20 December 2023
GRC International Group Plc
("GRC" or the "Group")
Interim results for the period ended 30 September 2023
Continued revenue growth and EBITDA positivity
Improved revenue quality with substantial ARR growth
GRC International Group PLC (AIM: GRC), an integrated cyber security and privacy solutions business, announces its unaudited interim results for the six months ended 30 September 2023.
Financial highlights
· Revenue up 4% to £7.6m (H1 FY23: £7.3m.
· Qualifications revenue up 24% to £1.5m (H1 FY23: £1.2m).
· GDPR Compliance revenue up 11% to £746k (H1 FY23: £671k).
· Professional services revenue up 6% to £4.8m (H1 FY23: £4.5m).
· Web revenue up 5% to £4.9m (H1 FY23: £4.6m).
· ARR (Annualised Recurring Revenue) at period end up 36% to £11.0m (H1 FY23: 8.2m).
· Recurring and contracted revenue up 8% to £5.5m (H1 FY23: £5.1m).
· 72% (H1 FY23: 71%) of revenue generated from recurring and contracted revenue contracts.
· Gross margin of 61% (H1 FY23: 60%) - continued improvement reflects operational gearing from subscription services and internal efficiencies from automation projects.
· Adjusted EBITDA1 of £0.2m (H1 FY23: £0.4m).
· Loss before tax of £0.9m (H1 FY23: £0.5m) driven by amortisation from the investment in capital expenditure to fuel future growth of £0.9m (H1 FY23: £1.0m).
· Cash balances at period end of £0.0m (H1 FY23: £0.2m). Facility headroom circa £0.4m (H1 FY23: £0.4m). Borrowings (excluding lease obligations) of £1.5m (H1 FY23 £0.8m).
Operational highlights
· Increased CyberComply ARR by 40% to £528k (H1 FY23: £378k).
· ITG EU billings2 up 20% to £410k (H1 FY23: £341k).
· Improved training value for money: training delegate numbers up 4% to 876 (H1 FY23: 839) and average delegate revenue up by 20% to £1.7k (H1 FY23: £1.4k).
· Increased investment in overhead improved the quality and efficiency of customer delivery, leading to a further increase in Group NPS (net promoter score) to 58 (H1 FY23: 54). Scores over 50 indicate customer service rating of 'Excellent'.
Outlook
· Continued investment in the CyberComply platform and our product suite.
· The Board expects that these investments will support an acceleration in revenue growth through Q3 and for compliance pressures to drive a very strong Q4. However, full year results will inevitably depend on Q4 expectations being realised.
· The Group's trading performance is historically H2 weighted, and the Board expects to see that patten continue in the current year.
· The Board remains confident that the Company will meet market expectations for the full year to 31 March 2024*.
*GRC believes that current consensus market expectations for the year ending 31 March 2024 prior to the publication of this announcement are revenues of £17.0 million and adjusted EBITDA of £1.1 million.
1 EBITDA is defined within the Financial Review of this announcement.
2 Billings equate to the total value (net of VAT) of invoices raised and cash sales through the Group's websites. Billings is considered by the Board to be a key metric for managing the business due to billings' direct relationship with cashflow. Cash receipts are driven by billings achieved each month rather than revenue recognised in accordance with IFRS.
Alan Calder, Chief Executive Officer, said:
"We continued in H1 FY24 to grow overall revenue, generate positive EBITDA, improve our customer quality scores, generate substantial Intellectual Property, and develop our longer-term delivery capabilities. We expect the development work done in H1 to accelerate revenue growth through H2 and as such, the Board is confident that the Company will meet market expectations for the full year to 31 March 2024.
CyberComply, our cyber security and compliance platform, is at the heart of our long-term strategy for growth. We made substantial progress, during H1, both in functionality improvements and in revenue, with CyberComply-specific ARR up 40% HY on HY.
Although economic and geo-political headwinds persist, we expect their effects to continue being counter-balanced by the impact on GRC of the requirements of a rapidly increasing cyber and privacy regulation and enforcement (such as GDPR, DORA and SEC Regulations) in the UK, the EU, the US and elsewhere."
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
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, US and Asia-Pacific regions.
Chief Executive Review
Overview
GRC continues this year to make progress in its transformation from a services business to one that is centred around a comprehensive cyber security and privacy compliance SaaS platform, CyberComply.
40% growth v H1 FY23in CyberComply-specific ARR demonstrates that our customers buy-in to our vision of how best to manage cyber security compliance in today's increasingly complex regulatory environment. Encouragingly, in spite of geo-political and economic headwinds, we continued to generate positive EBITDA as well as overall revenue growth. We had a marginal improvement in gross margin % as well as another improvement in our NPS service quality results. Most importantly, our focus on quality of earnings shows in the significant 36% increase in our overall ARR v H1 FYH23.
Strategy
Our strategy and the drivers for growth remain unchanged.
· Corporates, large and small, domestic and multinational, have to deal with a growing number of increasingly complex regulations and enforcement in the Group's three primary geographic markets of the UK, EU and US.
· All clients face escalating nation-state and criminal (serious organised crime) cyber-attacks.
· There are significant and deep-seated national and international cyber and compliance skills deficits.
· Technological security solutions are inadequate to the challenge, which is primarily one of insider risk and human susceptibilities.
In this environment, our strategy is to offer an integrated suite of sensibly priced, high-quality GRC products and services on an increasingly longer-term contracted basis. The proliferation of legal requirements (both cyber and privacy and customer-mandated security practices) is driving organisations to start looking for compliance platforms that can systematically and cost effectively support their risk management strategies. Our ongoing investment in our CyberComply platform and in our e-commerce websites are both important elements of what we see as the development of a cyber regulation technology ('cyber reg tech') market. This is a market that we aspire to lead.
In the longer term, we plan 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. We believe that the Group's proven 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 in excess of £50m, with gross margins and EBITDA margins in the order of 65% and 25% respectively.
Trading outlook
We are continuing to invest in our CyberComply platform, as well as in our product suite, to help our clients comply with the EU's Digital Operational Resilience Act, the USA's SEC Cyber Security Regulation, the UK's revised GDPR and a host of other industry-specific standards (such as PCI DSS, EuroPrivacy and ISO/IEC 27001). It is expected that these investments will support an acceleration in revenue growth through Q3 and for compliance pressures to drive a very strong Q4.
Alan Calder
Chief Executive Officer
Financial Review
Billings
Billings were up 1% to £7.3m (H1 FY23: £7.2m). Billings equate to the total value of invoices (excluding VAT) 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 billings 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 for training and 'ad-hoc' consultancy projects takes place ahead of delivery.
The overall shift within the business towards recurring revenue on monthly subscriptions and retainer type arrangements means that billings are more closely aligned with revenue than has been the case historically.
Revenue
Revenue for the six months ended 30 September 2023 was up 4% to £7.6m (H1 FY23: £7.2m).
Despite the uncertainty of the current economic climate, with high inflation, high interest rates and low levels of overall economic growth, our H1 FY24 revenue was still 3% up on the immediately previous 6 months (H2 FY23: £7.4m).
H2 is traditionally the Group's stronger trading period, so management are encouraged to see consecutive periods of growth.
Recurring and contracted revenue was up 8% to £5.5m (H1 FY23: £5.1m). This accounted for 72% of total revenue (H1 FY23: 71%).
The strong revenue growth (13%) in the E-Commerce division reflects a return on the investment made in automation and website infrastructure projects, which have made it easier for customers to purchase and have fulfilled products and services without the need to interact with salespeople or administrative staff.
| £'m | Services | Software as a Service (SaaS) | E-Commerce | Total |
| H1 FY24 | 3.9 | 1.9 | 1.8 | 7.6 |
| H1 FY23 | 3.6 | 2.1 | 1.6 | 7.3 |
| FY FY23 | 7.0 | 4.1 | 3.6 | 14.7 |
| | | | | |
| Period-on-period % | Services | Software as a Service (SaaS) | E-Commerce | Total |
| H1 FY24 vs FY23 | 8% | (10)% | 13% | 4% |
International
International revenue was down 6% to £1.5m (H1 FY23: £1.6m), representing 20% (H1 FY23: 22%) 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 experienced some operational challenges in the US during Q2. These have been successfully addressed by management and performance entering the second half of the year is encouraging. The EU and US are considered to be important future growth markets for the Group.
Gross profit
Gross profit was up 4% to £4.6m (H1 FY23: £4.4m), with gross margin also up by 100 basis points to 61% (H1 FY23: 60%).
The majority of the Group's direct cost base relates to headcount for consultants and client delivery staff. 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. Margin in the Services division also benefited from the positive impact of several operational projects designed to improve efficiency, while investment in website infrastructure has delivered margin improvement in the e-Commerce division.
The Board's expected revenue growth in H2, and in particular in Q4, is not expected to require additional delivery capability, and so H2 margins are expected to widen.
| Segment | 6 months to 30 September 2023 | | Revenue change | | 6 months to 30 September 2024 | ||||
| | | | | | | | | | |
| | Revenue | Margin | | % | | Revenue | Margin | ||
| | £ | £ | % | | | | £ | £ | % |
| Services | 3.6 | 1.7 | 47% | | 8% | | 3.9 | 2.0 | 51% |
| SaaS | 2.1 | 1.7 | 81% | | (10)% | | 1.9 | 1.3 | 68% |
| E-Commerce | 1.6 | 1.0 | 63% | | 12% | | 1.8 | 1.3 | 72% |
| Total | 7.3 | 4.4 | 60% | | 4% | | 7.6 | 4.6 | 61% |
Administrative expenses
Administrative expenses increased by £0.4m (8%) to £5.3m (H1 FY23: £4.9m).
During FY23 the Group invested in people, marketing and IT spend designed to fuel the next phase of revenue growth. It is therefore expected that FY24 will carry this cost in the first half of the year. The Group has now reached a point in its various software development and automation projects where overhead is expected to drop as a percentage of revenue through H2.
EBITDA
Adjusted EBITDA (earnings before interest, tax, depreciation and amortization, adjusted to remove exceptional administrative costs) is considered by the Board to be an important key performance indicator. The Board believes that it is a more accurate measure of underlying business performance as it removes the impact of non-cash accounting adjustments.
Adjusted EBITDA was £0.2m (H1 FY23: £0.4m).
| £'M | H1 FY24 | HY2 FY23 | HY1 FY23 |
| Revenue | 7.6 | 7.4 | 7.3 |
| | | | |
| Operating loss | (0.7) | (1.0) | (0.4) |
| Depreciation | 0.0 | 0.0 | 0.1 |
| Amortisation | 0.8 | 0.8 | 0.7 |
| Exceptional administrative costs | 0.1 | 0.1 | 0.0 |
| Adjusted EBITDA | 0.2 | (0.1) | 0.4 |
| Adjusted EBITDA as % Revenue | 3% | (1)% | 5% |
Finance expense
The net finance expense of £0.2m (H1 FY23: £0.1m) relates to interest on the Group's borrowings and leases accounted for under IFRS 16.
Loss before tax
Loss before tax was £0.9m (H1 FY23: loss £0.5m).
Taxation
No provision for tax has been made in the period (FY22: £Nil). The tax credit recognised relates to the unwinding of deferred tax on the acquisition of DQM.
Earnings per share
Loss per share was 0.78 pence (Hi FY23: loss per share 0.48 pence).
Dividend
The Group is not paying a dividend.
Cash flow and cash/debt
The Group's closing cash position net of a bank overdraft was £0.0m (30 September 2022: £0.2m).
Borrowings (excluding lease obligations) at period end were £1.5m (30 September 2022: £0.8m).
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 in 2019.
In addition, the unsecured loan facility provided by Andrew Brode for the amount of £700,000 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 2024 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, £350,000 remained available to be drawn down.
Statement of financial position
Net assets were £6.6m (30 September 2023: £8.1m).
Net current liabilities at period end were up by £1.4m to £5.6m (30 September 2023: £4.2m).
The trade and other payables balance includes a deferred income balance of £1.8m (30 September 2023: £1.8m), relating to training and consultancy projects due to be delivered after the statement of financial position date. This balance provides some visibility of income to be recognised in H2.
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 £0.9m (H1 FY23: £1.0m) relate to software, website development and the development of courseware.
Amortisation of intangible fixed assets was £0.8m (H1 FY23: £0.7m).
Goodwill arising from business combinations has been allocated to the Group's DQM cash-generating unit ('CGU').
Goodwill was £6.8m (30 September 2022: £6.8m).
Goodwill is tested at least annually for impairment and whenever there are indications that goodwill might be impaired.
Capital structure
The issued share capital at 30 September 2023 was 107,826,246 (30 September 2022: 107,826,246) ordinary shares of £0.001 each.
There were no share options granted in the period to 30 September 2023.
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 Group's Annual Report for 2023 (a copy of which is available from the Group's website (www.grci.group).
Chris Hartshorne
Finance Director
UNAUDITED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
| |
| 6 months to 30 September 2023 unaudited | | 12 months to 31 March 2023 audited | | 6 months to 30 September 2022 unaudited |
| | Notes | £'000 | | £'000 | | £'000 |
| Revenue | | 7,573 | | 14,660 | | 7,287 |
| Cost of sales | | (2,998) | | (5,783) | | (2,885) |
| Gross profit | | 4,575 | | 8,877 | | 4,402 |
| Administrative expenses | | (5,279) | | (10,423) | | (4,917) |
| Other operating income | | 18 | | 121 | | 48 |
| Operating loss | | (686) | | (1,425) | | (467) |
| Net financing costs | | (169) | | (190) | | (72) |
| Share of post-tax loss of equity-accounted joint ventures | | (17) | | - | | - |
| Loss before taxation | | (862) | | (1,615) | | (539) |
| Taxation | | 21 | | 365 | | 21 |
| Loss for the financial period | | (841) | | (1,250) | | (518) |
| Loss for the financial period attributable to: | | | | | | |
| Equity shareholders of the parent | | (841) | | (1,250) | | (518) |
| Basic loss per share (pence) | | (0.78) | | (1.16) | | (0.48) |
| Diluted loss per share (pence) | | (0.78) | | (1.16) | | (0.48) |
All of the Group's loss relates to continuing operations.
The accompanying accounting policies and notes form an integral part of these financial statements.
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
| | Notes | 6 months to 30 September 2023 unaudited | | 12 months to 31 March 2023 audited | | 6 months to 30 September 2022 unaudited |
| | | £'000 | | £'000 | | £'000 |
| Loss for the period | | (841) | | (1,250) | | (518) |
| Other comprehensive loss - items that may subsequently be reclassified to profit/loss: | |
(1) | |
(21) | |
(35) |
| Other comprehensive loss for the financial period | | (1) | | (21) | | (35) |
| Total comprehensive loss for the financial period | | (1) | | (21) | | (35) |
| Total comprehensive loss attributable to equity shareholders of the parent | |
(842) | |
(1,271) | |
(553) |
The accompanying accounting policies and notes form an integral part of these financial statements.
UNAUDITED CONSOLIDATED BALANCE SHEET
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
| |
| 6 months to 30 September 2023 unaudited | | 12 months to 31 March 2023 audited | | 6 months to 30 September 2022 unaudited |
| | Notes | £'000 | | £'000 | | £'000 |
| ASSETS | | | | | | |
| Non-current assets | | | | | | |
| Goodwill | | 6,804 | | 6,804 | | 6,804 |
| Intangible assets | | 5,663 | | 5,616 | | 5,876 |
| Property, plant and equipment | | 218 | | 248 | | 293 |
| Investments in equity-accounted joint ventures | | 19 | | 17 | | 17 |
|
| | 12,704 | | 12,685 | | 12,990 |
| Current assets | | | | | | |
| Trade and other receivables | | 1,509 | | 1,611 | | 1,376 |
| Current tax | | - | | 37 | | - |
| Cash at bank | | 27 | | 139 | | 199 |
|
| | 1,536 | | 1,787 | | 1,575 |
| Current liabilities | | | | | | |
| Trade and other payables | | (5,655) | | (5,291) | | (4,975) |
| Borrowings | | (1,269) | | (1,074) | | (526) |
| Lease liabilities | | (46) | | (58) | | (101) |
| Current tax | | (127) | | - | | (127) |
|
| | (7,097) | | (6,423) | | (5,729) |
| Net current liabilities | | (5,561) | | (4,636) | | (4,154) |
| Non-current liabilities | | | | | | |
| Trade and other payables | | - | | (8) | | - |
| Borrowings | | (199) | | (215) | | (252) |
| Lease obligations | | (76) | | (95) | | (119) |
| Deferred tax liability | | (280) | | (301) | | (317) |
|
| | (555) | | (619) | | (688) |
| Net assets | | 6,588 | | 7,430 | | 8,148 |
| Equity | | | | | | |
| Share capital | | 108 | | 108 | | 108 |
| Share premium | | 16,012 | | 16,012 | | 16,012 |
| Merger reserve | | 4,276 | | 4,276 | | 4,276 |
| Share-based payment reserve | | 126 | | 126 | | 126 |
| Translation reserve | | (31) | | (30) | | (44) |
| Accumulated deficit | | (13,903) | | (13,062) | | (12,330) |
| Total equity | | 6,588 | | 7,430 | | 8,148 |
|
| | | | | | |
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
| | Share capital | Share premium | Merger reserve | Share-based payment reserve | Retained deficit | Translation reserve | Total |
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Balance at 1 April 2022 (audited) | 108 | 16,012 | 4,276 | 126 | (11,812) | (9) | 8,701 |
Loss for the period | - | - | - | - | (1,250) | - | (1,250) |
Foreign exchange difference on consolidation | - | - | - | - | - | (21) | (21) |
Total comprehensive loss for the period | - | - | - | - | (1,250) | (21) | (1,271) |
At 31 March 2023 (audited) | 108 | 16,012 | 4,276 | 126 | (13,062) | (30) | 7,430 |
Loss for the period | - | - | - | - | (841) | - | (841) |
Foreign exchange difference on consolidation | - | - | - | - | - | (1) | (1) |
Total comprehensive loss for the period | - | - | - | - | (841) | (1) | (842) |
At 30 September 2023 (unaudited) | 108 | 16,012 | 4,276 | 126 | (13,903) | (31) | 6,588 |
| | Share capital | Share premium | Merger reserve | Share-based payment reserve | Retained deficit | Translation reserve | Total |
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Balance at 1 April 2022 (audited) | 108 | 16,012 | 4,276 | 126 | (11,812) | (9) | 8,701 |
Loss for the period | - | - | - | - | (518) | - | (518) |
Foreign exchange difference on consolidation | - | - | - | - | - | (35) | (35) |
Total comprehensive loss for the period | - | - | - | - | (518) | (35) | (553) |
At 30 September 2022 (unaudited) | 108 | 16,012 | 4,276 | 126 | (12,330) | (44) | 8,148 |
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
| |
| 6 months to 30 September 2023 unaudited | |
12 months to 31 March 2023 audited | | 6 months to 30 September 2022 unaudited |
| | Notes | £'000 | | £'000 | | £'000 |
| Cash flows from operating activities | | | | | | |
| Loss for the period | | (841) | | (1,250) | | (518) |
| Adjustments for: | | | | | | |
| Depreciation of plant and equipment | | 16 | | 37 | | 19 |
| Amortisation of right of use assets | | 27 | | 95 | | 47 |
| Amortisation of intangible fixed assets | | 817 | | 1,523 | | 719 |
| Foreign exchange loss/(gain) | | 11 | | 2 | | (4) |
| Share of post-tax loss of equity-accounted joint venture | | 7 | | - | | - |
| Finance expenses | | 169 | | 190 | | 72 |
| Income tax credit | | (21) | | (365) | | (21) |
| | | | | 232 | | 314 |
| Decrease in trade and other receivables | | 101 | | 9 | | 252 |
| Increase in trade and other payables | | 350 | | (750) | | (1,086) |
| | | 636 | | (509) | | (520) |
| Income tax refund | | 164 | | 163 | | - |
| Net cash inflow/(outflow) from operating activities | | 800 | | (346) | | (520) |
| Investing activities | | | | | | |
| Purchase of intangible assets | | (864) | | (1,506) | | (963) |
| Purchase of plant and equipment | | (15) | | (50) | | (37) |
| Acquisition of joint venture investment | | (9) | | - | | - |
| Net cash outflow from investing activities | | (888) | | (1,556) | | (1,291) |
| Financing activities | | | | | | |
| Proceeds from borrowings | | 665 | | 875 | | - |
| Repayment of borrowings | | (497) | | (658) | | (284) |
| Interest paid | | (152) | | (155) | | (50) |
| Interest on lease liability on right-of-use assets | | (6) | | (14) | | (13) |
| Payment of lease liabilities on right-of-use assets | | (31) | | (109) | | (43) |
| Net cash outflow from financing liabilities | | (21) | | (61) | | (390) |
| Net decrease in cash and cash equivalents | | (109) | | (1,963) | | (1,910) |
| Cash and cash equivalents at beginning of financial period | | 139 | | 2,099 | | 2,099 |
| Effects of exchange rate changes on cash and cash equivalents | | (3) | | 3 | | 10 |
| Cash and cash equivalents at end of financial period | | 27 | | 139 | | 199 |
| Comprising | | | | | | |
| Cash at bank | | 27 | | 139 | | 199 |
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 and its subsidiary companies is as a one-stop shop for IT governance including books, tools, learning and consultancy services.
The interim financial statements have not been audited or reviewed by the auditors.
2. Basis of preparation of half-year report
The condensed consolidated interim financial report for the half-year reporting period ended 30 September 2022 has been prepared in accordance with Accounting Standard IAS 34 Interim Financial Reporting.
The results 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 Company.
All intra-Group transactions, balances, income, and expenses are eliminated in full on consolidation.
The Interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 March 2023 and any public announcements made by GRC International Group plc during the interim period.
Half-yearly (interim) reports
The comparative financial information for the year ended 31 March 2023 in this interim report does not constitute statutory accounts for that year.
The statutory accounts for the year ended 31 March 2023 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
3. 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:
| | | 6 months to 30 September 2023 unaudited | |
12 months to 31 March 2023 audited | | 6 months to 30 September 2022 unaudited |
| | | £'000 | | £'000 | | £'000 |
| Consultancy | | 4,964 | | 9,350 | | 4,807 |
| Publishing and distribution | | 345 | | 794 | | 392 |
| Software | | 788 | | 1,760 | | 902 |
| Training | | 1,476 | | 2,756 | | 1,185 |
| Total revenue | | 7,573 | | 14,660 | | 7,287 |
The Group's revenue is analysed as follows for each revenue category:
| | | 6 months to 30 September 2023 unaudited | |
12 months to 31 March 2023 audited | | 6 months to 30 September 2022 unaudited |
| | | £'000 | | £'000 | | £'000 |
| Sale of goods | | 346 | | 794 | | 391 |
| Provision of services | | 7,227 | | 13,866 | | 6,896 |
| | | 7,573 | | 14,660 | | 7,287 |
| Other operating income * | | 18 | | 121 | | 48 |
| Total revenue | | 7,591 | | 14,781 | | 7,335 |
Other operating income relates to rent received from the sub-let of some of the Group's office space.
4. Earnings per share
Basic earnings per share is based on the loss after tax for the period and the weighted average number of shares in issue during the period.
| | | 6 months to 30 September 2023 unaudited | |
12 months to 31 March 2023 audited | | 6 months to 30 September 2022 unaudited |
| | | £'000 | | £'000 | | £'000 |
| Loss attributable to equity holders of the group | | (841) | | (1,250) | | (518) |
| Weighted average number of shares in issue | | 107,826 | | 107,826 | | 107,826 |
| Diluted loss per share (pence) | | (0.78) | | (1.16) | | (0.48) |
| | | 6 months to 30 September 2023 unaudited | |
12 months to 31 March 2023 audited | | 6 months to 30 September 2022 unaudited |
| Number of shares | | 107,826,246 | | 107,826,246 | | 107,826,246 |
| Dilutive (potential dilutive) effect of share options | | - | | - | | - |
| Weighted average number of ordinary shares for the purposes of diluted earnings per share | |
107,826,246 | |
107,826,246 | |
107,826,246 |
| | | | | | | |
| Diluted loss per share (pence) | | (0.78) | | (1.16) | | (0.48) |
Due to the losses incurred during the period, a diluted loss per share has not been calculated as this would serve to reduce the basic loss per share. There were 526,760 (2022: 526,760) share options outstanding at the end of the period that could potentially dilute basic earnings per share in the future.
5. Intangible assets
| | Marketing tools | Publishing products | Consultancy products and courseware | Software and website costs | Trademarks | Customer relationships | Total |
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
COST | | | | | | | |
At 1 April 2022 (audited) | 66 | 451 | 1,218 | 7,172 | 466 | 1,843 | 11,216 |
Additions | - | 83 | 374 | 1,049 | - | - | 1,506 |
Foreign exchange movement | - | - | 3 | - | - | - | 3 |
At March 2023 (audited) | 66 | 534 | 1,595 | 8,221 | 466 | 1,843 | 12,725 |
Additions | 1 | 4 | 285 | 574 | - | - | 864 |
Foreign exchange movement | - | - | (1) | - | - | - | (1) |
At 30 September 2023 | 67 | 538 | 1,879 | 8,795 | 466 | 1,843 | 13,588 |
Accumulated depreciation | | | | | | | |
At 1 April 2022 (audited) | 63 | 317 | 526 | 4,060 | 147 | 473 | 5,586 |
Charge for period | 1 | 55 | 119 | 1,148 | 46 | 154 | 1,523 |
At 31 March 2023 (audited) | 64 | 372 | 645 | 5,208 | 193 | 627 | 7,109 |
Foreign exchange movement | - | - | (1) | - | - | - | (1) |
Charge for period | - | 32 | 87 | 599 | 23 | 76 | 817 |
At 30 September 2023 | 64 | 404 | 731 | 5,807 | 216 | 703 | 7,925 |
Net book value | | | | | | | |
At 30 September 2023 | 3 | 134 | 1,148 | 2,988 | 250 | 1,140 | 5,663 |
At 31 March 2023 (audited) | 2 | 162 | 950 | 3,013 | 273 | 1,216 | 5,616 |
Amortisation is included within administrative expenses.
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.
6. Authorised, allotted, issued and fully paid
| | | 6 months to 30 September 2023 unaudited | | | 12 months to 31 March 2023 audited | | | 6 months to 30 September 2022 unaudited |
| | Number | | | Number | £'000 | | Number | £'000 |
Ordinary shares of £0.001 each | 107,826,246 | 108 | | 107,826,246 | 108 | | 107,826,246 | 108 |
| | | | | | | | | |
| | 107,826,246 | 108 | | 107,826,246 | 108 | | 107,826,246 | 108 |
7. Events after the reporting period
There have been no events that require disclosure in accordance with IAS10, 'Events after the balance sheet date'.
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