	-	-	-	12,153	12,153

Other comprehensive income		-	-	-	-	(3,702)	-	(3,702)

Total comprehensive income for the period		-	-	-	-	(3,702)	12,153	8,451

Issue of share capital	20	1,004	159,609	-	-	-	-	160,613

Share issue costs	20	-	(3,274)	-	-	-	-	(3,274)

Share-based payments charge	27	-	-	-	-	-	2,287	2,287

Tax on share options		-	-	-	-	-	738	738

Equity dividend	12	-		-	-	-	(4,049)	(4,049)

Balance at 31 March 2019		4,821	261,149	6,575	3	(2,811)	51,723	321,460

	Note	Equity share capital	Share premium	Merger reserve	Capital redemption reserve	Other reserves	Retained earnings	Total equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000

Balance at 1 April 2017		3,368	48,595	6,575	3	-	35,198	93,739

Profit for the period		-	-	-	-	-	5,153	5,153

Total comprehensive income for the period		-	-	-	-	-	5,153	5,153

Issue of share capital	20	2,189	56,219	-	-	-	-	58,408

Share issue costs	20	(1,740)	-	-	-	-	-	(1,740)

Resulting from hive-up transactions	31	-	-	-	-	4,543	-	4,543

Share-based payments charge	27	-	-	-	-	-	2,375	2,375

Tax on share options		-	-	-	-	-	651	651

Equity dividend	12	-	-	-	-	-	(3,582)	(3,582)

Balance at 31 March 2018 (As Reported)		3,817	104,814	6,575	3	4,543	39,795	159,547

IFRS 15 transition adjustment	2	-	-	-	-	-	(1,058)	(1,058)

Balance at 31 March 2018 (Restated)		3,817	104,814	6,575	3	4,543	38,737	158,489

Profit for the period		-	-	-	-	-	7,275	7,275

Total comprehensive income for the period		-	-	-	-	-	7,275	7,275

Issue of share capital	20	1,004	159,609	-	-	-	-	160,613

Share issue costs	20	-	(3,274)	-	-	-	-	(3,274)

Share-based payments charge	27	-	-	-	-	-	2,287	2,287

Tax on share options		-	-	-	-	-	738	738

Equity dividend	12	-	-	-	-	-	(4,049)	(4,049)

Balance at 31 March 2019		4,821	261,149	6,575	3	4,543	44,988	322,079


	Note	2019	2018
		£'000	£'000

Group profit before tax		14,736	13,400

Adjustments to reconcile Group profit before tax to net cash flows

Finance revenue	9	(31)	(37)
Finance costs	10	720	545
Depreciation of plant and equipment	14	1,544	1,430
Amortisation of intangible assets	15	10,821	8,832
Loss on disposal of plant and equipment		46	38
Fair value adjustment on contingent consideration	32	-	383
Share-based payments	27	2,287	2,375
(Decrease)/increase in provisions	23	(25)	(10)
Increase in inventories		58	(166)
Increase in trade and other receivables		(9,904)	(5,390)
Increase in trade and other payables		7,527	10,220

Cash generated from operations		27,779	31,620
Income tax paid		(2,930)	(3,247)
Net cash generated from operating activities		24,849	28,373


Cash flows from/(used in) investing activities

Acquisition of subsidiaries, net of cash acquired	31	(255,107)	(70,363)
Purchase of plant and equipment	14	(1,453)	(1,902)
Purchase of software	15	(172)	(212)
Proceeds from disposal of plant and equipment		6	96
Interest received	9	31	37

Net cash flows used in investing activities		(256,695)	(72,344)


Cash flows from/(used in) financing activities

Finance costs paid	10	(720)	(545)
Proceeds from issue of shares	20	160,613	58,408
Share issue costs	20	(3,274)	(1,740)
Proceeds from new borrowings	21	110,447	10,000
Repayment of borrowings	21	(32,807)	(12,839)
Dividends paid to equity shareholders	12	(4,049)	(3,582)

Net cash flows from financing activities		230,210	49,702


Net increase in cash and cash equivalents		(1,636)	5,731
Effect of exchange rates on cash and cash equivalents		72	(596)
Cash and cash equivalents at the beginning of the period		22,753	17,618

Cash and cash equivalents at the end of the period	19	21,189	22,753

	2019	2018	Change	Change
	£'000	£'000	£'000	%

Revenue¹	143,504	119,702	23,802	19.9
Adjusted operating profit ²	32,031	26,311	5,720	21.7
Share-based payments	(2,287)	(2,375)	88	3.7
Amortisation of acquired intangibles	(10,316)	(7,885)	(2,431)	30.8
Operating profit before exceptional items	19,428	16,051	3,377	21.0
Exceptional items	(4,003)	(2,143)	(1,860)	86.8
Operating profit	15,425	13,908	1,517	10.9
Net finance costs	(689)	(508)	(181)	35.6
Profit before tax	14,736	13,400	1,336	10.0
Total tax charge	(2,583)	(2,746)	163	5.9
Profit for the year	12,153	10,654	1,499	14.1
Dividend per share	2.99	2.65	0.34	12.8
Adjusted earnings²	28,759	23,057	5,702	24.7
Basic weighted average number of shares ('000)	158,052	150,553	7,499	5.0
Basic earnings per share (pence)	7.7	7.1	0.6	8.5
Adjusted basic earnings per share (pence) ²	18.2	15.3	2.9	19.0

	Company Cash Flow Statement
	Year ended 31 March 2019

		Note	2019	2018
			£'000	£'000

Company profit before tax			9,078	6,303

Adjustments to reconcile Company profit before tax to net cash flows

Finance revenue			-	(16)
Finance costs			642	439
Depreciation of plant and equipment		14	1,125	856
Amortisation of intangible assets		15	6,116	1,851
Loss on disposal of plant and equipment			47	-
Fair value adjustment on contingent consideration		32	-	383
Share-based payments		27	2,287	2,375
Increase in inventories			61	(399)
(Decrease)/increase in provisions		23	(25)	(10)
Increase in trade and other receivables			(4,548)	(9,505)
Increase/(decrease) in trade and other payables			4,074	33,268

Cash generated from operations			18,857	35,545
Income tax paid			(1,674)	(399)
Net cash generated from operating activities			17,183	35,146


Cash flows from/(used in) investing activities

Acquisition of subsidiary undertakings		31	(256,348)	(81,312)
Dividends received			2,464	-
Purchase of plant and equipment		14	(1,214)	(585)
Purchase of software		15	(167)	(145)
Interest received			-	16

Net cash flows used in investing activities			(255,265)	(82,026)


Cash flows from/(used in) financing activities

Finance costs paid			(642)	(439)
Proceeds from issue of shares		20	160,613	58,408
Share issue costs		20	(3,274)	(1,740)
Proceeds from new borrowings		21	110,447	10,000
Repayment of borrowings		21	(32,000)	(12,000)
Dividends paid to equity shareholders		12	(4,049)	(3,582)

Net cash flows from financing activities			231,095	50,647


Net increase in cash and cash equivalents			(6,987)	3,767
Cash and cash equivalents at the beginning of the period			14,778	11,011

Cash and cash equivalents at the end of the period		19	7,791	14,778

Ex-dividend date for 2019 final dividend	18 July 2019
Record date for 2019 final dividend	19 July 2019
Annual General Meeting	25 July 2019
2019 final dividend payment date	23 August 2019
Announcement of 2019 half year results	November 2019

Analysed as:

Amounts falling due within 12 months

Amounts falling due after one year

At 31 March