10 May 2023

GRC International Group PLC

Year-end trading update

GRC International Group PLC (AIM: GRC, "GRC" or the "Group"), the international governance, risk management and compliance company whose main business is cyber defence-in-depth, announces a trading update for the 12 months ended 31 March 2023 ("FY23").

Highlights

·           Revenue expected to be £14.5m - £15.0m (FY22: £13.9m).

•       Annualised Recurring Revenue ('ARR') increased by 7% in one month to £6.7m at the end of March.

•       Contracted and recurring revenues expected to account for over 60% of total revenues.

·           Q4 billings* up 23% on Q3 to £4.3m (Q3: £3.5m). Notably, Q4 included the signing of several significant multi-year contracts, with an aggregate value of £5.0m.

·           Gross margin expected to increase to 61% (FY22: 59%).

·           EBITDA expected to be £0.3m - £0.6m (FY22: £0.9m) impacted by economic headwinds and wider macro uncertainties in Q3.

·           Year-end cash £0.1m (2022: £2.0m). Facility headroom at the period end circa £0.5m (FY22: £0.5m).

The Group saw strong positive momentum through Q4 of FY23 across all areas of the business, despite experiencing the widely reported effects in Q3 of the economic headwinds in the UK economy from uncertainty in the financial markets, inflationary pressures and staff shortages. 

Q4 saw the highest levels of training course attendance and training revenue for the Group across all delivery options since the end of the GDPR boom as well as a number of significant multi-year contract signings.

The improved revenue performance was supported by ongoing investment in staff capability and product quality, resulting in improvements in the Group NPS (Net Promoter Score) score from 39 in FY22 to 53 (+50 is 'excellent') in FY23 and an initial TrustPilot rating of 4.5 (also 'excellent').  Service quality is one of the Group's key competitive differentiators.

The Group also continued to invest in the development of its websites and software-as-a-service platforms, whilst at the same time substantially reducing the HMRC liabilities deferred during the pandemic in line with its agreements, utilising the funds raised from the successful share placing in January 2022.  

Alan Calder, Chief Executive Officer, commented:

"Our solid performance in H1 of FY23 continued into Q4, resulting in revenue growth and continued margin improvements.  However, the economic and geopolitical headwinds materially impacted our Q3 performance.

"Our technology capabilities and our track record, with deep expertise and cyber defence-in-depth model, provide our clients with peace of mind. They know their assets are safe and, equally importantly, comply with the numerous cyber regulations.

"As we have previously stated, our strategy is to grow organically and by acquisition. In the current financial market conditions, our primary focus is on organic growth and, in particular, in positioning our Cyber Comply platform at the heart of our service offering.

"With our recurring revenue activities continuing to perform strongly and the good momentum in Q4  continued into the start of the new financial year, we are looking forward with increasing confidence.

"Trading to the end of April 2023 is in line with our expectations."

* 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.

Note: the FY23 numbers detailed above are unaudited and actual outturn for the financial year will be determined during the audit process to be completed during the Summer

ENDS

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014, which is part of UK law by virtue of the European Union (withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

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

 About GRC International Group PLC

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, US and Asia-Pacific regions.