GB Group plc (GBG) Earnings Call Transcript & Summary

Good morning.

Good day, and welcome to the GBG full year results conference call. At this time, I would like to turn the conference over to Mr. Chris Clark. Please go ahead, sir.

Thank you, Mollie, and apologies for interrupting you. Good morning, everyone, and a very warm welcome to GBG's full year results presentation. I'm Chris Clark, Chief Executive of GBG. And I'm delighted today to be joined by Dave Wilson, our CFO and COO; and David Ward, our incoming CFO. As many of you know, Dave, after 12 incredible years at GBG will, at the end of this month, take semiretirement -- a well-deserved semiretirement and move into nonexecutive roles. And I do want to express my personal thanks for everything Dave has done in helping GBG on its journey over the last 12 years, and actually my own personal thanks for making my 4 and a bit years at GBG such fun and so rewarding. Equally, I want to give you a huge GBG welcome to David. David joined us in mid-May and will be formally taking over responsibilities as CFO on July 1. In terms of agenda, I'll give an overview of the strategic and operational progress we've made over the last 12 months and an insight to some of our plans for the future. I'll then hand to Dave, who will talk in more detail about the financial results. Dave will then hand to David, who will make a few introductory remarks. And then David will hand back to me to close and take any questions you might all have. For the eagle eye amongst you, you might well have noticed a slightly different look and feel today in our slides. I'm really excited to tell you that just last week, we did execute on a revised look and feel. So we've refreshed the brand. We've changed or updated our purpose statement, which is about creating trust in the digital world. And we've reviewed and renewed our vision statement, which is about creating a world where everyone can transact online with confidence. I think these changes reflect our ambition and the long-term opportunity that we see in front of us. Turning back to the last 12 months, I couldn't be prouder of the results our team have achieved, and I want to formally thank each and every member of the GBG team around the world. I think we're all very aware of the truly exceptional circumstances we've all had to work through and in, and I couldn't be prouder of the results we have achieved. We've achieved record people engagement scores in our latest internal survey. We had a 94% response rate, and 91% of our team recommended GBG as a great place to work. We achieved record customer satisfaction scores with an NPS, a Net Promoter Score, of 50. And we've achieved record financial results with a 12% constant currency organic growth, giving us total revenue of GBP 217.7 million and record operating profit of GBP 57.9 million, a 21% growth. And we now have cash in hand, as Dave will describe in more detail. This all comes down to our very simple focus on our people, ensuring their health and safety; our customers reacting to their different and rapidly changing requirements; and continuing to execute on our strategy. The team has not missed a beat and continue to deliver new innovative solutions, whether that's our Decision Builder capability and Identity in the United States, our multi-bureau capability in Identity in the U.K. and additional AI and machine learning capabilities supporting both Location and Fraud. We've also made significant strategic progress in terms of the acquisition of HooYu Investigate, the investment stake in Credolabs in Singapore and the divestment of the remainder of our U.K.-focused Marketing Services business and our background checking business, Employ & Comply, in the United Kingdom. Looking in more detail, GBG is increasingly becoming a globally diversified business by geography, by sector and actually, importantly, subsector particularly when you look at financial services and by solution area. We now have revenues outside of the U.K. of approximately 65%. If one looks at each solution area, I'll start with Location. Location accounts for approximately 25% of the group and is broadly 60% license and 40% transaction. The Location business posted strong growth of just over 10% constant currency organic, driven by good growth in our core geographic focus areas: U.K., Western Europe, North America and Australia and New Zealand, predominantly by e-commerce customers such as wish.com, ASOS, eBay. As well as some great new wins, for example, we completed a deal with Just Eat to help them improve their deliveries, and they've said that they've seen a 27% improvement in delivery accuracy as a result of our technologies and data. And as well as Nintendo across Europe as they look to improve their direct -- or online direct-to-consumer sales processes. We've also started to see early signs of our expansion of Location in Asia with wins in Mainland China and South Korea. Turning to Identity, which is approximately 60% of the group and virtually all the revenues are transactional, we posted a very strong growth of 28% constant currency organic growth. The standout performance was in North America, where we posted 71% growth. As many of you know, we were helped by the small part we played in the U.S. stimulus, helping verify emergency funds. But even if you strip out U.S. stimulus, we grew Identity in the United States 30%. This was driven by strong e-commerce trends, good new wins such as Citigroup and Microsoft, and early progress into expansion to new sectors such as gaming in the United States, health care and insurance. Looking at U.K. and Europe, which accounts for about 35% of our Identity business, you might well recall in the first half we posted a modest decline largely as a result of our historical sector exposure, particularly online sports betting and our background checking business in the United Kingdom. I am pleased to report that in the second half, we did return to growth. And for the full year, we grew low single digits. This growth was driven by a number of factors: some bounce-back of sports betting as live events happened; good penetration of new customers and new sectors, for example, insurance, where we won AIG; or wealth, life and pensions, where with a combined Fraud and Identity deal, we won Willis Towers Watson; and as well, like in the United States, we also saw particularly in Q4 strong performance from crypto. And then last but not least, in Identity, our Australia and New Zealand capabilities, again saw improving growth rates from H1 into H2, giving a full year growth of 6%, which I think largely reflects the progress that Australia and New Zealand have made both through the crisis as we have good diversified sector exposure in Australia and New Zealand. Turning to Fraud. Fraud accounts for 12% of the group and is predominantly license-based. And there's 2 key components to our Fraud services. One is our U.K. investigations business, which is about 6%. I'm delighted that we made the acquisition of HooYu Investigate. And coupled with the HooYu technology and the GBG data, we believe we absolutely have a market-leading capability. And during -- through Q4, it's integrated well and we're starting to see early signs of success, and that gives us confidence for future growth. And then the second part is our banking software, where we sell into Tier 1, 2 and 3 banks for transactional fraud monitoring services. We did see, as previously discussed, significant challenges in this part of the business for 2 key reasons. One, we were -- strong comparisons in terms of a very strong performance in FY '20 and a number of multiyear deals. But two and then probably more importantly, we did see a delay in sales conversion as customers -- banking customers around the world prioritized their own projects for working virtually as opposed to kicking off new developments. That said, we are pleased to have made the investment into Credolabs, and we are confident that business will return to growth in the first half. And we have seen early signs of success in countries such as Vietnam and Philippines. What we have learned and experienced in the last 12 months gives us heightened confidence about the total addressable market, the fact that it's large and growing. It's giving us increased confidence that what we do matters, and it really does help -- our services help our customers offer a better digital service for their consumers. And we have -- it's demonstrated that we have competitive differentiation. The broad structural trends that have aided GBG in the past have been accelerated. And if you look at Fraud as an example, in a recent research we've done in the United States, 53% of companies have announced an increase of fraudulent activity in the last 12 months. So we are positive about our capabilities, we are positive about the market opportunity and we are confident that we can continue to win. In terms of outlook, we have started the year well. Some of the trends that we saw through Q4, such as crypto trading and, to a much lesser degree, U.S. stimulus, have continued in the early part of the first quarter, albeit more recently have moderated significantly. We do expect the pandemic to have many more twists and turns, meaning that there are a large number of outcomes -- possibilities and outcome. That said, what we have learned means that we have now restarted several investments as we came into H2 around sector exposure, around geographic expansion, for example, location services in broader Asia, and around our fundamental products, data and technology, so -- such as cloud enabling our Fraud services, continuing to invest in our data and continue to enhance our core differentiated products for our customers. Equally, we continue -- as Dave will talk about in more detail, we now have a very strong balance sheet and we continue to expect that M&A will play a significant part in our journey, and we have a strong pipeline. So in summary, I couldn't be more proud of the team. It's been in a hell of a year and the team have achieved some great results. On that note, let me hand it to Dave.

Thank you, Chris. Just looking at the income statement, as Chris said, we've performed very well with our constant currency organic growth at 12% and our operating margins at 27%. The 12% was helped with the U.S. stimulus, which was high in the first half and some lower levels in the second half. Our higher-margin U.S. Identity business gave us an uplift in our operating margins as well as the cash conservation measures that we put in place in the first half. And also, we delayed our investments until the start to the second half. Our gross profit percentage was lower due to the business mix. Our U.S. Identity business has a lower gross profit percentage. And with lower levels of fraud, which has a higher margin, that reduced the gross profit by 2%. Moving over to the segment performance. Our Location business increased its growth to a constant currency organic growth of 10%, which was particularly good in the second half. And as Chris talked about, we had some key wins and we've made some good progress in the business. Identity grew 28%, helped obviously by the U.S. stimulus. But outside of that, the U.S. grew in excess of 30%. As we discussed at the half year, our Fraud business declined, and this was a consequence of tough prior year comps and also the lack of on-site installation opportunities in lockdown. Looking at the revenue by sector, 3 key points here to mention. In financial year '21, we were affected -- 14% of our revenues were affected by COVID directly challenged sectors. Our financial services, which is a very broad church, benefited from the U.S. stimulus. But we also have some great growth in crypto and payment services sectors. The drop-off in the U.K. sports betting was more than compensated by very sizable growth around GBP 2 million of U.S. sports betting. So our sector in the online gambling at 9% remain the same through the 2 years. If we look at it by geography, as Chris mentioned, U.K. and U.S. now represents 36% of our total revenues. And in the year, the U.K. was reduced by the COVID-affected sectors, whereas the U.K. -- U.S. benefit is from the stimulus, but also very good sector growth in financial services, retail and e-commerce. Australia, New Zealand mirror the local economic activity there. And in the -- in Europe, outside of the U.K., we grew in 6 countries specifically as a result of sectors like crypto, e-commerce, fintech and payment services. Looking at the cash flow. We had a very strong EBITDA to cash conversion. The working capital inflow was very good, 1/3 of which is significantly better U.K. and European cash collections. The other element was a shift geographically to the U.S. customers who are paying us faster from the Asia-Pacific customers who are banking customers that tend to be slower payment. As a result of this, our net cash position is GBP 21 million. Along with our bank facilities, it gives us realistic firepower of GBP 140 million to GBP 200 million for future acquisitions. So just to summarize on the cash flow and near-term capital allocation. We took early action to conserve cash in the first half of the year. You know we've got a very strong cash generation business model. And our priority for capital remains funding the numerous organic growth opportunities that we have, followed by mergers and acquisitions and then returns to shareholders. The Board also declared a 3.40p a share dividend. So just before I hand over to David Ward, I'd just like to thank my fellow team members who have been the essence of the growth of the business last year and previous years. I'd like to pass my sincere thanks and support for our shareholders and analysts that have helped grow the business over the past few years. I'd like now to hand over to David Ward to talk a little bit about himself and why he chose to join GBG. Thank you.

Thank you, Dave. Very well said. And hello, everyone. Good morning. So as Chris said at the start of the call, I joined GBG in mid-May. And at the end of this month, I'll officially be taking up the CFO reins from Dave. Clearly, I've got some very big shoes to fill after Dave's fantastic 12-year innings for the company. So for today's presentation, my part is actually quite small. I just had 2 things I wanted to cover: firstly, some background on me and then a little insight into my first perspectives on the business, as Dave has said. I also hope to give you a little bit of comfort that myself and the team, we're executing on a tight plan for the smooth CFO transition. So first of all, just a little bit of background for you on me. While I know some of you who have joined this call, there are many of you that I haven't yet had the opportunity to meet, and I'm really looking forward to meeting you all in due course. So I'm David Ward, and I joined GBG from AVEVA, the industrial software company, where I spent the last 10 years. When I started there in 2011, I was finance #2. And then in 2016, I progressed to the CFO role, before then stepping down from the Board in 2018 following the completion of a successful and transformative piece of M&A that elevated AVEVA to a much larger business and ultimately into the FTSE 100. I stayed with AVEVA as a member of the executive team. And for the last few years there, I ran a team of approximately 350 people across finance, legal and commercial operations teams. And I also oversaw a lot of the important post-merger integration work. But that's in the history. Since joining GBG, I've been very grateful to Chris, Dave and, in fact, the whole GBG Board for the 6-week handover period that Dave and I have together before he leaves the company. And that 6-week period has really allowed me a good opportunity for an orderly handover with Dave. But it's also given me a decent space and time to get to know the business. I've had product demonstrations. I've had the opportunity to meet lots of the management team. And it's also given me the opportunity to take stock by having lots of introductory meetings with our advisers and to get those valuable outside-in perspectives. And I'm really pleased to say that the perceptions I had during my recruitment process have now all been proven out. GBG really does have a great team and, I think, a very valuable culture. The company is in a hugely exciting and quick-moving space, and I've really enjoyed understanding our solutions, which I believe are differentiated and competitive in their respective markets. We've got 3 really strong business units that each have plenty of organic and inorganic growth opportunities in front of them. And finally, as Dave has just said, we are in a really strong financial position, highly cash generative with a strong balance sheet and [ agreed ] debt facilities if we need them. So I'm really excited to be joining GBG at this time, and I'm really looking forward to meeting you all over the coming weeks. With that, I will hand back to Chris.

Thank you, David, and thank you, Dave. And I think we all know Dave will be missed, but we wish him well. His timing, as ever, is everything. Being a passionate sports fan, I know his short-term plans are about EUROs, Lions rugby and then Olympics. But equally, we are delighted to have David on board, and it's very clear already that David is a great addition to the team. So in summary, I couldn't and we couldn't be prouder of our team and what they have helped us deliver for our customers: record people engagement, record customer satisfaction, record financial results without missing a beat in terms of innovation, strategic advancement and adding strength to our team in terms of new recruits around the world. We look forward with confidence. We've started the year well. We are absolutely expecting lots of twists and turns with regard to how the pandemic affects our teams and our customers. But we are clear of where the opportunities lie. We have clear plans for taking hold of the opportunities, and that's around investments in sectors, in geographies and fundamentally in our products, data and technology. And on that note, I will pause, hand back to Mollie and see if there are any questions today.

[Operator Instructions] Our first question today will come from Kai Korschelt of Canaccord.

The first one was just, as you mentioned, there are different sort of COVID -- coming out of lockdown cycles, I guess, across the world and also across different industries and geographies. So I'm just curious from your perspective which regions and perhaps which industry verticals would you expect to be leading the charge compared to perhaps lagging a bit. That's my first question. The second was around M&A. I think your balance sheet, pretty good shape. You've delevered very quickly. How should we think about the strategic or perhaps technology or geographic exposure of anything that you're looking at the moment?

Thanks, Kai. I'll take those questions. So I guess your first question about how we expect lockdown -- changes to lockdown and restrictions to impact different geographies and sectors, I think what we've learned in the last 12 to 18 months is to expect the unexpected. And I guess one of the things I'm actually most grateful for is having a truly geographically diverse team. And what that means is that one moment of time one can be really excited because as a resident of the United Kingdom, you think you're making great progress, and then at the same breath, you have our Malaysia team go into complete lockdown, which is what happened 2 weeks ago. And our Melbourne team go into a semi-lockdown, but fortunately they've come out of that today. So in other words, I guess, Kai, what I'm really saying is I don't think we can confidently predict how the pandemic is going to unfold in the coming weeks and months. That said, if you think about the portfolio, we are pleased that if you think about our revenue distributions, the majority of our revenue is coming from the United Kingdom, the United States and Australia and New Zealand, actually, those 4 countries are relatively making good progress. So that's good news. Equally though, if I'd answered this question at the half year, I said we'd have had more confidence of recovery of Fraud in the second half because we'd have expected in December many of Southeast Asia to improve and therefore start to move the pipeline through, and that has not happened with the exception of places like Vietnam and the Philippines. Indonesia, Malaysia, Singapore are still in quite difficult circumstances. Once you think about lockdown easing, though, I think there are a couple of important things to comment on. So particularly relevant, say, the U.S. and U.K., is we have -- if you look at the transactional businesses, so really Identity and part Location, we have enjoyed exceptional increases from some customers offset by significant declines from other sectors, which we've talked less about today. What we're seeing in the early stages of -- if you take the U.K., for example, coming through the lockdown release stages, is there is some moderation in the exceptional performances. And we -- and some recovery in some of the COVID challenge, but it really does change by day and week. And actually, if you take U.K. travel and entertainment as a very topical example, absolutely when the green, amber, red list was introduced and Portugal becoming the go-to place, we saw travel pickup. But that lasted all of a few days and then it's declined significant again. So in other words, Kai, it's a very long way of answering what was a straightforward question, say we are clear of the structural drivers, we're less clear of timing. Turning to M&A, as I commented on, we absolutely believe M&A will continue to play a critical part of our strategy. Our M&A strategy has not changed. That means it's all about finding the right acquisitions to accelerate our strategic intent, which just means the perfect M&A is -- gives us enhanced capabilities from a product, data or technology perspective, enhanced geographic scope and, in a perfect world, actually some sector expansion. Now the one thing that would kind of always say but I think it's well understood is one thing about M&A is you can't predict the timing because it has to be the right business at the right time from the seller at the right value because, obviously, our responsibility about making sure that we provide the right returns. So in reality, we do have a pipeline, a strong pipeline. We're busy working it. But I think we would probably expect smaller deals in the short term partly because particularly in the United States, there is a fairly high value expectation currently.

[Operator Instructions] Our next question will come from Tintin Stormont of Numis.

Just 3 questions from me. I can already see Dave wincing. Just first on the Fraud side, Chris, you talked about obviously efforts being made to cloud-enable some of the Fraud services. And obviously, Fraud stands out as the division that has still a lot of one-off license sales. How should we think about timing in terms of kind of moving this model more towards a recurring SaaS-type revenue? And what do you think is the kind of the response of customers to that? You're in a geography where sort of, particularly in Asia Pac, that probably favor more one-off license sales at the moment. Are you seeing that changing? Are they actually sort of very much responsive to potentially SaaS-type models? And in terms of the ambition for Fraud, how wide a solution set are you thinking in that space? And then secondly, in terms of U.S. betting, I think, Dave, you mentioned this obviously had substantial growth in the year, a couple of million pounds. Where -- how should we think about the ultimate potential of U.S. betting relative, for example, to obviously your U.K. betting business? And then lastly, on M&A, just obviously, Chris, you just mentioned focus more on sort of smaller medium-sized transactions. Just curious to find that in the last couple of years, have there been assets that you missed out on just because you felt the pricing was wrong, sort of it's quite a hot market out there? And just in terms of sort of kind of large deals, will it be down to sort of kind of pricing, in your view, sort of kind of normalizing a bit more?

Thank you, Tintin. Yes, I'm stopping you there, Tintin. No, thank you very much, Tintin, for the 3 questions. Actually, you made Dave's morning. He did make a bet with David last night that you would have 3 questions, so that's a -- you made Dave's day. Look, firstly, on the Fraud question, I think the key point that I would make here, which I probably didn't cover in enough detail in my opening remarks, is actually our core competitive differentiation is around our 3 capabilities of Location, Identity and Fraud increasingly coming together to solve the digital requirements of businesses, particularly Identity and Fraud. And therefore, that -- and in fact, today, when we talk about the Identity revenue streams and the 60% of the group in Identity, actually, we could actually label quite a lot -- some of that as transactional fraud services. The definition and the boundary is already blurring at quite a pace given what we're doing and what we're seeing in the marketplace. And actually, that kind of jumps to your third point on the Fraud question is Fraud is a very, very significant, broad market sector as a stand-alone. We're increasingly confident and clear of where we have a right to play, and it is actually all about identity fraud. And that's actually the terminology we're starting to talk about more and more as identity fraud or another way of talking about that is originations fraud. So that's -- so in other words, our strategy naturally takes us to more transactional-based revenues as we increasingly align our Identity and Fraud capability sets. That said, we do have a significant opportunity still in the traditional fraud software space, transactional fraud monitoring services, which you quite rightly point out, Tintin, is our key geographic focus for that is Asia Pacific. And the reason for that is often it's greenfield compared to North America or Europe. And really the question around how receptive are customers from SaaS-based to -- move into SaaS-based services as opposed to on-prem, I'd actually answer that by saying we'd always had a long-term plan to start to SaaS-enable our Fraud services. However, as a result of the pandemic in different geographies, actually, banks suddenly started changing their thinking around it, where it was them who were very hesitant and now saying, actually, we think we want SaaS services. However, it is a marathon not a sprint, to your timing question. Yes, this is years and years transition, not overnight. And in reality, we would still expect in the next couple of years licenses to be the lion's share. And that will evolve over the next number of years. In terms of your second question, U.S. betting or U.S. sports betting, yes, as you quite rightly said, we did enjoy some growth of about GBP 2 million in the half in the United States. How to think about that? We see it as a good growth vector as we expand our capabilities into some newer sectors. That said, we are not going to [ put ] all of our investment resources into growing that as sort of the cost of other expansion opportunities for several reasons. One is, as we experienced in the United Kingdom, yes, it is a political topical hot potato. And whilst we are confident from an ESG perspective that we're offering services to ensure that the sports betting community is doing the right thing in terms of age verification or affordability, there are political consequences. And what we've experienced in the U.K. isn't just a result of sports, live sports disappearing this time a year ago, it's also partly to do with the sports betting companies deciding that it's getting too difficult in the U.K. regulation and so have moved into the U.S. So we will continue to invest and go after the capabilities, but we see it as one growth vector and one that we won't overexpose ourselves to. And then lastly, on M&A, I hope you'd expect us to say, yes, there are larger transactions and smaller transactions that we've walked awhile for because we don't think they're valued correctly. And that isn't just in the last 12 months, that's been in the last 5 years that I've been here. So yes, we -- as I said, it has to be everything coming together, right company, right technology, right people at the right price.

We will take our next question today from Bridie Barrett of Stifel.

Just one question from me. It's really, I suppose, about the sales process. Obviously, we understand that there's been particular difficulties in the Asian business, but I wondered if you could just talk a little bit about how you have perhaps changed the sales processes in Identity and Location over the last year and whether you sort of feel confident that you can continue to convert your pipeline and grow your pipeline into the current year. And I suppose alongside that, the other aspect that I'd like to just understand a little bit more about is in your release today you talk about the increased convergence of the products. And I know that's something that in the past you sometimes gave stats on. Maybe you could just sort of link the 2 together and talk about how you're approaching the sales process in -- with a view to cross-sell.

Thanks, Bridie. If I'm not mistaken, I think that was actually 2 questions. So firstly, sales process. I think GBG, just like any other business around the world, absolutely has had to modify at pace sales processes as a result of lockdowns around the world. If you step back, we have 3 core channels to market across the group. Direct in [ commerce ] is face-to-face, that's one. Second one is self-serve. And third one is distributional partners. Self-serve being the smallest of the 3 and really focused through history on our Location capabilities. And actually, what we've clearly done in the last 15 months is put more capability, more investment in our self-service capabilities because that's an easier way for new customers and existing customers to consume in the world in which we're all currently living and operating. Having said that, it is not appropriate for all of our services. So -- and the most obvious is fraud software. You're not -- no business can sell a complex software sale that involves significant workflow changes for banks in a self-serve environment. Whereas actually, if you look at Location, some of the largest companies in the world can absolutely absorb location capabilities through a simple API. So we have significantly increased the focus on self-serve. That's paying dividends. We've also significantly actually expanded our channel capability set. And actually, as a number of businesses in our ecosystem continue to work together actually to solve the customers' requirements, we've seen a growth in channel. So I hope that answers that question, Bridie. In terms of convergence, actually, the reason we don't really give stats around cross-sell, it's not simple cross-sell. It isn't about an Identity salesperson in the United States carrying a quota for a Location set of services, because the coming together of our services is a data, technology and product layer. And actually, how you talk about that from a financial perspective is incredibly tricky. What I can tell you though is we have seen significant progress. As I've already mentioned to Kai's question, actually, we could talk about a number of the Identity transactional revenues actually being Fraud because it is blurring. And equally, and I touched on it briefly in my opening remarks, we have seen -- I mean 80% of our growth came from existing customers. And that wasn't just usage of single product, that was extension into other capability areas. Willis Towers Watson as a new customer in the U.K. is a good example of that. They've taken both our U.K. fraud services and our identity services. So we are seeing that. And in fact, that's accelerated during the last 12 months. So I hope that answers your questions, Bridie, and I hope you're keeping well.

It does. And just on that, coming back on the face-to-face and direct side of things. I mean face-to-face these days is via screen, obviously. Is that something that is working out? Or is that something that you think you still have to wait until we sort of learn to live in this new world?

Well, it - face-to-face isn't via screen in some geographies. In Australia and New Zealand, it's been old-fashioned face-to-face for a number of months now. Same actually is true in parts of the United States and has been for quite a while. So -- and it is increasing in the U.K. now as well. So firstly, depending on where one is around the world, good old face-to-face is virtual and in real life. Has it work out? Look, I think most businesses would now say, and I suspect we all would, that nothing beats face-to-face contact particularly when it's complex. Proper face-to-face, real-life face-to-face is probably how I should describe it. But we've learned to adjust and our teams have done absolutely phenomenal job, and customers have been receptive because everyone's had to learn how to operate in that environment.

[Operator Instructions] Our next question comes from Julian Yates of Investec.

A question from me on the investment going into the business. Could you sort of outline, I guess, firstly, the quantum that you're looking to put into this year? And when I say some quantum, I guess, the step-up from last year. Clearly, that's going to be a post-COVID pandemic sort of step-up but also a strategic step-up as well, so maybe just a bit of understanding between those 2. And in terms of -- you spoke about a bit about where they go, where this investment would go to on the sort of preamble. Maybe you could be a bit more specific in terms of sales, product and which of the 3 pillars the product investment may go into. And lastly, what's the realities of this investment not happening because you can't actually find the people, the resource to do that, and therefore, we get another nice little [ detailed ] numbers that we've got accustomed to over many, many years?

Thanks, Julian. And I think it's time that I make sure Dave realizes he isn't quite retired yet. So I will -- Dave and I will double answer that one. I'll give a high level and then pass to Dave. So let me just firstly pick up your third point first. Look, recruitment is challenging. There is no doubt about that. And it's not because of virtual procedures, it's just about finding the right talent because, as I think you all know, we absolutely believe having the best and most engaged team is what makes GBG exceptional. So we won't lower our standards, and of course, there is a war for talent. So the likelihood that we can't get everyone on board in time is not insignificant. It's fairly high likelihood, but that's not -- that's disappointing, actually. I'll let perhaps Dave [ narrate ] that, the number -- put numbers around that. And then the second bit I'll just do and then hand to Dave is just to build on where are we investing. So if you think about the growth vectors, if you think about it from a first year sales and marketing perspective, there's both sector expansion and geographic expansion. And sector expansion in the U.S., we're starting to look at expansion in gaming, as we've talked about, in health care, insurance and broader into technology. In Europe, it's further into some of the financial services, particularly things like insurance, both life and pensions, and deeper into fintech. And in Asia, it's really around actually following our geographic expansion of things like Loqate is then into some of the e-com and retail players. Then you've got geographic expansion. And if you think strategically, it's about our 3 core capabilities in our key geographies, which means particularly around Location and Identity into broader parts of Asia. And then it is around product stage and tech. And data is the fuel that -- or the gas that makes our engines operate and give insights to our customers. So it's about more in different sources of data. It's around price enhancement. So again, coming back to, actually, Tintin's question, it's particularly around the coming together of Identity and Fraud, and it is around cloud-enabling every service for both reasons of SaaS and on-prem but also capacity. So those are the high level we're investing. And now I'll shut up and hand to Dave.

Yes. Thanks, Chris. So I think in terms of the timing and the effect on the margins of the business, as we talked earlier, we had 27% operating margins last year. The go-forward is low 20s, if I'm going to say, call it, 22%. That's 5%. I'm actually good with numbers on that, can work that one out myself. And that equates to about GBP 10 million. When it works to in real life is we've got inbound currently about 100 people. And for every month of a delay, that works out about GBP 0.5 million of profit. And in the year, we've got a further 50 people coming in. So it's all around the timing of those people coming in. Now as we release our cash conservation measures at the end of August, we started heavily recruiting there. So it's all around when we can transition them in, in the virtual environment. So it really is a case that we want to recruit, we want to invest, we have invested, it's all around the timing of when we come in. And it equates about GBP 0.5 million a month in that respect. I hope that answers the question.

Great. Yes, it does. Dave, I hope I didn't lose you any money by asking one question on your last call here.

You did, actually, so thank you for that.

I can make another one out, if you want.

No, a great question.

It appears that there are no further questions in the queue. Mr. Clark, I would like to turn the conference back to you for any additional or closing remarks.

Thank you, Mollie, and thank you all very much for your time today and the questions. I actually think it's appropriate, given how well most of you know Dave, that actually I leave the last word to Dave. I'm hugely thankful of every one of our team around the world, their contribution has been incredible. But I'm hugely grateful, as are the whole Board and I expect lots of other people around the world, to Dave's contribution in the last 12 years. So thanks all for joining. I'll hand to Dave for the last word.

That was surprising. Thanks for that, Chris. So I really would just like to, again, thank all our team members because they make the business. I'd also like to thank our customers, that I didn't do earlier, for paying us a little earlier than previously. It helped our working capital considerably. And then from our shareholder support and analyst support, I really do thank for the help -- thank you for the help you've given us over the years and look forward to that continuing. So thank you very much.