TIDMGRC
RNS Number : 6642X
GRC International Group PLC
31 August 2022
31 August 2022
GRC International Group PLC
("GRC" or the "Group")
Final results for the year ended 31 March 2022
Continued strong organic revenue growth with improved margins
and positive EBITDA
GRC International Group PLC (AIM: GRC ), an integrated cyber
security and privacy solutions business, announces its audited year
end results for 12 months to 31 March 2022 (FY22).
Financial highlights
-- Revenue up 18% to GBP13.9m (FY21: GBP11.8m)
-- Billings* were up 20% to GBP14.8m (FY21: GBP12.3m)
-- Recurring and contracted revenue up 22% to GBP8.2m (FY21:
GBP6.7) - 59% of total revenue (FY21: 57%).
-- FY22 billings from recurring revenue products accounting for
56% of total billings (FY21: 54%)
-- Gross profit was up 34% to GBP8.2m (FY21: GBP6.1m), with
gross margin up by 700 basis points to 59% (FY21: 52%) - reflecting
continued improvement in operational gearing
-- EBITDA** of GBP1.0m (FY21: GBP1.1m loss)
-- Loss before tax reduced to GBP1.0m (FY21: GBP2.8m loss)
-- Year-end cash GBP2.1m (FY21: GBP0.2m), reflecting January
2022 share placing and particularly strong February and March
trading and cash performance
Operational highlights
-- Recurring revenue subscriber base up 41% to 5,089 (FY21: 3,600)
-- 57% of transactions from returning existing customers (FY21: 45%)
-- Website visits up 17% to 4,312k (FY21: 3,691k)
-- Internal automation projects have delivered operational efficiencies across the business.
* Billings equate to the total value (net of VAT) of invoices
raised and cash sales through the Group's websites. This figure
does not take account of accrued or deferred income adjustments
that are required to comply with UK-adopted International Financial
Reporting Standards ("IFRS") but is considered to provide useful
information to the users of the Group's financial information.
Billings is considered by the Board to be a key metric for managing
the business due to its direct relationship with cash flow. Cash
receipts are driven by billings achieved each month rather than
revenue recognised in accordance with IFRS.
** EBITDA is defined in the Financial Review within this
announcement.
Alan Calder , Chief Executive Officer, said:
"We performed strongly last year, delivering on our two key
objectives - to improve the quality of earnings and revenue forward
visibility with significant organic growth and a positive
EBITDA.
"Overall billings were up 21% and recurring billings were up to
56% with transactions from returning customers up to 57%. EBITDA
saw a GBP2.1m turnaround to GBP1.0m against a prior year loss of
GBP1.1m.
"Our domestic and international markets continue to grow and our
strong performance in the final quarter of FY22 continued into the
first five months of the current financial year. Trading remains
robust and the substantial progress we made last year should
support our long term growth aspirations."
The Company's annual report and accounts for the year ended 31
March 2022 is available to view electronically on the Company's
website at www.grci.group/results-reports-presentations and hard
copies will be sent to the shareholders on or around 1 September
2022.
Enquiries :
GRC International Group PLC +44 (0)330 999 0222
Alan Calder, Chief Executive Officer
Christopher Hartshorne, Finance Director
Singer Capital Markets (Nominated Adviser and Joint Broker) +44
(0)20 7496 3000
Phil Davies, James Fischer
Dowgate Capital Limited (Joint Broker) +44 (0)20 3903 7715
James Serjeant, Russell Cook, Nicholas Chambers
Meare Consulting +44 (0)7990 858548
Adrian Duffield
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014 (as it
forms part of domestic law of the United Kingdom by virtue of the
European Union (Withdrawal) Act 2018).
About GRC International Group PLC ("GRC" or "the Group")
GRC is an international governance, risk management and
compliance company whose main business is cyber
defence-in-depth.
A technology business, its proprietary premier brands including
the market leader, IT Governance, offer 'Our expertise, your peace
of mind' for GRC's wide range of domestic and international
corporate customers across all industrial sectors.
GRC's three operating divisions - Software as a Service (SaaS),
e-Commerce and Services - offer a wide range of products and
services encompassing: IT governance, risk management, compliance
with data protection and cyber security regulations, online and
in-person training and staff awareness, consultancy, online
publishing and distribution as well as software. The Group's
capabilities also include products and services to enable
corporates to address wider governance issues such as money
laundering and bribery.
In addition to its UK business, GRC has operations in the EU and
US.
Overview
Importantly, we achieved our two key objectives last year. The
first was to improve the quality of earnings and forward visibility
of our revenue while delivering significant organic growth. The
second was to deliver positive EBITDA.
The Group performed strongly through calendar 2021 and this
accelerated into Q4 of FY22. March 2022 was our best month of
billing since May 2018, despite the economic and geopolitical
headwinds.
Year on year, overall billings were up 20%, recurring billings
were up to 56% (FY21: 51%) of total billings with our subscription
numbers up 41% to 5,089. Transactions from returning customers was
also up to 57% of the total. As a result, we saw organic revenue
growth of 18%.
We moved strongly into positive EBITDA, achieving GBP1.0m
against a prior year EBITDA loss of GBP1.1m, a turnaround of just
over GBP2m.
We also successfully completed a GBP3m oversubscribed share
placing in January 2022. This enables us to continue to invest in
products and business automation, that substantially improves our
profitability, as well as to strengthen the balance sheet position
and support working capital.
Strategy
As we have said before, we are seeing significant international
growth opportunities in the digitally transformed, Cloud-based,
increasingly vulnerable, hybrid- working environment as a result
of:
-- Corporates, large and small, domestic and multinational,
having to deal with increasingly complex regulations and
enforcement in the Group's three primary geographic markets of UK,
EU and US
-- All clients facing escalating nation-state and criminal
(serious organised crime) cyber-attacks
-- Significant and deep-seated cyber and compliance skills deficits.
In this environment, our strategy is to accelerate growth
nationally and internationally, organically and by acquisition.
Today's fragmented and rapidly growing international cyber markets
offer significant organic and consolidation opportunities. The
Group's resilience and agility will enable it to exploit those
opportunities in the years ahead.
The Group's medium-term objective is to build annual revenue,
both organically and through acquisition, to approximately GBP50m,
with gross margins and EBITDA margins in the order of 65% and 25%
respectively. Incentives are being put in place to ensure alignment
throughout the organisation with these objectives.
Current trading and outlook
The strong sales momentum, billings, numbers of new business
leads and cash generation in Q4 FY 22 has continued into the
current financial year. Importantly, we ended the last financial
year with GBP2.4m of FY23 revenue already invoiced.
Our overall growth is driven by client acquisition through our
e-commerce division, the continued development of expertise through
our services division to solve client problems and create
opportunities for SaaS deployment.
The SaaS division underpins our Cyber Defence-in-Depth offering
and is expected to support continued double-digit
organic divisional billings growth in the current financial
year.
We will continue to invest in our e-commerce and SaaS
infrastructure in order to extend our automated fulfilment and
customer support. This enables our account managers to concentrate
on landing and expanding our client relationships, which improves
forward revenue visibility, widens gross margins and increases
customer lifetime value.
After a strong final quarter in FY22 momentum has continued into
the first five months of the new financial year. Trading remains
robust and in line with expectations. The substantial progress made
last year should support the Group's long term growth
aspirations.
Operational review
Operational execution
Our technology capabilities and track record, together with our
deep expertise and Cyber Defence-in-Depth model, provide our
clients with peace of mind. They know that our comprehensive,
integrated range of products and services enables them to build
cyber resilience through deploying our Cyber Defence-in-Depth
solutions.
We support our clients, helping them comply and thrive while
they tackle cyber resilience, compliance and data protection. Our
primary focus is on the people and process domains, and on ensuring
that our solutions align
with appropriate national and international standards. Our
productised services and packaged offerings simplify choice for
smaller customers. It also enables effective cross and up-selling.
At the same time, our expertise enables us to create custom
solutions for corporate and enterprise clients.
Our wide-ranging, proprietary product and service offering,
supported by substantial IP, is primarily delivered through the
market- leading IT Governance brand and our unique Cyber
Defence-in-Depth model.
During the last financial year, we continued to invest in and
build on our 20 years of content marketing, book publishing, PR
activity and Search Engine Optimisation (SEO) dominance which
resulted in growing volumes of incoming customers seeking specific
solutions.
We also continued to add external service accreditations,
wide-ranging customer endorsements and high Net Promoter Score
(NPS) scores to help convert incoming customers.
International development
The Group is well established in the UK and its main brand, IT
Governance, has significant recognition.
Our businesses are now established in the US and EU, and we see
significant organic and M&A growth opportunities.
Our initial Asia-Pacific website is open as we begin to explore
a number of regional opportunities.
Quality and accreditations
Our business management system continues to be accredited to
ISO/IEC 27001, ISO/IEC 27701, BS 10012 and ISO 9001. These
accreditations, combined with those from professional bodies such
as CREST, the UK's National Cyber Security Centre (NCSC), and the
Payment Card Industry Data Security Standard (PCI SSC), our Cyber
Essentials Plus certificate and from training organisations and
exam institutes, such as the International Board for IT Governance
Qualifications (IBITGQ), ISC2, ISACA, BCS and the UK's CIISec, are
all reflections of the care we take to ensure that we practice what
we preach.
Our focus on quality is reflected in our NPS scores, which we
use for engaging customer feedback. We achieve average scores
across the Group in excess of 50, which is a consistently 'Good'
score.
Divisional performance
Services
Our services division helps corporate and public organisations
meet compliance and cyber risk management objectives. This division
offers:
-- ISO/IEC 27001 (and related standards) implementation, audit and support services
-- A wide range of cyber security management systems and control implementations
-- Penetration testing
-- PCI DSS & Cloud compliance
-- Legal, General Data Protection Regulation (GDPR) Data
Protection Office (DPO) and Privacy by Design services
We continued to increase our penetration of the mid-size
enterprise market, with wins of multi- year contracts from key
customers around the world. We also steadily increased the numbers
of clients who are signed up to ongoing annual PCI QSA, Penetration
testing, ISO 27001 support, DPO and EU/UK representative
contracts.
During Q4, the Group's cyber security incident response service
achieved CREST accreditation. This, combined with GRC's unique
Cyber Safeguard service package, which includes cyber insurance
from Hamilton Insurance, enables the Group to support a growing
number of customers that are particularly exposed to cyber
attacks.
On 1 April 2022, the Group launched a Cloud Security consultancy
service to help mid-sized corporate clients ensure that their Cloud
infrastructures are securely configured. The service is fully
described on the UK website and sold directly to our existing
medium and large consultancy clients through our consultancy and
professional services teams. Allied with the Group's Microsoft
Global Training Partnership, this expands the footprint in the
fast-growing Cloud security market.
e-Commerce
This division encompasses:
-- Eight B2B e-commerce websites
-- ITGP, our publishing business, offers a wide range of books
and standards, covering cyber security, GDPR, privacy/ data
protection, risk & compliance
-- 'Learn from Anywhere' training delivery model, with
accredited training for a wide range of cyber security and privacy
qualifications.
We made significant progress with developing self-paced versions
of all the best-selling instructor-led courses in our portfolio.
This enables us to target markets and time zones for which our
Instructor-led offering is either difficult to attend or
unaffordable.
Software as a Service
This division is focused on delivering cyber security and
privacy subscription solutions from a growing range of cloud- based
platforms. These include
-- CyberComply GRC platform
-- Cyber Essentials certification
-- Vulnerability Scanning
-- GRC e-learning (staff awareness training)
-- Privacy as a Service
-- DocumentKits templates.
-- Cyber Safeguard, our Cyber security as a Service offering.
We significantly expanded the range of cyber security and
privacy standards and frameworks that can be addressed though the
CyberComply platform. At the same time, we started expanding the
staff awareness e-learning portfolio outside the core cyber
security and privacy product range to include the other GRC
subjects (such as anti-bribery and anti-money laundering) that
clients expect to see on GRC staff awareness platforms.
Financial report
Billings
Billings were up 20% to GBP14.8m (FY21: GBP12.3m). Billings
equate to the total value of invoices raised as cash sales through
the Group's websites. The figure does not take account of accrued
or deferred income adjustments that are required to comply with
accounting standards for revenue recognition.
The Board considers this to be a key performance indicator
because it has a much closer relationship than accounting revenue
to cash receipts from customers. It also provides good forward
visibility of future accounting revenue since much of the Group's
invoicing takes place ahead of delivery.
Revenue
Revenue for the year ended 31 March 2022 was up 18% to GBP13.9m
(FY21: GBP11.8m). The comparative period was particularly impacted
by the effects of the early months of COVID-19. H2 revenue at
GBP7.3m was up 11% on the previous six months (H1 FY22: GBP6.6m),
despite continuing uncertainty in the wider economy over inflation,
rising energy prices and other geopolitical factors.
Recurring and contracted revenue was up 22% to GBP8.2m (FY21:
GBP6.7). This accounted for 59% of total revenue (FY21: 57%).
The most significant revenue growth was in the e-Commerce
division, which includes sales of public training courses and
documentation toolkits. These were hardest hit during the COVID-19
pandemic and have recovered strongly, with the introduction of
recurring revenue product lines and longer term projects in this
division contributing to the growth and making this revenue stream
more resilient going forward. The growth in the Software as a
Service division reflects the Group's focus on and investment in
developing its high margin and highly scalable recurring
revenue.
Software
GBP'm Services as a Service e-Commerce Total
(SaaS)
------------- ---------- ------------- ------------ -------
FY22 6.6 3.7 3.6 13.9
------------- ---------- ------------- ------------ -------
FY21 6.6 2.8 2.4 11.8
------------- ---------- ------------- ------------ -------
FY22 vs FY21
% 0% 32% 50% 18%
------------- ---------- ------------- ------------ -------
International
International revenue was up 43% to GBP3.0m (FY21: GBP2.1m),
representing 22% (FY21: 18%) of total Group revenue. The Group
services the majority of its US based clients through its IT
Governance USA business and most of its European clients through
its IT Governance EU business. Invoicing in USD and EUR
respectively. The use of local staff and suppliers in those
territories means cost is incurred in local currency providing a
natural partial hedge against foreign exchange risk.
The Group saw growth in both its US and European revenues, of
44% and 14% respectively in FY22 at constant currency,
notwithstanding the differing rates of general economic recovery
from the pandemic around the world, along with other worldwide
macro-economic challenges.
Gross profit
Gross profit was up 34% to GBP8.2m (FY21: GBP6.1m), with gross
margin also up by 700 basis points to 59% (FY21: 52%).
The majority of the Group's direct cost base relates to
headcount for consultants and client delivery staff. The COVID-19
related sudden and dramatic revenue drop in the early part of the
comparative period meant that sales revenue was temporarily out of
alignment with the Group's costs.
Where possible, the Group focused on retaining the staff it
needed to deliver the expected strong growth and client delivery
coming out of the pandemic. This resulted in better consultant
utilisation rates and therefore better margins in the Services
division as revenue recovered. This, along with the Group's focus
on higher-margin subscription services, has driven the overall
improvement in margin. In particular, the growth in retainer type
arrangements for some services contracts has driven margin
improvement in the services division and also improved forward
visibility of revenue.
Notably, the Group's two fastest-growing revenue divisions, SaaS
and e-Commerce, have the highest gross margin:
FY21 FY22
----------- ------- ----- ------ --------- ------- ----- ------
Division Revenue Gross profit Revenue Revenue Gross profit
increase
----------- ------- ----- ------ --------- ------- ----- ------
GBP GBP % % GBP GBP %
----------- ------- ----- ------ --------- ------- ----- ------
Services 6.6 2.1 32% -% 6.6 2.7 41%
----------- ------- ----- ------ --------- ------- ----- ------
SaaS 2.8 2.6 93% 32% 3.7 3.3 89%
----------- ------- ----- ------ --------- ------- ----- ------
e-Commerce 2.4 1.4 58% 50% 3.6 2.2 61%
----------- ------- ----- ------ --------- ------- ----- ------
Total 11.8 6.1 52% 18% 13.9 8.2 59%
----------- ------- ----- ------ --------- ------- ----- ------
Administrative expenses
Administrative expenses increased by GBP0.2m (2%) to GBP9.1m
(FY21: GBP8.9m), compared with revenue increasing by 18%.
The increase in administrative expenses was mostly due to staff
costs and related expenses, with only a small increase in headcount
required to support the growth in revenue.
The Group's investment in automation and focus on SaaS revenue
lines has improved the overall operational gearing which has seen
top-line growth without the proportionate increases in staff. This
is expected to result in a continued widening of margins.
EBITDA
EBITDA (earnings before interest, tax, depreciation and
amortisation) is considered by the Board to be an important key
performance indicator. It is a more accurate measure of underlying
business performance as it removes the impact of non-cash
accounting adjustments.
EBITDA was GBP1.0m (FY21: loss GBP1.1m). The positive
performance in the last quarter of FY21 continued through FY22,
delivering the Group's first positive EBITDA full year result since
FY18.
FY21 FY22
-------------------- ----- -----
Revenue 11.8 13.9
-------------------- ----- -----
Operating loss (2.6) (0.7)
-------------------- ----- -----
Depreciation 0.4 0.3
-------------------- ----- -----
Amortisation 1.1 1.4
-------------------- ----- -----
EBITDA (1.1) 1.0
-------------------- ----- -----
EBITDA as % revenue (9)% 7%
-------------------- ----- -----
Finance expense
The net finance expense of GBP0.3m (FY21: GBP0.2m) relates to
interest on the Group's borrowings and leases accounted for under
IFRS 16.
Loss before tax
Loss before tax was GBP1.0m (FY21: loss GBP2.8m).
Taxation
No provision for tax has been made in the period (FY21:
GBPNil).
The small tax charge recognised primarily relates to the
unwinding of deferred tax on the acquisition of DQM GRC, offset by
the effect of changes in tax rates.
Earnings/loss pe share
Loss per share was 0.98 pence (FY21: loss per share 2.58
pence).
Dividend
To ensure the Group maintains financial flexibility and an
appropriate level of financial headroom for investment and working
capital the Board is not proposing a dividend in respect of the
year ending 31 March 2022. The board will review its dividend
policy annually.
Cash flow and cash/debt
The Group's closing cash position net of a bank overdraft was
GBP2.1m (31 March 2021: GBP0.2m).
Borrowings (excluding lease obligations) at period end were
GBP1.1m (31 March 2021: GBP1.3m).
The Group has banking facilities to provide adequate headroom
for unforeseen working capital requirements by way of an invoice
discounting facility that was inherited as part of the acquisition
of DQM GRC in 2019.
In addition, the unsecured loan facility provided by Andrew
Brode for the amount of GBP700,000 at an interest rate of 5% above
the Bank of England base rate to provide additional working capital
is available to the Company until at least 31 December 2023 and
shall automatically renew for a further 12 months unless terminated
by either party. As at the period end and the date of this report,
GBP350,000 remained available to be drawn down.
Further information on Going Concern is provided in the
Financial Statements 'Nature of operations and general information'
section (Principal accounting policies) of the Annual Report.
Statement of financial position
Net assets were GBP8.7m (31 March 2021: GBP6.9m).
Net current liabilities at period end were down by GBP2.0m to
GBP3.2m (31 March 2021: GBP5.2m).
In January 2022, GRC International completed a successful GBP3m
oversubscribed share placing. This is enabling the Group to
continue its product investment and business automation programmes,
including the development of new features and functionality across
all units in the SaaS division, at the same time as making agreed
repayments (under the 'time to pay' arrangements) against the
deferred HM Revenue & Customs (HMRC) tax liabilities that arose
through the COVID-19 pandemic.
The main factor in the overall decrease in net current
liabilities of GBP1.9m was the increase in cash balance resulting
from the January share placing and a strong Q4 trading and cash
performance.
The trade and other payables balance includes a deferred income
balance of GBP1.8m (31 March 2021: GBP1.1m), relating to training
and consultancy projects due to be delivered after the statement of
financial position date. The 63% increase in this balance signifies
improving revenue trends and provides some visibility of income to
be recognised in FY23.
Intangible assets
The Group's accounting policy is that only directly attributable
staff costs of the technical teams developing the assets are
capitalised. No management time is capitalised, and neither is any
proportion of overheads or borrowing costs.
Additions of GBP1.2m (FY21: GBP1.2m) relate to software, website
development and the development of courseware.
Capital structure
The issued share capital at 31 March 2022 was 107,826,246 (31
March 2021: 99,931,509) ordinary shares of GBP0.001 each.
There were no share options granted in the period to 31 March
2022.
Risks and uncertainties
The Board continually assesses and monitors the key risks of the
business. The key risks that could affect the Group's performance,
and the factors that mitigate these risks, are set out on pages 24
to 25 of the Annual Report.
Consolidated Income Statement
For the year ended 31 March
Notes 2022 2021
GBP'000 GBP'000
------------------------------------------------- ----- -------- ----------
Revenue 4 13,902 11,760
Cost of sales (5,698) (5,614)
------------------------------------------------- ----- -------- ----------
Gross profit 8,204 6,146
Administrative expenses (9,141) (8,882)
Other operating income 240 148
------------------------------------------------- ----- -------- ----------
Operating loss (697) (2,588)
Net finance costs (304) (247)
Share of post-tax loss of equity accounted joint
ventures (2) -
------------------------------------------------- ----- -------- ----------
Loss before taxation (1,003) (2,835)
Taxation 6 264
------------------------------------------------- ----- -------- ----------
Loss for the financial year (997) (2,571)
Loss for the financial year attributable to:
Equity shareholders of the parent (997) (2,571)
------------------------------------------------- ----- -------- ----------
Basic loss per share (pence) 10 (0.98) (2.58)
Diluted loss per share (pence) 10 (0.98) (2.58)
------------------------------------------------- ----- -------- ----------
Consolidated Statement of Comprehensive Income
For the year ended 31 March
2022 2021
GBP'000 GBP'000
========================================================== ======== ==========
Loss for the year (997) (2,571)
Other comprehensive (loss)/profit - items that may
subsequently be reclassified to profit/loss:
Exchange differences on translation of foreign operations (1) 4
========================================================== ======== ==========
Other comprehensive (loss)/profit for the financial
year (1) 4
========================================================== ======== ==========
Total comprehensive loss for the financial year (998) (2,567)
========================================================== ======== ==========
Total comprehensive loss to equity shareholders
of the parent (998) (2,567)
========================================================== ======== ==========
Consolidated Balance Sheet as at 31 March
Notes 2022 2021
GBP'000 GBP'000
Assets
Non-current assets
Goodwill 5 6,804 6,804
Intangible assets 6 5,630 5,765
Property, plant and equipment 325 426
Investments in equity-accounted joint ventures 17 7
--------------------------------------------------------- --------- ---------
12,776 13,002
-------------------------------------------------------- --------- ---------
Current assets
Inventories - 33
Trade and other receivables 7 1,612 1,694
Cash at bank 2,099 233
--------------------------------------------------------- --------- ---------
3,711 1,960
-------------------------------------------------------- --------- ---------
Current liabilities
Trade and other payables 8 (5,935) (5,986)
Borrowings 9 (722) (863)
Lease liabilities (117) (197)
Current tax (127) (127)
--------------------------------------------------------- --------- ---------
(6,901) (7,173)
-------------------------------------------------------- --------- ---------
Net current liabilities (3,190) (5,213)
--------------------------------------------------------- --------- ---------
Non-current liabilities
Trade and other payables 8 (73) -
Borrowings 9 (329) (460)
Lease liabilities (145) (83)
Deferred tax liability (338) (340)
--------------------------------------------------------- --------- ---------
(885) (883)
-------------------------------------------------------- --------- ---------
Net assets 8,701 6,906
--------------------------------------------------------- --------- ---------
Equity
Share capital 108 100
Share premium 16,012 13,227
Merger reserve 4,276 4,276
Share-based payment reserve 126 126
Translation reserve (9) (8)
Accumulated deficit (11,812) (10,815)
--------------------------------------------------------- --------- ---------
Total equity 8,701 6,906
--------------------------------------------------------- --------- ---------
Consolidated Statement of Changes in Equity
For the year ended 31 March 2022
Share-based
payment
Share Share Merger reserve Retained Translation
capital premium reserve GBP'000 earnings reserve Total GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- --------- --------- ----------- ---------- --------------- ---------------
Balance at 1 April
2021 100 13,227 4,276 126 (10,815) (8) 6,906
Loss for the year - - - - (997) - (997)
Foreign exchange
difference on
consolidation - - - - - (1) (1)
========================== ========= ========= ========= =========== ========== =============== ===============
Total comprehensive
loss for the year - - - - (997) (1) (998)
Shares issued 8 2,992 - - - - 3,000
Cost of share issue - (207) - - - - (207)
Transactions with
owners 8 2,785 - - - - 2,793
========================== ========= ========= ========= =========== ========== =============== ===============
At 31 March 2022 108 16,012 4,276 126 (11,812) (9) 8,701
========================== ========= ========= ========= =========== ========== =============== ===============
For the year ended 31 March 2021
Share-based
payment
Share Share Merger reserve Retained Translation
capital premium reserve GBP'000 earnings reserve Total GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- --------- --------- ----------- ---------- --------------- ---------------
Balance at 1 April
2021 100 13,182 4,276 171 (8,289) (12) 9,428
Loss for the year - - - - (2,571) - (2,571)
Foreign exchange
difference on
consolidation - - - - - 4 4
========================== ========= ========= ========= =========== ========== =============== ===============
Total comprehensive
loss for the year - - - - (2,571) 4 (2,567)
Shares issued - 45 - (45) 45 - 45
Transactions with
owners - 45 - (45) 45 - 45
========================== ========= ========= ========= =========== ========== =============== ===============
At 31 March 2022 100 13,227 4,276 126 (10,815) (8) 6,906
========================== ========= ========= ========= =========== ========== =============== ===============
Consolidated Statement of Cash Flows
FOR THE YEARED 31 MARCH
2022 2021
Notes GBP'000 GBP'000
=============================================== ======== -------- --------
Cash flows from operating activities
Loss for the year (997) (2,571)
Adjustments for:
Depreciation of plant and equipment 91 156
Amortisation of right of use assets 143 194
Amortisation of intangible fixed assets 1,367 1,107
Loss on disposal of fixed assets 50 4
Foreign exchange loss/(gains) 18 (22)
Share of post-tax profits of equity accounted
joint ventures 2 -
Finance expenses 304 247
Income tax expense (6) (264)
========================================================= ======== ========
972 (1,149)
Decrease in inventories 33 28
Decrease in trade and other receivables 83 588
Increase in trade and other payables 28 2,560
========================================================= ======== ========
1,116 2,027
Income tax refund 5 187
========================================================= ======== ========
Net cash Inflow from operating activities 1,121 2,214
Investing activities
Purchase of intangible assets (1,231) (1,168)
Purchase of plant and equipment (47) (35)
Acquisition of joint venture investment (13) -
========================================================= ======== ========
Net cash outflow from investing activities (1,291) (1,203)
--------------------------------------------------------- -------- --------
Financing activities
Proceeds from issue of shares 3,000 -
Costs of share issue (207) -
Repayment of acquired contingent consideration
liability - (100)
Proceeds from borrowings 546 710
Repayment of borrowings (836) (1,249)
Interest paid (245) (186)
Interest on lease liability on right of
use assets (69) (43)
Payments of lease liabilities on right of
use assets (155) (168)
Net cash (outflow)/inflow from financing
activities 2,034 (1,036)
Net increase/(decrease) in cash and cash
equivalents 1,864 (25)
Cash and cash equivalents at beginning of
financial year 233 245
Effects of exchange rate changes on cash
and cash equivalents 2 13
========================================================= ======== ========
Cash and cash equivalents at end of financial
year 2,099 233
========================================================= ======== ========
Comprising
Cash at bank 2,099 233
========================================================= ======== ========
Nature of Operations and General Information
1. Nature of Operations and General Information
GRC International Group plc (GRC International Group or 'the
Company') is a public limited company limited by shares,
incorporated and domiciled in England and Wales. The registered
company number is 11036180 and the registered office is Unit 3
Clive Court, Bartholemew's Walk, Cambridgeshire Business Park, Ely,
Cambridgeshire, CB7 4EA.
The principal activities of GRC International Group plc and its
subsidiary companies (together, the "Group") are those of a
one-stop shop for IT Governance including books, tools, learning
and consultancy services.
The financial information for the year ended 31 March 2022 and
the year ended 31 March 2021 does not constitute the company's
statutory accounts for those years. Statutory accounts for the year
ended 31 March 2021 have been delivered to the Registrar of
Companies. The statutory accounts for the year ended 31 March 2022
will be delivered to the Registrar of Companies in due course.
The auditors' report on the accounts for 31 March 2022 was
unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006. The auditors' report on the accounts for 31
March 2021 did draw attention to an emphasis of matter regarding
going concern.
2. Principal Accounting Policies
Basis of preparation
The consolidated financial statements of GRC International Group
plc and entities controlled by the Company (its subsidiaries) for
the years presented has been prepared in accordance with UK-adopted
international accounting standards
Basis of consolidation
The results for the year ended 31 March 2022 and 31 March 2021
include the results of GRC International Group plc and its
subsidiaries.
A subsidiary is a company controlled directly by the Group.
Control is achieved where the Group has the power over the
investee, rights to variable returns and the ability to use the
power to affect the investee's returns.
Income and expenses of subsidiaries acquired during the year are
included in the Consolidated Income Statement from the effective
date of control. When necessary, adjustments are made to the
financial statements of subsidiaries to bring their accounting
policies into line with those used by the Group.
All intra-Group transactions, balances, income and expenses are
eliminated in full on consolidation.
The principal accounting policies adopted are set out in the
Annual Report and Financial Statements.
These accounting policies comply with each IFRS that is
mandatory for accounting periods ending on 31 March 2022.
3. Segmental reporting
Operating segments
For the purposes of segmental reporting, the Group's Chief
Operating Decision Maker ('CODM') is considered to be the Board of
Executive Directors of the Company. The Board receives information
on a consolidated basis. Given the extent and nature of central
support services provided centrally in support of the Group's
different revenue streams, the Board therefore considers that the
Group operates as a single operating segment.
Revenue by geographic destination
Revenue across all operating segments is generated from the UK
but includes overseas sales:
2022 2021
GBP'000 GBP'000
======= ======== ========
UK 10,880 9,666
Non-UK 3,022 2,094
======= ======== ========
13,902 11,760
======= ======== ========
Information about major customers
No customers contributed 10% or more to the Group's revenue in
any period presented.
4. Revenue
Revenue is all derived from continuing operations.
Notwithstanding that the Group's revenues are often
interdependent, the Group has disaggregated revenue into various
categories in the following tables which is intended to depict how
the nature, amount, timing and uncertainty of revenue and cash
flows are affected by economic date:
2022 2021
GBP'000 GBP'000
================================= ======== ========
Consultancy and similar services 8,882 8,106
Publishing and Distribution 838 750
Software 1,481 1,147
Training 2,701 1,757
================================= ======== ========
Total revenue 13,902 11,760
================================= ======== ========
5. Goodwill
2022 2021
Total Total
Cost and Net book value GBP'000 GBP'000
========================== ======== ========
At 1 April 6,804 6,804
At 31 March 6,804 6,804
========================== ======== ========
Goodwill arising from business combinations has been allocated
to the Group's DQM cash-generating unit ('CGU'). Goodwill is tested
at least annually for impairment and whenever there are indicators
that goodwill might be impaired.
For the DQM CGU, the carrying amount of goodwill has been
assessed for impairment by comparing the carrying amount of the CGU
in which it is included to the recoverable amount based on value in
use of the CGU. The value in use calculation for the
cash-generating unit uses: estimated future cash flows, for which
the key assumptions are forecast revenue over the next five years,
based on management's estimates; the terminal growth rate for
revenues beyond that period, which reflects a cautious approach for
the purpose of measuring a value in use; and a pre-tax discount
rate, which is based on management's assessment of risk inherent in
the estimated future cash flows.
The pre-tax cash flows for the forecast period are derived from
the most recent financial budget for the year ending 31 March 2023
approved by the Board. The extrapolation for the period 2024 to
2028 is based on management estimates with an assumption of 15%
revenue growth.
As of 31 March 2022, the value in use of the cash-generating
unit was greater by GBP7,015k than the CGU's carrying amount. The
key assumptions used were the forecasts as explained above, the
terminal growth rate of 2%, and the pre-tax discount rate of 7.2%.
Management's methodology does not include the use of small company
or company specific risk Premia because in the judgement of the
directors, the degree of risk attached to the cash flow assumptions
is such that no additional risk premium in the discount rate is
considered necessary. The growth in cashflows and the selection of
the discount rate are a judgement that management has made which
may have a bearing on the identification of impairment losses.
The changes in key assumptions that would individually give rise
to a material impairment loss are as follows:
a) The discount rate would have to increase by 4.0%.
b) Operating costs would have to rise by 15%, assuming that
revenue levels were still to grow by 15%.
c) Future revenue increases by 14% less than is modelled in the
forecast period (assuming margins remain the same) in order to
reduce the headroom to nil, all other variables remaining
constant.
6. Intangible assets
Consultancy Software
Marketing Publishing products and Trademarks Customer Total
tools products and website GBP'000 relationships GBP'000
GBP'000 GBP'000 courseware costs GBP'000
GBP'000 GBP'000
------------- ----------- ------------ ------------ -------------- ------------ ----------------- -------------
Cost
At 1 April
2020 63 333 881 5,234 466 1,843 8.820
Additions - 67 158 943 - - 1,168
Foreign
exchange
movement - - (3) - - - (3)
------------- ----------- ------------ ------------ -------------- ------------ ----------------- -------------
At 31 March
2021 63 400 1,036 6,177 466 1,843 9,985
Additions 3 51 182 995 - - 1,231
------------- ----------- ------------ ------------ -------------- ------------ ----------------- -------------
At 31 March
2022 66 451 1,218 7,172 466 1,843 11,216
------------- ----------- ------------ ------------ -------------- ------------ ----------------- -------------
Accumulated
depreciation
At 1 April
2020 61 234 325 2,274 54 166 3,114
Charge for
year 2 32 90 783 46 154 1,107
Foreign
exchange
movement - - (1) - - - (1)
------------- ----------- ------------ ------------ -------------- ------------ ----------------- -------------
At 31 March
2021 63 266 414 3,057 100 320 4,220
Charge for
year - 51 112 1,003 47 153 1,366
------------- ----------- ------------ ------------ -------------- ------------ ----------------- -------------
At 31 March
2022 63 317 526 4,060 147 473 5,586
------------- ----------- ------------ ------------ -------------- ------------ ----------------- -------------
Net book
value
At 31 March
2022 3 134 692 3,112 319 1,370 5,630
------------- ----------- ------------ ------------ -------------- ------------ ----------------- -------------
At 31 March
2021 - 134 622 3,120 366 1,523 5,765
At 1 April
2020 2 99 556 2,960 412 1,677 5,706
------------- ----------- ------------ ------------ -------------- ------------ ----------------- -------------
Amortisation is included within administrative expenses.
Intangible assets includes capitalised related party costs
incurred.
All intangible assets have been developed internally with the
exception of those arising on the business acquisition in 2019. For
CGUs requiring impairment testing under IAS 36 Impairment of
Assets, the method used to determine recoverable amount is
value-in-use.
7. Trade and other receivables
2022 2021
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Trade receivables 1,284 1,186
Less: provision for impairment of trade receivables (124) -
----------------------------------------------------- -------- --------
Net trade receivables 1,160 1,186
Other receivables 32 78
Prepayments 420 430
----------------------------------------------------- -------- --------
1,612 1,694
----------------------------------------------------- -------- --------
None of the Company's trade and other receivables are secured by
collateral or credit enhancements.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses on a collective basis. To measure expected
credit losses on a collective basis, trade receivables and contract
assets are grouped based on a similar credit risk and ageing.
The Group's policy for monitoring default risk over receivables
is based on the ongoing evaluation of the collectability and ageing
analysis of trade and other receivables. Considerable judgement is
required in assessing the ultimate realisation of these
receivables, including reviewing the potential likelihood of
default, the past collection history of each customer and the
current economic conditions.
The Group uses a third-party credit scoring system to assess the
creditworthiness of potential new customers before accepting them.
Credit limits are defined by customer based on this information.
All customer accounts are subject to review on a regular basis by
senior management and actions are taken to address debt ageing
issues.
To determine the level of expected credit loss provision
required historical loss rates are adjusted for current and
forward-looking information on macroeconomics factors affecting the
Group's customers. The Group has identified gross domestic product
growth rates, employment rates and inflation rates as the key
macroeconomic factors in the countries in which the Group operates.
The rates applied vary from 10% to 100% depending on the above
factors and the age of the debt.
The Group has not previously recorded any credit loss provision
on the grounds of materiality.
The maturity profile of trade and other receivables is set out
in the table below:
2022 2021
GBP'000 GBP'000
----------------------------------- -------- --------
In one year or Less, or on demand 1,612 1,694
----------------------------------- -------- --------
The analysis of trade and other receivables by foreign currency
is set out in the table below:
2022 2021
GBP'000 GBP'000
------------------- -------- --------
UK pound 1,476 1,581
US dollar 83 67
Euro 51 46
Australian dollar 2 -
1,612 1,694
------------------- -------- --------
The Group's foreign currency receivables are denominated in the
functional currency of the subsidiaries in which they arise. There
is no impact on the loss for the year from foreign exchange rate
movements on such financial instruments.
8. Trade and other payables
Amounts falling due within one year:
2022 2021
GBP'000 GBP'000
------------------------------------ -------- --------
Trade payables 1,018 1,223
Other taxation and social security 2,273 2,737
Other payables 436 451
Deferred income 1,847 1,114
Accruals 361 461
------------------------------------ -------- --------
5,935 5,986
------------------------------------ -------- --------
Amounts falling due after one year:
2022 2021
GBP'000 GBP'000
----------------------------------- -------- --------
Other taxation and social security 73 -
73 -
----------------------------------- -------- --------
Amounts falling due after one year relate to the non-current
element of the tax and social security arrangements agreed with
HMRC based on time to pay arrangements. The balance payable is
expected to reduce as cash payments are made and as claims for
R&D tax credits are claimed from HMRC as and when quantified in
respect of year ended 31 March 2020. 31 March 2021 and 31 March
2022 respectively.
9. Borrowings
2022 2021
Current Non-current Total Current Non-current Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---------------------- -------------------------- ---------------------- ---------------------- -------------------------- ----------------------
Secured
Other loans
(i) 205 - 205 266 - 266
-------------------------- ---------------------- -------------------------- ---------------------- ---------------------- -------------------------- ----------------------
Total
secured
borrowings 205 - 205 266 - 266
-------------------------- ---------------------- -------------------------- ---------------------- ---------------------- -------------------------- ----------------------
Unsecured
Bank loans 40 193 233 63 234 297
Other loans 91 136 227 166 226 392
Loans from
related
parties 386 - 386 368 - 368
-------------------------- ---------------------- -------------------------- ---------------------- ---------------------- -------------------------- ----------------------
Total
unsecured
borrowings 517 329 846 597 460 1,057
-------------------------- ---------------------- -------------------------- ---------------------- ---------------------- -------------------------- ----------------------
(i) Secured liabilities and assets pledged as security
Of the Other loans, GBP82,000 (2021: GBP260,000) is secured
against future receivables. The remaining secured bank loans and
overdrafts are secured against assets of the business.
Lease liabilities are secured as the rights to the leased assets
recognised in the financial statements revert to the lessor in the
event of default.
Cash
As at proceeds As at
1 April from Repayments Repayments Interest 31 March
2021 borrowings of capital of interest accruing 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- --------- ------------ ------------ ------------- ---------- ----------
Secured loans 266 546 (607) (87) 87 205
Unsecured loans 689 - (229) (60) 60 460
Loans from related
parties 368 - - - 18 386
-------------------- --------- ------------ ------------ ------------- ---------- ----------
Total 1,323 546 (836) (147) 165 1,051
-------------------- --------- ------------ ------------ ------------- ---------- ----------
Cash
As at proceeds As at
1 April from Repayments Repayments Interest Foreign 31 March
2020 borrowings of capital of interest accruing exchange 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- --------- ------------ ------------ ------------- ---------- ---------- ----------
Secured loans 528 392 (654) (71) 71 - 266
Unsecured loans 591 318 (217) (70) 70 (3) 689
Loans from related
parties 728 - (378) - 18 - 368
-------------------- --------- ------------ ------------ ------------- ---------- ---------- ----------
Total 1,847 710 (1,249) (141) 159 (3) 1,323
-------------------- --------- ------------ ------------ ------------- ---------- ---------- ----------
The Group has a number of loans in the period presented, and are
summarised as follows:
Effective Interest
Security pledged Term Expiry/Maturity rate
Date
--------------------------- -------------------- ----------------- ------------------ ------------------
Bank
Lloyds Bank - CBILS
Loan Unsecured 72 Months October 2026 2.45%
--------------------------- -------------------- ----------------- ------------------ ------------------
Other
Parent company
Wesleyan guarantee 60 Months September 2024 14.32%
Director's
Portman Asset Finance Guarantee 36 Months August 2023 10.16%
Bute Capital Secured against 14-16 Months July 2022 6.65% - 10.36%
assets of business
Secured against
receipts from
You Lend sales 12 Months July 2022 16.67%
Director's
LDF Finance No. 3 Ltd Guarantee 36 Months August 2022 10.16%
Paypal Secured against 12 Months June 20022 4.26-10.49%
receipts from
sales
Uncapped finance Unsecured 12 Months July 2022 15.00%
=========================== ==================== ================= ================== ==================
Loans from related
parties
Unsecured loan facility Unsecured Available to December 2023 5.0% above
provided by Andrew Brode. the Group until the Bank of
at least England
31 December base rate
2023 and will
automatically
renew for a
further 12
months unless
terminated
by
either party.
=========================== ==================== ================= ================== ==================
In addition, the Group has access to an Invoice discounting
facility.
10. Earnings per share
Basic earnings per share is based on the loss after tax for the
year and the weighted average number of shares in issue during each
year.
2022 2021
'000 '000
=========================================== ======= =======
Loss attributable to equity holders of
the Group (GBP) (997) (2,571)
Weighted average number of shares in issue 101,510 99,754
=========================================== ======= =======
Basic loss per share (pence) (0.98) (2.58)
=========================================== ======= =======
Diluted earnings per share is calculated by adjusting the
average number of shares in issue during the year to assume
conversion of all dilutive potential ordinary shares.
Taking the Group's share options into consideration in respect
of the Group's weighted average number of ordinary shares for the
purposes of diluted earnings per share, is as follows:
2022 2021
Number of shares 101,510,456 99,754,064
------------------------------------------------------- ------------ -----------
Dilutive (potential dilutive) effect of share options - -
Weighted average number of ordinary shares for the
purposes of diluted earnings per share 101,510,456 99,754,064
------------------------------------------------------- ------------ -----------
Diluted loss per share (pence) (0.98) (2.58)
======================================================= ============ ===========
Due to the losses incurred during the year, a diluted loss per
share has not been calculated as this would serve to reduce the
basic loss per share. There were 426,760 (2021: 426,760) share
incentives outstanding at the end of the year that could
potentially dilute basic earnings per share in the future.
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END
FR DBLFXLVLZBBD
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