I guess the first point to say is nothing's materially changed from our trading update of October 20th. We've delivered revenue of GBP 133.8 million at 22.6% total growth and a pro forma revenue growth of 10.4%, but constant currency of 3.4%. We delivered an operating profit of GBP 28.1 million at 21% margin, and we're confident that we can see a revenue acceleration in the second half and margin improvement, which we'll come back to. Looking in a little more detail about the strategic and operational progress we've made in the period, I'll do that by looking through the three solution areas of location, identity, and fraud. Starting with location.
Location accounts for just over 25% of the group and grew at a strong 10.5% constant currency pro forma rate. Excellent new wins, cross-sell, upsell, and pricing drove that growth, also offsetting some decline in e-commerce volumes. We continue to win new business across a diverse customer sector base as well as geo-geographic. To give you a few examples, gaming is a key sector for GBG and has strong structural tailwinds, but not only for identity, but also location. An example of a win in the period that I hope demonstrates that was for Caesars in North America. In addition, we continue to expand geographically, both in North America, Continental Europe, and Asia, and we were delighted that we won Shopee , one of Asia's largest e-commerce platforms on a global basis.
We're seeing growing momentum on cross-sell and upsell. Wise, who have been a long-standing identity customer here in the U.K., now are using our location services. We continue to witness the trend of manufacturers going direct to consumers with customers like New Balance now joining GBG as a key customer. From a product development perspective, our latest release of our capture products with additional AI capabilities is offering real benefit to our customers. In fact, we believe adds about a 20% further improvement on match rates to our customers. I believe this is best evidenced by a win we've made in the period on a global basis for a large buy now, pay later customer, who I'll come back to, who we won competitively and beat the incumbent globally by an improvement of 23% match rates.
We believe we have the best products and therefore we are taking share globally in location. Turning to identity. Identity accounts for 61% of the group and includes the former Acuant business. Before I talk about identity, I think it is important to say that as we execute on our ambition of driving a world-beating end-to-end identity and fraud capability, the blurring of identity and fraud becomes increasingly complex. When we look at identity as a standalone solution, we did see a decline of 1.4% on a constant currency pro forma basis. This decline was driven by two exceptional end market issues, crypto and internet economy. David will talk a lot more about the financial impact of crypto, but just by internet economy, what do we mean by that?
We mean basically the technology firms who have been in the media of recent weeks announcing some very significant layoffs. These are the companies that saw accelerated growth during the pandemic, and that growth is starting to normalize. Most of these are customers of ours, and we have had a transactional impact. The key point for both crypto and internet economy customers is it isn't a case of us losing customers, it is a case of transactional volume decline. We saw the biggest impact in North America. This is largely down to the fact of our relative sector exposure, where we are most exposed in North America to those two segments. I guess that's best evidenced by if you look at our identity outside the United States, we actually grew at 6% taking account of the crypto decline.
I don't think it's a surprise that we're largely exposed in the U.S. to those sectors because that's where a lot of these customers are based. Having said all of that, we're actually pleased with the momentum we have got in identity. We continue to win new business across multiple geographies and sectors. We're making excellent progress on product innovation. A few examples. I've touched on gaming being a key sector for us with structural tailwinds, particularly around the liberalization of sports betting in North America, both the United States and Canada. As an example, we were delighted to add Beldies Canada to our customer roster as a direct consequence of our relationship here in the U.K. with Gamesys, who of course have now merged with Beldies.
We've also won Share in the UK, for example, in gaming with Broadway Gaming, and we continue to do well as well across most of the financial services, particularly traditional banking and areas like wealth, life, and pensions right around the world. One great example is Spirit Super Pension Fund in Australia. Significant new business and growing momentum on cross-sell and upsell. Turning to that, we're delighted that we now have over 30 customers in the US using both the former Acuant and the former IDology services at a revenue run rate of approximately $200,000 a month. We're also delighted that in the period, we've now secured cross-sell in both Asia and AMER. Right across the world, we are seeing a growing pipeline of cross-sell opportunities as well as new business opportunities as a direct result of our enhanced capabilities.
I've already touched on the fact that we've made significant progress in the acceleration of our product development, in part due to the Acuant acquisition. Let's give you a few examples. We've now delivered Multi Bureau services in both the United Kingdom and Australia, which is unique. We've added mobile data so that we can help our customers better detect origination fraud. In Australia, we released fraud alerts specifically to help consumers and businesses deal with the recent significant breaches in Australia. We've launched a Know Your Business service in the United States and most recently, we launched GBG Go, firstly in the United States. GBG Go is a no-code orchestration platform that allows our customers and potential customers to access a number of the features from across our product portfolio in a simple, easy-to-use platform.
Turning to fraud, I know I've already said it, but the first thing I wanna say again is it's increasingly difficult to distinguish between identity and fraud. For the services we do consider fraud in how we report, which is really our U.K. investigations and our banking software, that accounts for 13.5% of the group and grew at a good 14.4% organic pro forma constant currency. That growth was driven by the new business renewals and upsell across two very resilient customer sectors, traditional banking and public sector. That growth came from continued geographic diversification and upsell and cross-sell. A couple of examples. Here in the U.K., we extended our fraud relationship with the U.K. government, with the Department for Work and Pensions, using the service that we already offer HMRC, the helping prevent benefit fraud.
We've had a long-standing relationship with BCP, we're now delighted to have deployed our services for Bank of Morocco, part of BCP, we continue to make excellent progress across Southeast Asia with continued wins in Malaysia, Indonesia and additional business now in the Philippines with Union Bank of the Philippines. The investments we've made in next generation fraud capability, we're delighted are working and working well and now powering a new fraud consortium in the Philippines, leveraging our lessons and learnings from the United States. In summary, it's been a mixed first half. We've made excellent strategic and operational progress, but our financial results have been impacted by two specific end market customer issues, those being crypto and internet economy, while the rest of the business has performed well.
To give you a little bit more insight on those details, I'm delighted to hand over to David.
Thanks, Chris. Hello. Good morning, everyone. I will now take you through, as Chris said, a more detailed review of the financial results. Firstly, I think it's important to say, as Chris did, that these results we've announced today are wholly in line with the most recent trading update we provided on the 20th of October. Hopefully some of the extra detail I have for you this morning will keep it interesting. As Chris has said, the first half of this year has been a more challenging period for us to navigate. The macroeconomic backdrop really began to change just as our financial year was just beginning. We have seen this impact our customers to varying degrees.
At the extreme end of that spectrum, we saw our activity volumes with customers involved in cryptocurrency trading decline much more significantly and more abruptly than we had anticipated. This has had a negative impact on our growth rate, as Chris has said. I have a slide coming up where I will share some more details on that subsector. That said, we did still achieve forward momentum, and our reported revenue increased by 22.6% to GBP 133.8 million. On a pro forma basis, revenue was GBP 134.9 million, and that includes a small adjustment for the deferred revenue haircut arising on the acquisition of Acuant. Growth in pro forma revenue was 10.4%, with 7% of that driven by more favorable FX rates for the translation of our non-UK revenue.
Adjusted operating profit was GBP 28.1 million, which represented a 1% increase over last year and a margin of 21%. As the chart on the right-hand side of this slide shows, we do usually have a higher weighting of revenue in the second half of any financial year. Through this, at a degree of growth acceleration, we are expecting a stronger margin in H2. We continue to see a high proportion of our revenue from repeatable revenue streams and had a total of 93.3% of revenue from the combination of subscription and consumption models.
I have some more detail on that later too for you. Despite our debt repayments being largely on track since the Acuant acquisition, our debt balance actually peaked at the end of September at GBP 132.6 million as a result of an adverse currency movement that caused a GBP 22.2 million retranslation impact. That has begun to unwind since the 30th of September as the pound has strengthened from the rates that we saw at the end of the half year. You'll remember that at that point, it was particularly low against the dollar and was feeling the effects of the UK government's mini-budget. Now let's take a look at the income statement in a bit more detail.
As I've said, reported revenue increased 22.6%, there are a number of moving parts to that revenue trend, so I'll cover that in a bit more detail using a different slide in a moment or two. Our gross margin improved slightly to 71.1%, and that was a function of the change in revenue mix between our businesses. We had an increase in operating expenses year-over-year of 51.6%. Let me give you a breakdown of that. 28% of that came from the effect of the two acquisitions we made last year. A further 8% arose from the retranslation of our non-GBP expenses at less favorable FX rates than last year.
On average, as we said before, the impact of our pay review for the team caused an increase of approximately 6.5%. There was a small increase due to the return to a small amount of business travel and in-person marketing conferences. The remaining increase was due to the investments in the business that we made in the prior year, and particularly in the second half of last year. The majority of those were into our technology and regional go-to-market teams. Bringing that all together, that led to an adjusted operating profit of GBP 28.1 million, which represents an operating profit margin of 21% versus the prior year of 25.5%.
As I said a moment ago, we do expect margin improvement as our second half revenues are traditionally stronger. That is further supported by a healthy pipeline of sales opportunities and our continuing focus on disciplined cost control. Moving below adjusted operating profit, the charge for amortization of acquired intangibles increased to GBP 21.3 million. That was due to the two acquisitions we completed last year. The exceptional items charged in the half year of GBP 1.5 million are predominantly related to M&A and integration costs. Our finance costs increased over the prior year as a result of the new debt facility we put in place and which we utilized just a year ago to part fund the acquisition of Acuant.
We have obviously seen the impact of rising interest rates, and in the second half, we expect that we will have the competing effects of interest rates increasing further, but also more material debt repayments. Overall, for the full year, we now expect the net finance costs to be approximately GBP 6.57 million, based on the latest forecast of interest rates and FX rates. On tax, our charge for the six-month period was just GBP 0.7 million. On an adjusted basis, the effective rate was 26.4%, which was a little higher than our expectations are for the full year. Those remain at approximately 24% for the full year as previously guided. Now on to the balance sheet, and here I have compared the half year balance sheet with the last full year end, March 2022.
There is a reasonable proportion of the intangible assets that are on the balance sheet that are held as US dollar denominated assets. The value of those has increased as a result of foreign currency rate movements. Our receivables remain healthy and the quality and aging is strong. The balance was lower than at the last year end, just due to the higher level of annual renewal invoices that we always raise in March. Deferred revenue was GBP 58.2 million at the end of the half year, therefore very similar to the balance at the last year end, which means that we continue to have a reasonable degree of visibility for future revenue to be recognized. Probably the most interesting movement for you all will be what's happened with net debt.
As you know, the vast majority of our drawings on the revolving credit facility are USD denominated, and sadly, the pound to USD exchange rate movement we have seen since the end of March has increased the reported value of the debt that is outstanding. The impact of that FX movement was GBP 22.3 million. That was the main driver that caused the overall increase in net debt to GBP 132.6 million. Our repayments against the debt were always going to be lower in H1 than in H2, as in the first half we have repayment of our dividend. That was GBP 9.6 million, and we also paid out our team bonuses related to the strong business performance in the prior year.
We made our first purchases of GBG shares in the market for our newly formed employee benefit trust. That was a cash outlay of GBP 2.5 million. Overall, we generated operating cash flow of GBP 16 million, which represented a rolling twelve-month cash conversion of 70%. This was lower than our usual expectation for more like 95%, and this was due to some of the reasons I've just mentioned, but also due to us settling a liability that was within the acquisition balance sheet for Acuant. That was for GBP 2.3 million. On an adjusted basis, our cash conversion for the last twelve months has been 85%. Still lower than our guidance of 95%, and that's really due to the timing of the bonus payments and bonus accruals.
Finally, just to bring you up to date with changes since the end of September and up to today, our net debt balance has reduced now to approximately GBP 118 million. Quite a sizable reduction since the end of the half year. Some of that to do with FX, some of it to do with extra repayments on the debt. Also, earlier this month, we agreed with our club of five lending banks an additional 12 months of term for our revolving credit facility. That now doesn't expire until July 2026, and we are grateful to each of the banks for their continued support to GBG. On this next slide, I focus again on our business and revenue model.
As you know, GBG generates most of our revenue from either subscriptions, and those represent upfront commitments, and these can either be time-limited or volume-limited, or from transactions or consumption arrangements where customers pay monthly in arrears on usage. The total of these two models accounted for 93% of total revenue in the six months. The chart on this slide has been presented on the pro forma basis for FY 2022, so includes the revenue from our two most recently acquired businesses and excludes the non-repeating revenue from crypto and US stimulus. With the continuing strength of growth in our location and fraud segments, as Chris described, we've been able to deliver good growth in our subscription revenues. These increased 19.5% over last year, and in the period under review, represented an increased 54.9% of total revenue.
This proportion of our total revenue that arises from subscriptions has been helped substantially by the addition of Acuant. In the first half of last year, on a reported not pro forma basis, our subscription revenues were 11 percentage points lower at 44%. Of course, the challenges of the crypto markets impacted Acuant too. Excluding crypto, Acuant subscription revenue grew by 20.8%, and this offers us encouragement that the expected growth rates for Acuant at the time of the acquisition remain realistic for a time when the macro isn't as challenged as it has been during this period.
While I'm on the topic of Acuant performance, it is worth me noting that it was a stronger underlying performance than IDology, mostly as a result of the broader sector diversification and therefore lower exposure to internet economy customers, which I think Chris described earlier. On this slide, you'll hopefully recognize the format now. We've provided more detail on the various moving parts within our revenue growth. I am optimistic that next year we are likely to have fewer complications to understanding these trends, hopefully that will get a bit easier. Hopefully for now, this analysis continues to be helpful for you all. Firstly, working left to right, the main difference between our reported growth and the underlying growth was the impact of the M&A we completed last year. That was GBP 21.8 million.
Then to try and help you all understand the underlying growth trends, we also need to deduct the revenue from the last half year that we have consistently called out as exceptional or non-repeating. Those being, first, the US stimulus project, that was GBP 3 million in H1 of last year, and then the exceptional cryptocurrency volumes. As I said, I've got more detail on that subsector on a later slide. That gives us the pro forma revenue of the prior half year of GBP 122.2 million. Versus that starting point in H1 of the current year, we have achieved a total of 10.4% of growth. 7% from the benefit of a more favorable FX translation rate for our non-UK businesses, and particularly versus the US dollar, and an underlying constant currency growth rate of 3.4%.
You will note that there is a small impact still of GBP 1.1 million from the deferred revenue haircut adjustment. We expect the materiality of that adjustment will decline even more from this point forward. Next slide, please. Thank you. We continue to be well-diversified with our business spanning multiple geographic markets as well as a varied mix of end market sectors. You will see that in a change from our previous categorization, we have split out crypto revenues from the rest of financial services.
While the crypto subsector was severely challenged compared to the prior year volumes, and as a result declined from 6% of total revenue last year to just 3% in the current period, the remainder of financial services, and particularly the more traditional elements of banking, pensions, and insurance, was much more robust and grew both as a proportion of total revenue and in absolute terms. Somewhat counterintuitive to the macro trends, we actually saw revenue from retail also grow, both in absolute terms and as a proportion of our total. As Chris said earlier, this was very much down to strong operational execution as we counteracted lower retailer volumes with upsells to more of our solutions, winning new logos, and also the impact of our price increase strategy in the location business.
Technology, gaming, and professional services were other sectors that were much more resilient to the macro environment. Through a geographic lens, it will be no surprise, given our comments so far this morning, that in reported terms, the U.S. customer revenues decreased as a percentage of the total from 41% last year to 38% of total, and that is despite some currency translation benefit. Outside of this region, where we're less materially exposed to the internet economy, customers that Chris mentioned, we saw a much more resilient picture in the U.K. and Europe, and very pleasingly, absolute relative growth in the significance to the group of our revenue from APAC.
As we've always said, our diversification is a real strength for GBG and an indicator of our resilience. It is just disappointing that the decline in cryptocurrency that we've seen has been much more abrupt and significant than we had expected, in scale was more than we were able to compensate for through these other areas of the business where there was strength. That takes me nicely onto my final slide, where I wanted to remind you of the picture with respect to cryptocurrency. As you've already heard from both Chris and myself, the effect of the decline in revenue from cryptocurrency exchange customers has been material to the half year results and therefore our expectations for the full year. Firstly, let me explain our business with these customers in brief.
We provided identity verification, most typically at account opening, we've charged these customers mostly on a transaction or consumption basis. As interest in cryptocurrency investments has increased over the last five years, we've seen a decent level of growth in revenue. As you can see from the chart, this sub-sector has been a steady grower until last year when volumes ballooned. This caused us to call out some of that revenue as being unlikely to repeat. I should say that the chart on the left side of this slide is GBG prior to Acuant, as that is where we have the best data over this longer time horizon. You should see this as representative of the trends of the larger group, too.
I've also included a table here of the pro forma view, so this time including Acuant for just last year versus the current year. The GBG revenue from this sub-sector peaked last year at GBP 14 million or 6% of group revenue and 10% of our identity revenues. Acuant had a similar level of exposure to crypto as GBG. That was approximately GBP 6 million, therefore GBP 20 million in total. We felt that GBP 4 million of that, plus GBP 1.8 million from Acuant of that, was attributable to an exceptional peak in volumes in Q1 of that financial year, and we did not expect those to be repeatable.
As we came into this current financial year, our estimate of our recurring revenues from crypto was the GBP 20 million pro forma from last year, but you can see that on the table, less the total of GBP 5.8 million of revenues that were exceptional and expected to not repeat. About GBP 14 million. It is definitely true that the volume declines we have seen have been more significant and more abrupt than we envisaged. As we said at the time of the trading update, and we have provided more color on here, we now expect a 60% decline this year and including a contribution of just GBP 2 million of revenue in H2, which is in line with the more stable volumes we have seen in the last few months.
That would mean that the contribution to group revenue this financial year will be more like 2%, and the decline has resulted in a headwind to our pro forma group growth rate of around 3%. If we achieve, as we expect to, a mid-single digit constant currency pro forma growth rate in H2, this would represent a high single digit without the crypto headwind. With that, I will now hand back to Chris.
Thank you, David. In summary, it has been a mixed first half. We've made strong strategic progress with an acceleration of our product innovation, we believe increasing our differentiation as we bring the capabilities across the group together for our customers. Two specific end market challenges have impacted our financial results, and I hope the depth that particularly David has given clarifies that picture. The rest of the business has performed well, and that's what gives us, a view of our outlook as David has articulated. GBG is a well-diversified business by customer sector, solution, and geography. I hope we've demonstrated in what we've covered today already, the team has done a fantastic job on seizing the opportunities and trying to minimize the risk areas. We've done it before, during the pandemic, and we're confident we can do it again.
That means that we do expect pro forma constant currency revenue growth to accelerate into the second half of the year, as David's touched on, and that we'll deliver a mid-single digit discrete growth rate in H2 whilst taking account of the 3% drag effect from crypto. This will be driven by the natural H2 weighting in the business, revenue acceleration from wins, new wins, cross-sell, and upsell through the first half, as well as executing on a strong pipeline of opportunities that we have right across the group. When we turn to margin, we do expect an improvement in margin from H1 to H2 for three reasons. Firstly, the natural weighting of the business from H1 to H2. Secondly, the acceleration of revenue. Thirdly, tight cost control.
We look forward to talking more about the strong strategic progress we've made and how that is creating and will continue to create significant differentiation in a competitive marketplace at our capital markets day on January the 19th. The board remains very confident about the long-term opportunities for GBG, and we hope we demonstrated that to a degree today, and we'll do more so on the 19th of January. On that note, let me hand over to George to see if we have any questions.
Thank you much, sir. Ladies and gentlemen, if you would like to ask an audio question and you dialed in by phone, please press star one on your telephone keypad. Please also ensure your mute function is not activated unless you wish to equipment. We'll give everybody a chance to fill up for a question. One moment, please. This first question is coming from Tintin Stormont, calling from Numis. Please go ahead. Your line is open.
Morning, guys. Three questions, 'cause I suspect it's not gonna come back to me again. First one on subscription revenue. You saw 19% growth there. Some of that you said driven by strong operational execution on the location side, good growth in Acuant outside of crypto. How should we think of your opportunity here going forward, you know, in terms of, for example, like the price increase strategy? Is there more of that coming through in terms of renewals in the second half? If you could give a bit more of a picture there. Secondly, on Acuant, the growth outside of crypto, can you flag particular sectors that performed well? The third one, actually, this is for Chris. You talked about some of the opportunities in location, so with some of the gaming customers.
Can you just maybe expound on that? Is there a particular reason why there's demand coming through on that side from that particular sector for that particular solution?
Thanks, Tintin Stormont. David, why don't I take the second and third question and you take the first, if that's all right? Given I've got the microphone, I'll start with your second question regarding where we saw good momentum with Acuant. I'd start by saying, you know, we're really pleased with the momentum, particularly around cross-sell and upsell, primarily in the United States, but increasing momentum out of the U.S. Sectors that we saw good traction probably doesn't really come as a surprise. It's very aligned to what I hope David and I described in our presentation. Sectors such as, you know, broader financial services, traditional banking. We saw good growth. Public sector in the United States, we saw some good momentum.
As well as sort of the travel sectors. Really, I think what we would consider resilient and countercyclical sectors is where we saw the growth from Acuant. Turning to your third question, Tintin Stormont, around gaming. I mean, just stepping back, gaming does offer strong structural tailwinds, particularly around the liberalization of sports betting in North America, both with various individual states in the US, but also now in Canada. The example I gave was actually Ontario. Really the reason that the requirement isn't just for verification services but also location services is because the operators, you know, are fighting for share in a digital world. The location capabilities help them help them acquire customers quicker and more efficiently.
That's the rationale for why they need location type services. We saw the same trend a number of years ago, actually, here in the UK, where a number of our biggest gaming customers take both identity and location services. David, I'll now turn to you on the subscription question.
Yeah. Thank you, Chris. Thanks for taking two of the three as well. Tintin Stormont, thanks for asking about subscription revenue, 'cause I think, hopefully you've picked up that I think there are some highlights in there. I think it's very encouraging now that we've now got a proportion of our revenue taken up by subscriptions of nearly 55%. It was one of the things that actually was particularly attractive about the Acuant model was that they do have a greater level of subscription than GBG has traditionally had. We are seeing that coming through. You mentioned also the growth that's come from particularly location and fraud, where those businesses have continued to be strong.
I think the price increase, in Loqate, we would expect to continue to have an impact for the second half of the year. Obviously in Loqate we have a cycle of renewals. So we still have some more Loqate customers that, where their annual renewals will be in the second half. So we've got somewhat more to do on price increase to make sure that, the increase we're looking for gets embedded in the second half renewal process. But overall, we're very pleased with that increase in subscription driven by the operational execution, but also the shift in mix that really Acuant has given a bit of a boost to.
Great. Thanks, guys.
Thanks, Tintin Stormont.
Thank you. We'll now move to Kai Korschelt calling from Canaccord. Please go ahead. Your line is open.
Great. Morning, gentlemen. Thanks for taking my question. I also have three, if that's okay. The first one was I just wanted to drill down a bit into Acuant. At the time of acquisition, I think you were guiding to 20%-25% revenue growth. You haven't split it out, but it looks like the business is probably sort of flattish. You mentioned crypto, it doesn't look like that accounts for all the slowdown. I'm just kind of curious if you could give a bit more color on, you know, what else been growing slower than expected 12 months ago when you bought the business, please. That was the first question. The second one was around the subscription revenues, it's more a clarification.
I just wanted to double check that the what you call subscription revenues, that those are completely fixed and there's no sort of volume dependency, sort of prepaid type activities in there, and these are a proper, fully recurring revenues. That was the second. The third one was just on interest cost. I'm just wondering if you could perhaps give us a bit of a steer on what that would be in fiscal 2024, and whether the GBP 7 million for this year, now is sort of right sized to interest rate expectations in the U.S., which I think still expects some further increase over the next few months, just looking at sort of forward rates and stuff. Thank you.
Thank you, Kai, and good morning to you too. David, this time round, perhaps I'll start with the first question and then hand to you to perhaps add to that, and then answer questions, Kai's questions two and three. With regard to Acuant, you're absolutely right, Kai. We talked about at the time of acquisition over 12 months ago that we expected a 20%-25% growth rate. you know, we are really pleased that that business is fully integrated and actually counting revenue separately is almost impossible now as the teams are all joined up. Increasingly, we've got momentum on cross-sell and upsell, as I discussed.
Really to answer your question about sort of why is the growth rate not quite what we expected, it really does come down to two things, crypto, which I hope we've explained fully today, and hardware. There's been a slight softening on hardware, which we're not overly concerned about. Hopefully that answers the question. David, I'll hand to you perhaps to add more color to that one and also Kai's questions on interest rates and subscription.
Yep. Thank you, Chris. Thank you, Kai, for the questions. Just to finish off Chris's comments there on Acuant, and particularly on hardware, we actually saw a decline in hardware revenue of around GBP 1 million in the first half. On this chart where we show the breakdown of our revenue by types, that's included in the other. It's not a large proportion of our group. There are other things in there. There's professional services in there as well. As I say, hardware did decline by about GBP 1 million in the half, and that was another headwind for Acuant on a purely standalone basis. As Chris said, we don't see that as indicative of a trend.
Hardware orders can be a bit lumpy, that might even reverse in the second half or over time. Moving on to your questions two and three. Subscription revenue first, your question was really, what are those, I think. Let me just explain. What we categorize as subscriptions are upfront commitments. Sorry, my screen's just changed view, it threw me slightly. Those are upfront commitments. They would include anywhere where a customer is either making a commitment upfront for a particular time period or for a volume commitment. Those volume commitments would be use or lose, otherwise we wouldn't include them in subscription revenues. They are committed and give us forward visibility.
On interest costs, you heard me say earlier in the presentation that we now expect our interest costs for the current year to be between GBP 6.5 million and GBP 7 million. There are some key assumptions within there, interest rate being one of them. Because the debt is denominated in USD, FX rates is the other key consideration as well. We're not issuing any formal guidance at this stage for FY 2024, but I would expect that particularly on interest, our interest cost for next year is more likely to be around two-thirds of the cost that we'll probably see this year. Really the two things that are driving that are we expect to be able to make further repayments against the debt. That will obviously bring down gross value.
Also most forecasts have interest rates perhaps reducing at some point during the course of our next financial year.
Thank you very much. Very helpful.
Thank you.
Thank you, sir.
Next question is coming from Bryony Barrett calling from Kepler Cheuvreux. Please go ahead.
Hi. Morning, everyone. Two questions. Firstly, just I guess following on from Tintin's question earlier, you've talked about some additional capabilities that have been introduced as a result of the acquisition. You know, you sort of mentioned the improvements to anti-tampering in the fraud business and the orchestration layer. Can you sort of talk about how you're positioning yourself with those enhancements? You know, are they being used more as a tool to improve your competitive position, or do they come with a new and higher pricing point? That's the first question, and my second one is just on FX. Maybe I'll come back to that.
Well, thank you, Bryony, and good morning, and I'll take that question and perhaps save the FX one for David. I guess the easiest way to think about it is the compelling strategic logic of the acquisition of Acuant over 12 months ago was around, if you looked at the data, the products, the technology, and the team of Acuant, comparing that to GBG, it was the fact that when one looked at our aspiration about having the most complete location identity fraud solutions globally, Acuant pre-acquisition had done quite a lot of work and we'd done a lot of work, and that was highly complementary. Which means when we talk about cross-sell, upsell or enhancements, it isn't really a case of Acuant product A, powering GBG solution B.
It's a combination of components, and GBG Go is a good example of that.
That, that's how to think about it. To your point about how does that commercially play out, it really at the simplest level, I would think about it in, or we think about it in two ways. Firstly, it offers upsell opportunity with additional capability. If you think about sort of growing with our existing customer base, you know, in a world where that's perhaps not driven entirely through transactional volume, actually being able to offer additional capability and pricing that as an additional capability helps, and we've seen a bit of that in the first half. Then that's kind of one area is additional capability which we can charge for.
The second area is actually being in a position to improve conversion rates and improve pipeline by going after opportunities we wouldn't have been able to do ourselves.
Okay. Thank you. That's helpful. Just on FX, I mean, you've called out the benefit that you saw in revenue. I'm just trying to understand the impact on margins as well. Does the 52% growth in OpEx include an FX benefit? If so, what was it? I see also that you highlighted GBP 6 million FX gain below that line, but it's included in adjusted operating profit. Is that the translation impact on the intercompany loans you mentioned? If so, what would you anticipate in the second half?
Bryony, I'll take that one. I'm sure Chris will be relieved. You're right. We have a 7% FX benefit to revenue, an 8% adverse impact on operating expenses. We have called out, as you said, on the face of the income statement, we have called out an FX gain on intercompany loans. As I said earlier when I talked about external net debt, we had obviously a hopefully what will be seen to be an exceptionally low GBP to USD exchange rate at the end of September. And just as it impacted our external debt, it also impacted the revaluation of those intercompany loans. That did drive a higher FX gain there than we would expect for the full year.
As you know, exchange rates have already started to somewhat normalize since then, some of that gain has already started to unwind. By the end of the year, obviously it's largely outside our control where it would be, we would expect some of that to unwind in the second half, but not all of it. When we think about margins for the full year, we've obviously factored in some of that. As Chris and I have talked about, we think that with our current run rate of costs and our processes that we have in place, operational processes we have in place to make sure we keep tight discipline on our costs, that we're pretty confident in where our operating costs and margins should land for the full year.
Really the question is over where the revenue will land and then the margin should be much less dependent.
Okay. I've not done the math around this, but if we think with exchange rates potentially reversing in the second half, that headwind to OpEx becomes a tailwind, but the tailwind to intercompany loans becomes a headwind, so it sort of nets out.
Yeah, correct. It obviously depends on the assumptions you're making about FX rates, but certainly based on-
Yeah.
On the sensitivities we've run, yeah, we're not concerned about that.
Okay. Thank you.
Thanks, Bryony.
Thank you very much, ma'am. We'll now go to Mr. Andrew Ripper calling from Liberum. Please go ahead. Your line's open, sir.
Yeah. Good morning, everybody. A couple of questions from me. Firstly, just in terms of the guidance for revenue growth for the second half of the year, just wondering what visibility you have behind that mid-single digit guidance. I think I know the answer, but, can you just re-clarify the basis on which that guidance has been made? Is it equivalent to the 3.4% that you reported sort of pro forma growth for the first half, or is it excluding the drag from crypto? That's the first question.
The second question was, we've sort of talked around this a little bit, but I just wonder, it's quite tough for us externally to sort of get a handle on how your peers are doing, either because they're part of much larger groups or because they're private companies. I just wonder where you feel you sit relative to peer performance, YTD, whether you're sort of neutral, winning or losing share, if you've got a perspective on that. Just thinking about the sort of medium to long-term perspective, appreciate you probably don't want to get drawn on when you may or may not go back to double-digit growth, but do you feel other than the cycle and the froth dropping out of the market, whether anything else has structurally changed?
Thank you, Andrew. Why don't I pick up your second question, then hand to David for your first. Thank you and good morning, Andrew. You're absolutely right on your second point. It is very difficult for all of us, actually, given the competitive marketplace, to pick out what's really going on in the market. Our assessment from what we can pick out and what we hear from customers and chatter in the market
Is a couple of things I'd call out. Firstly, cryptos hurt us. We acknowledge that. We reflect that. It's impacted our results, as we've talked about at length today and in the past. Actually, in reality, for a lot of our competitors, it's hurt them more. You know, I think, we were exposed to crypto up to 6% at the end of last year. We know for a fact that for a lot of our competitors, particularly the privately held ones, they had much higher exposure. I guess that's one point to call out. The other is we do actually believe we're taking share across the business. Hopefully, we alluded to that in our comments.
You know, increasingly, you know, we are winning customers off competitors, so we do believe we're taking share. We completely acknowledge, Andrew, the point you made, and we share your frustration to some degree. It's very difficult to be clear on that, either with publicly held competitors, because this is a small part of what they do, or the private guys, 'cause they come up with lots of different numbers. In terms of long term, just before handing to David on the guidance piece. In terms of long term, you know, we absolutely believe the structural, the structural tailwinds, and our position in the marketplace, you know, are actually intact.
In fact, we would argue with the progress we've made with the Appian integration, you know, we're positioned stronger today than we were 12 months ago. You're absolutely right. We're not gonna comment on when we can get back to our guided range, because we're living in a fairly volatile world. We are confident that we can, and we're in a strong position today than we were 12 months ago.
Yeah. Specifically on H2, Andrew, good question, and definitely worth clarifying. Just deal with the numbers first. It is on the same basis as 3.4 that we're talking about for the first half, and that's why Chris and I have both talked about an acceleration. That is pro forma. It's not stripping out all crypto. And that's why I think Chris and I both said that, achieving mid-single digit growth for the second half, despite for the full year at least, a 3% headwind from crypto, we think shows some resilience in these more challenged times and therefore, you know, brings us closer to what we would see as our medium-term growth potential. That's it there. In terms of visibility, again, good question.
We never really quantify this, and I'm not about to, so I'm afraid. I think there are a number of things that give us good visibility. Firstly, if we build it up in terms of from the bottom up, we've got deferred revenue, we've got the renewals that we know that we've got in our pipeline, we've got volumes from recurring customers, and we've obviously got our pipeline of new business. Some of which, when we think about new business, we think about it in two respects. We think about the deals that have already signed and closed, but perhaps haven't yet activated or are still to fully get up to activation. We have completely new business with new prospects, winning new logos.
Through all of that, actually we feel we've got good visibility. Clearly there's always some variability and there's work for us to do in the second half. Really that really will dictate where we land within our range of likely outcomes. There are also some outside events that will drive some of the outcomes. For example, volumes as we run it up to Christmas and through the holiday seasons, maybe even some how much sports betting there is on the World Cup. You know, some of these things, relatively small impacts, but I think the fact I'm flagging those sorts of things to you probably give you some comfort that aside from that and some renewals, actually we've got reasonable visibility.
As I say, it's really around the execution of some of that new business and getting those things executed and in interplay in the second half so that they can make a contribution to revenue.
Just the bottom end of that range, you know, if I take mid single as being four-six or possibly three-seven if you wanna widen it, does the bottom end of that range allow for if things don't go your way in terms of renewals and sort of external events?
You're trying to draw me, Andrew. I think you'd be amazed if I agreed that the bottom end of the range was within that mid-single digit. Clearly, you know, there's more risk in the second half than that. I still think we're in a pretty tight range, which gives us confidence over that. Clearly, if we did absolutely nothing, we would be outside of mid-single digit. We've got a lot to do.
Okay.
The team are focused on that.
Right. Thanks for your answers. Thanks, Andrew.
Thank you, sir. Thank you. We'll now go to Mr. James Zaremba, colleague from Barclays. Please go ahead.
Good morning. Three questions, please. One, a follow-up on Bryony around product development. Looks like a lot was achieved in the first half, including several product launches. Just wondering if you could kind of help us understand what incremental contribution to revenue some of those products might make in the next, you know, couple of years or so. A second one on inflation and pricing. Can you provide an update on the pricing dynamics in Identity and whether the kind of tougher funding environment and inflation is helping the ability to maybe increase pricing here? The last one, just on kind of cost discipline and how we should think about the relationship between headcount, investment and longer term organic growth. Thanks.
Thanks, James. Good morning to you. David, why don't I take the first and half the second, and then you can pick up from there. With regards to sort of product development and contribution of revenue over time, it's actually, James, a surprisingly difficult question to answer because it isn't as simple as, you know, a fundamentally different product, as I hope I explained in Bryony question. It's lots of different components, and it, therefore it can monetize itself either through incremental charging for a particular customer 'cause we add a feature, or it could be, you know, a fundamentally new customer using a new solution. It's quite difficult to unpick.
That said, we absolutely believe, as we fulfill our ambition of creating the leading end-to-end capability set, the contribution of new enhancements will increase relative. I think that also ties to the point that, you know, we feel confident about the medium to long term because, you know, whatever the world throws at us, and we played this out during the pandemic, and we're playing it out again, you know, we have the breadth of capability to grow by adding more features. The net-net is it's very difficult to be very precise because it's often component parts, but we do expect, you know, additional services to add more to our growth than historically, partly because of the macros, but partly because of our strategic positioning. James, starting on your second question for us...
Sorry, James. Hope that was helpful. Just starting on your second question before I hand to David. You know, we've said this before and we haven't seen any material change. You know, we definitely got pricing leverage in Location and you can see that. We've got some in our broad software services. In Identity, we don't believe we have a lot of leverage for lots of different reasons. I guess we wish we saw a sort of an opportunity, but it's not there today, albeit we talk about every cloud has silver linings. We do think there'll be fallout in the space related to actually some of Andrew's questions around some of our privately held competitors, and that might create an opportunity.
Our real focus is to actually differentiate our capabilities by delivering on the product roadmaps, and that allows us to actually price in a slightly different way. David, as you wanna take that?
Thank you.
Yeah. I'll pick up, James. Thanks for the questions. On inflation generally, I mentioned as we went through the presentation that our wage inflation impact this year has been approximately 6.5%. I think our inflation outside of staff costs, which obviously the majority of our costs are staff-related, our inflation outside of that has certainly been no more than 6.5%. It's averaged probably a little bit less than that. We are still forming our view, frankly, on next year for that, I think it's something that we'll have to come back to you on.
Probably will come as no surprise because I think a lot of businesses are still assessing what next year is going to look like and what sort of salary changes are going to be required. Clearly for us, we remain in a competitive space, particularly for the top talent. It will be one for us to watch, and I am sure we will comment on that as the next few months unfold. On cost discipline, I think if I understood your question, there were probably two sides to it. I think firstly, just to reiterate, Chris and I personally are heavily involved in making sure that we have got a firm hand on any investments or new roles that are going into the business.
We've really done that since the start of the year 'cause I think we sensed quite early on that it was gonna be a more challenging environment. We are not predicting, like some of our customers, for example, have had to do quite big team corrections. We're certainly not predicting that. We think that actually we've been more cautious through this year, which has put us in a slightly better spot. I think the second part of your question is that therefore having an impact on growth potential? Certainly we don't think so. We think actually. You've heard Chris say lots of times actually that one of the hardest parts of our job is prioritization.
There are lots of opportunities, actually we're being very strict with prioritization. I think actually there's a lot of opportunity there and perhaps even some benefit in focusing on some of the areas where we see the biggest benefit and closing other projects down quicker. Overall, we certainly are not concerned that that cost discipline is gonna impact medium-term growth.
Very clear. Thank you. Thanks.
Thanks, James.
Thank you much, sir.
We now have a question or questions coming from Bharath Nagaraj calling from Berenberg. Please go ahead.
Thank you. Good morning. Just two questions from me. Are you expecting any further bad debt given what's happened in the crypto world with BlockFi filing for bankruptcy as well this morning? Secondly, with regards to your cash conversion, which was lower due to the explanations you provided, one of them to do with higher bonus payouts with regards to last year's performance, please could you help us understand why that's a one-off and what levels you expect cash conversion to be in the future? Thanks.
Thanks for that. Go on, David.
Sorry. Chris. Yeah. Bad debt first, I think specifically on those customers, they're not customers of ours, not in any significant way, no bad debt concern on crypto. Generally on debt, as I tried to convey in the presentation actually, clearly it's an area we're watching very closely given the environment. Actually overall, the strength of our ledger and the health of our ledger is just as strong as it was at year-end, we've got no concerns in that respect, clearly something we're keeping a very close eye on. Cash conversion, you're right to say that the first half was lower than we would expect. We've always said that the, you know, the long run average for our cash conversions should be around 95%.
We're not changing that view, but clearly in the current year it has stepped back. There are some complicating matters which I tried to try my best to explain in the presentation. You've picked up on one specifically, which was the timing of bonuses. Really it's just the timing of the accounting. Obviously last year we accrued the bonuses in respect of last year, which based on the performance we had last year were healthy bonuses for the team. And we paid those this year. You end up with a mismatch in timing where you've had the charge go through last year, but the higher cash outflow go through the current year.
In the current year, based on the current level of performance, we are not assuming a level of bonus payout at the same levels as last year. You end up with that timing difference. Hopefully that helps, Bharath.
Sure. Thank you.
Thank you.
Thank you much, sir. We do not appear to have any further questions at this time. I'll turn the call back over to the meeting organizers for any additional closing remarks. Thank you.
Many thanks, George. Conscious we have slightly overrun, so thank you all for the questions and apologies for overrunning. Look, thank you very much for joining David and I today for our half year results presentation. We look forward to catching up with you soon. For those who we don't catch up this side of Christmas, may I wish you and all your families a merry Christmas and a prosperous 2023. Thanks very much, and we look forward to catching up soon.