TIDMGRC
RNS Number : 3344L
GRC International Group PLC
05 September 2023
05 September 2023
GRC International Group Plc
("GRC" or the "Group")
Final results for the year ended 31 March 2023
FY23 revenue growth and positive EBITDA
Trading remains robust and in-line with expectations for
FY24
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 2023 (FY23).
Financial highlights
-- Revenue up 6% to GBP14.7m (FY22: GBP13.9m).
-- International revenue up 3% to GBP3.1m (FY22: GBP3.0m).
-- SaaS revenue up 11% - the Group's highest gross margin generating division.
-- ARR (Annualised Recurring Revenue) at period end up 31% to GBP10.9m (FY22: 8.3m).
-- Recurring and contracted revenue up 30% to GBP10.7m (FY22: GBP8.2m).
-- 73% (FY22: 59%) of revenue generated from recurring and contracted revenue contracts.
-- Gross margin of 61% (FY22: 59%) - continued improvement
reflects operational gearing from subscription services and
internal efficiencies from automation projects.
-- Adjusted EBITDA 1 of GBP0.3m (FY22: GBP1.0m).
-- Loss before tax of GBP1.6m (FY22: GBP1.0m.) Investment in
capital expenditure to fuel future growth of GBP1.6m (FY22:
GBP1.3m).
-- Cash balances at period end of GBP0.1m (FY22: GBP2.1m).
Borrowings (excluding lease obligations) of GBP1.3m (FY22
GBP1.1m).
Operational highlights
-- Increased the value of SaaS subscriptions customers - at
period end we had over 3,000 SaaS customers with an average value
of GBP1.2k, a 5% year-on-year increase.
-- Increased the number of delegates attending training courses
across the year, with Q4 showing a 17% increase in delegate numbers
on Q4 FY22.
-- In our training business, significantly expanded the course
portfolio, deployed digital badging for successful delegates, and
added additional accreditations.
-- Started delivering completely revamped ISO/IEC 27001 product
portfolio to support client transitions from ISO/IEC 27001:2013 to
ISO/IEC 27001:2022.
-- Increased investment in overhead led to an increase in Group
NPS (net promoter score) to 48 (FY22: 37). Scores over 50 indicate
customer service rating of 'Excellent'.
-- Acquired initial customers for accredited SWIFT consultancy
and CREST-accredited Cyber Incident Response services.
1 EBITDA is defined within the Financial Review of this
announcement.
Alan Calder, Chief Executive Officer, said:
"Following the 2019 collapse in the GDPR market, we set
ourselves four medium term objectives: to re-build revenue growth
around an offering that combined cyber security and privacy, to
recover our gross margins to in excess of 60%, to make contracted
and recurring revenue more than 70% of our total revenue and,
through automation and process improvement, control overheads so
that we would consistently generate positive EBITDA.
We have now achieved all four of those objectives.
At the end of Q1 FY24, the Group's revenue was up on the same
quarter a year ago. We also turned negative EBITDA in the first
quarter a year ago into a positive EBITDA in the first quarter of
FY24. We are particularly pleased with 30% Q1 billings 2 growth in
our CyberComply business. At the end of August, the Group's
cumulative
billings 2 for the financial year were also ahead compared with the prior year.
Although economic and geo-political headwinds persist, we expect
their effects to continue being counter-balanced by the impact on
GRC requirements of rapidly increasing cyber and privacy regulation
and enforcement (GDPR, DORA, SEC Regulations) in the UK, the EU,
the US and elsewhere."
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.
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 International Group made significant progress last year in
its post-GDPR turnaround. Encouragingly, in spite of geo-political
and economic headwinds, it was our second year in a row of positive
EBITDA. It was our third year in a row of revenue growth and
revenue in the year was higher than we achieved in 2020, the year
preceding the onset of the Covid pandemic. It was our third year in
a row of increasing gross margin and our FY23 gross margin now
matches what we achieved in the GDPR rocket fuelled FY18. It was
also the third year in a row of improvement in our NPS (Net
Promoter Score) service quality results. Finally, it was our sixth
straight year in a row of improving the recurring and contracted
percentage of our total revenue.
Strategy
Cyber security has three domains: people, process and
technology. Most cyber security vendors focus on selling technology
solutions to technology teams in their corporate clients.
Technology, though, is not the answer. The strategic cyber
vulnerabilities for most organisations are in the areas of under
skilled people and inadequate processes. The GRC International
Group provides integrated compliance-linked solutions that enable
our corporate clients to build cyber resilience and cyber
defence-in-depth by deploying effective governance, risk management
and compliance (GRC) across the people and process domains.
The market is increasingly competitive, with a proliferation of
new entrants, both small start-ups and larger investor-backed
growth businesses. In this environment, our experience and
expertise are as important in winning and retaining customers as
the breadth of our international accreditations and the proven
quality of our service.
As we have said before, we see 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 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 facing escalating nation-state and criminal
(serious organised crime) cyber-attacks.
-- Significant and deep-seated national and international cyber
and compliance skills deficits.
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, in our other software-as-a-service
offerings, and in our e-commerce websites are all 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 GBP50m, with gross margins and EBITDA
margins in the order of 65% and 25% respectively.
Current trading and outlook
The strong FY23 Q4 sales momentum, billings, numbers of new
business leads and cash generation has continued into the current
financial year. Importantly, we ended FY23 with GBP2.3m (GBP2.2m at
end FY22) of FY24 revenue already invoiced.
Our overall growth is driven by client acquisition through our
e-commerce division, the continued deployment of expertise through
our services division to solve client problems and create
opportunities for SaaS deployment.
The SaaS division underpins our Cyber Resilience and Cyber
Defence-in-Depth offering and should support double-digit organic
divisional billings growth in the current financial year.
The publication of regulations such as DORA (the Digital
Operational Resilience Act) in the EU, the EU's EuroPrivacy GDPR
compliance certification, new SEC regulations in the US in respect
of Cyber Security governance, risk management and compliance, and
proposed changes to the UK's privacy and cyber security regulatory
framework, all play into our broad product and service offering. We
see our CyberComply platform, which is essentially a regulatory
technology compliance platform, as having a key role to play in
supporting clients implement and maintain compliance frameworks in
this changing environment. We are continuing to invest in our
e-commerce and SaaS infrastructure in order to extend our
cost-effective automated fulfilment and customer support. We are on
the point of rolling out significantly improved functionality to
our EU and USA websites, as well as significantly improving our
automated support for our SaaS business. The use of Artificial
Intelligence (AI) is a key strand of our current development
activity, as we look at ways in which we can both reduce costs and
increase speed and agility through its effective use.
Major development work in our CyberComply platform is seeing
significant functionality enhancements released every quarter and
we are planning an October 2023 soft launch of an exciting
CyberComply development roadmap and pricing model that we expect to
drive significant medium and long-term increases in revenue and
margins.
AI and ML (Machine Learning) obviously have an important
contribution to make to improving our gross margins, reducing
overheads and accelerating software development - while also
improving our software product - and we will report in due course
on how our work in that field is driving improvements in the
business.
After a strong final quarter to FY23, momentum has continued
into Q1 of the new financial year. Trading remains robust and in
line with expectations. The substantial progress made last year and
our ongoing investment in infrastructure should support the Group's
longer-term growth aspirations.
FY23 Performance Review
Following the 2019 collapse in the GDPR market, we set ourselves
four medium term objectives: to re-build revenue growth around an
offering that combined cyber security and privacy, to recover our
gross margins to in excess of 60%, to make contracted and recurring
revenue more than 70% of our total revenue and, though automation
and process improvement, control overheads so that we would
consistently generate positive EBITDA.
We have now achieved all four of those objectives.
Our cyber resilience, cyber defence-in depth offering recognises
that cyber security and privacy are different sides of the same
coin and our value statement ('Our expertise, your peace of mind')
reflects that value to our customers. In spite of the significant
disruption during our Q3, in which the UK dealt with the death of
the monarch, the chaos surrounding the end of the Johnson
premiership and the short-lived Truss administration, all on top of
the geo-political headwinds triggered by the Russian invasion of
Ukraine, we achieved a 6% year-on-year revenue increase. Strong
performances in the US as well as in our smaller UK subsidiaries
all helped counterbalance the temporary Q3 decline in our main UK
business. While the Q3 disruption effectively halted our billings
growth in Q3, we did recover momentum from the start of Q4 and our
Q4 performance virtually matched the prior year.
Our gross margin in FY23 increased to 61% from 59% the prior
year. This was achieved through a combination of improving sales
mix toward higher margin SaaS offerings and successfully pushing
price rises through our professional services and e-commerce
businesses.
Recurring and contracted revenue increased by a substantial 30%
(GBP2.4m) to GBP10.7m, which was 73% of group revenue. In the prior
year it was only 59% and, considering that the equivalent figure in
FY18 was only 2.5% of revenue, is a key indicator of the
transformation in the Group. In the context also of the economic
and political headwinds last year, and considering the growth in
competition in our markets, this is a significant improvement. It
reflects our focus through the year in growing predictability and
stability in revenue.
At the start of the financial year, we set ourselves the
additional objective of significantly improving the quality of our
products and services. We believe that quality will, in an
increasingly competitive marketplace, be a key differentiator. Our
primary chosen measure for service quality is NPS (Net Promoter
Score). Our average score in FY22 was 37 (good, but not excellent).
We recognised that we would have to make sustained investments in
developing and retaining our people and improving our
infrastructure in order to move the NPS dial meaningfully. We
increased overhead spend during FY23 by GBP1.3m in order to do
this. That investment shows through in significant ongoing
improvements in product and service quality. The Group increased
its NPS score to 48 (50+ is 'excellent') from 37 the previous year,
and our initial steps into encouraging customers to rate our
e-commerce services on TrustPilot achieved an average score of 4.5
(out of 5) in Q4, which is rated as 'excellent'.
In spite of the overhead investment to drive up performance
quality, and in spite of the macro-headwinds, we delivered a second
year of positive EBITDA.
We expect, in FY24, to make further improvements in all those
areas.
Divisional performance
Performance in our three revenue divisions reflected the overall
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, GDPR Data Protection Office (DPO) and Privacy by Design services
We saw 6% revenue growth in the services division, and we
successfully increased prices during the year as well as improving
the level of longer-term contracted revenue. Gross margin in the
division improved from 60% to 63% and demonstrates that clients
value the quality of our advice and support in their security and
privacy endeavours.
e-Commerce
Our e-commerce division works with both individuals and business
and includes:
-- Eight B2B e-commerce websites
-- ITGP, our publishing business, offers a wide range of books
and standards, covering GRC, cyber security, GDPR, privacy/data
protection, risk & compliance.
-- 'Learn from Anywhere' training delivery, with accredited
training for a wide range of cyber security and privacy
qualifications.
We continue to make good progress with developing self-paced
versions of the instructor-led courses in our training portfolio.
This enables us to target markets and time zones for which our
instructor-led offering is either difficult to attend or
unaffordable. We are also making good progress in producing audio
versions of our ITGP titles and expect that, in the course of this
year, ITGP will transition completely to electronic delivery only
across the entire product range.
Revenue growth in our c-commerce division was largely flat
across the year but, again, we were able to improve gross margins
from 64% to 68%, through a combination of price increases and
better attendance at in-person (largely online) training
courses.
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 'reg tech' platform
-- Cyber Essentials certification
-- Vulnerability Scanning
-- GRC e-learning (staff awareness training)
-- Privacy as a Service
-- Document Kits templates
We continued to expand the range of cyber security and privacy
standards and frameworks that can be addressed though the
CyberComply platform. At the same time, we also continued expanding
the staff awareness e-learning portfolio outside the core cyber
security and privacy product range to include the other GRC
subjects (such as business continuity, quality management,
anti-bribery and anti- money laundering) that clients expect to see
on GRC staff awareness platforms.
Half of the Group's FY23 revenue growth was in the
Software-as-a-Service division. Revenues in the division grew 11%
across the year, with the growth primarily spread across e-Learning
staff awareness, the CyberComply GRC management platform and the
DQM Seeding System. Gross margin in the SaaS division decreased
slightly from 87% to 84%, reflecting higher input prices from IASME
which, combined with their pricing restrictions, squeeze margins.
We do, however, see opportunities for improving the margins
here.
International and Channel performance
Our businesses in the EU and the US continued to grow. Although
their offering is currently more limited than that available in the
UK, both businesses saw growth across the year. The US business, in
particular, achieved 54% growth in revenue, demonstrating the
benefit of being completely divorced from the turmoil in the UK
economy during Q3.
Our channel sales business, which helps MSPs (Managed Service
Providers) deliver to their customers a range of IT
Governance-branded cyber security and privacy services, had another
year of strong growth. The channel team's primary market last year
was in the UK in which they achieved 18% revenue growth.
Quality and accreditations
Externally audited certifications are one of the ways that we
demonstrate the quality of our offerings to our customers. Our
business management system continues to be accredited to ISO/IEC
27001, ISO/IEC 27701 and ISO 9001. These certifications are
supported by those from professional bodies such as CREST, the UK's
National Cyber Security
Centre (NCSC), the Payment Card Industry Security Standards
Council (PCI SSC), and IASME for Cyber Essentials Plus as well as
by those from exam and personnel certification bodies, such as
IBITGQ, ISC2, APMG and Microsoft. Additionally, we have been
accredited to deliver consultancy services against the SWIFT cyber
security requirements, the US Department of Defence CMMC
(Cybersecurity Maturity Model Certification) and the EU's
EuroPrivacy standards.
We are currently preparing for certification to ISO 22301 of our
Business Continuity Management System.
Security and compliance
As should be expected of all organisations, we successfully
navigated the year's cyber security and regulatory compliance
challenges. There were no reportable cyber security incidents and
no breaches of applicable cyber security or data security
legislation.
Alan Calder
Chief Executive Officer
Financial Review
Billings
Billings were up 1% to GBP14.9m (FY22: GBP14.8m). 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
takes place ahead of delivery.
Revenue
Revenue for the year ended 31 March 2023 was up 6% to GBP14.7m
(FY22: GBP13.9m). Despite the uncertainty of the current economic
climate, with high inflation, high interest rates and low levels of
overall economic growth, our H2 revenue was still marginally up on
H1. In Q3 the Group saw a notable slowdown in the decision making
of clients leading to a lengthening of the sales cycle, but Q4
delivered excellent results.
Recurring and contracted revenue was up 30% to GBP10.7m (FY22:
GBP8.2m). This accounted for 73% of total revenue (FY22: 59%).
The most significant revenue growth was in the Software as a
Service (SaaS) division. The growth reflects the Group's focus on
and investment in developing its high margin and highly scalable
recurring revenue. The growth in the Services division is driven by
the increase in retainer type contracts both from new customers and
from the renewals of existing contracts, improving the Group's
forward visibility of revenue.
Software
as a Service
GBP'm Services (SaaS) E-Commerce Total
------------ ------------ ----------------- -------------- ---------
FY FY22 7.0 4.1 3.6 14.7
FY FY22 6.6 3.7 3.6 13.9
------------ ------------ ----------------- -------------- ---------
Software
as a Service
Period-on-period % Services (SaaS) E-Commerce Total
----------------------- ------------ ----------------- -------------- ---------
FY23 vs FY22 6% 11% -% 6%
----------------------- ------------ ----------------- -------------- ---------
International
International revenue was up 3% to GBP3.1m (FY22: GBP3.0m),
representing 21% (FY22: 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 saw growth in both its US and European revenues. These
are considered to be important future growth markets for the Group,
and year on year growth demonstrates an increased international
footprint.
Gross profit
Gross profit was up 9% to GBP8.9m (FY22: GBP8.2m), with gross
margin also up by 200 basis points to 61% (FY22: 59%).
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.
Notably, the Group's fastest-growing revenue division, SaaS, has
the highest gross margin:
Segment FY22 Revenue FY23
change
Revenue Margin % Revenue Margin
---------- ----------
GBP GBP % GBP GBP %
Services 6.6 2.7 41% 6% 7.0 3.0 43%
SaaS 3.7 3.3 89% 11% 4.1 3.5 85%
E-Commerce 3.6 3.6 61% -% 3.6 2.4 67%
Total 13.9 8.2 59% 6% 14.7 8.9 61%
Administrative expenses
Administrative expenses increased by GBP1.3m (14%) to GBP10.4m
(FY22: GBP9.1m), compared with revenue increasing by 6%.
During the year the Group invested in people, marketing and IT
spend designed to fuel the next phase of revenue growth. The
temporary drop in revenue in Q3 meant that overheads were, for a
brief period, out of alignment with revenue, but the Q4 performance
meant that the position had corrected itself prior to the year end
as return on that investment began to be delivered and is expected
to continue to be delivered through FY24 and beyond.
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. It is a more accurate measure of underlying business
performance as it removes the impact of non-cash accounting
adjustments.
Adjusted EBITDA was GBP0.3m (FY22: GBP1.0m).
GBP'M FY22 FY23
----------------------------------- ------ ------
Revenue 13.9 14.7
Operating loss (0.7) (1.4)
Depreciation 0.3 0.1
Amortisation 1.4 1.5
Exceptional administrative costs 0.0 0.1
Adjusted EBITDA 1.0 0.3
------------------------------------ ------ ------
Adjusted EBITDA as % Revenue 7% 2%
Finance expense
The net finance expense of GBP0.2m (FY22: GBP0.3m) relates to
interest on the Group's borrowings and leases accounted for under
IFRS 16.
Loss before tax
Loss before tax was GBP1.6m (FY22: loss GBP1.0m).
Taxation
No provision for tax has been made in the period (FY22: GBPNil).
The tax credit mostly relates to the recognition of Research &
Development Tax Credits agreed with and received from HM Revenue
& Customs.
Earnings per share
Loss per share was 1.16 pence (FY22: loss per share 0.98
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
GBP0.1m (31 March 2022: GBP2.1m).
Borrowings (excluding lease obligations) at period end were
GBP1.3m (31 March 2022: GBP1.1m).
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 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 GBP7.4m (31 March 2022: GBP8.7m).
Net current liabilities at period end were up by GBP1.4m to
GBP4.6m (31 March 2022: GBP3.2m).
In January 2022, GRC International completed a successful GBP3m
oversubscribed share placing. This has enabled 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 HMRC tax liabilities that arose through the pandemic.
The main factor in the overall increase in net current
liabilities of GBP1.4m was the decrease in cash balance as the
proceeds from the January 2022 share placing were deployed as
planned, with the development activity being capitalised as within
intangible fixed assets and the reduction in HMRC liabilities
reflected within trade and other payables.
The trade and other payables balance includes a deferred income
balance of GBP2.0m (31 March 2022: GBP1.8m), relating to training
and consultancy projects due to be delivered after the statement of
financial position date. The 11% increase in this balance signifies
improving revenue trends and provides some visibility of income to
be recognised in FY24.
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 GBP1.5m (FY22: GBP1.2m) relate to software, website
development and the development of courseware.
Amortisation of intangible fixed assets was GBP1.5m (FY22:
GBP1.4m).
Goodwill arising from business combinations has been allocated
to the Group's DQM cash-generating unit ('CGU').
Goodwill was GBP6.8m (31 March 2022: GBP6.8m).
Goodwill is tested at least annually for impairment and whenever
there are indications that goodwill might be impaired.
Further information is provided in Note 6.
Capital structure
The issued share capital at 31 March 2023 was 107,826,246 (31
March 2022: 107,826,246) ordinary shares of GBP0.001 each.
There were 100,000 share options granted in the period to 31
March 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 Annual Report.
Chris Hartshorne
Finance Director
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 MARCH
2023 2022
Notes GBP'000 GBP'000
================================================= ===================== =====================
Revenue 4,5 14,660 13,902
Cost of sales (5,783) (5,698)
------------------------------------------------- --------------------- ---------------------
Gross profit 8,877 8,204
Administrative expenses (10,423) (9,141)
Other operating income 121 240
================================================= ===================== =====================
Operating loss (1,425) (697)
Net finance costs (190) (304)
Share of post-tax loss of equity-accounted joint
ventures - (2)
================================================= ===================== =====================
Loss before taxation (1,615) (1,003)
Taxation 3 365 6
================================================= ===================== =====================
Loss for the financial year (1,250) (997)
================================================= ===================== =====================
Loss for the financial year attributable to:
Equity shareholders of the parent (1,250) (997)
================================================= ===================== =====================
Basic loss per share (pence) 11 (1.16) (0.98)
================================================= ===================== =====================
Diluted loss per share (pence) 11 (1.16) (0.98)
================================================= ===================== =====================
All of the Group's loss relates to continuing operations.
The accompanying accounting policies and notes form an integral
part of these financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 MARCH
2023 2022
GBP'000 GBP'000
Loss for the year (1,250) (997)
Other comprehensive loss - items that may subsequently
be reclassified to profit/loss:
Exchange differences on translation of foreign operations (21) (1)
============================================================= ======== ========
Other comprehensive loss for the financial year (21) (1)
============================================================= ======== ========
Total comprehensive loss for the financial year (1,271) (998)
============================================================= ======== ========
Total comprehensive loss attributable to equity shareholders
of the parent (1,271) (998)
============================================================= ======== ========
The accompanying accounting policies and notes form an integral
part of these financial statements.
CONSOLIDATED BALANCE SHEET
FOR THE YEARED 31 MARCH
2023 2022
GBP'000 GBP'000
Assets
Non-current assets
Goodwill 6 6,804 6,804
Intangible assets 7 5,616 5,630
Property, plant and equipment 248 325
Investments in equity-accounted joint ventures 17 17
=============================================== ===================== =====================
12,685 12,776
=============================================== ===================== =====================
Current assets
Trade and other receivables 8 1,611 1,612
Current tax 37 -
Cash at bank 139 2,099
=============================================== ===================== =====================
1,787 3,711
=============================================== ===================== =====================
Current liabilities
Trade and other payables 9 (5,291) (5,935)
Borrowings 10 (1,074) (722)
Lease liabilities (58) (117)
Current tax 3 - (127)
=============================================== ===================== =====================
(6,423) (6,901)
=============================================== ===================== =====================
Net current liabilities (4,636) (3,190)
=============================================== ===================== =====================
Non-current liabilities
Trade and other payables 9 (8) (73)
Borrowings 10 (215) (329)
Lease liabilities (95) (145)
Deferred tax liability 3 (301) (338)
=============================================== ===================== =====================
(619) (885)
=============================================== ===================== =====================
Net assets 7,430 8,701
=============================================== ===================== =====================
Equity
Share capital 108 108
Share premium 16,012 16,012
Merger reserve 4,276 4,276
Share-based payment reserve 126 126
Translation reserve (30) (9)
Accumulated deficit (13,062) (11,812)
=============================================== ===================== =====================
Total equity 7,430 8,701
=============================================== ===================== =====================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MARCH
For the year ended 31 March 2023
Share-based
Share Share Merger payment Retained Translation
capital premium reserve reserve deficit reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============== ============== ============== =========== ================= ============ ============= =========
Balance at 1
April 2022 108 16,012 4,276 126 (11,812) (9) 8,701
Loss for the
year - - - - (1,250) - (1,250)
Foreign
exchange
difference
on
consolidation - - - - - (21) (21)
============== ============== ============== =========== ================= ============ ============= =========
Total
comprehensive
loss
for the year - - - - (1,250) (21) (1,271)
============== ============== ============== =========== ================= ============ ============= =========
Shares issued - - - - - - -
Cost of share - - - - - - -
issue
============== ============== ============== =========== ================= ============ ============= =========
Transactions - - - - - - -
with owners
============== ============== ============== =========== ================= ============ ============= =========
At 31 March
2023 108 16,012 4,276 126 (13,062) (30) 7,430
============== ============== ============== =========== ================= ============ ============= =========
For the year ended 31 March 2022
Share-based
Share Share Merger payment Retained Translation
Capital premium reserve reserve Deficit reserve Total
GBP'000 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
============================ ======= ======= ======== =========== ========== ============= ==========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MARCH
Cash flows from operating activities
Loss for the year (1,250) (997)
Adjustments for:
Depreciation of plant and equipment 37 91
Amortisation of right of use assets 95 143
Amortisation of intangible fixed assets 1,523 1,367
Loss on disposal of fixed assets - 50
Foreign exchange loss 2 18
Share of post-tax loss of equity-accounted joint
ventures - 2
Finance expenses 190 304
Income tax credit (365) (6)
===================================================== ======= =======
232 972
Decrease in inventories - 33
Decrease in trade and other receivables 9 83
(Decrease)/increase in trade and other payables (750) 28
===================================================== ======= =======
(509) 1,116
Income tax refund 163 5
===================================================== ======= =======
Net cash (outflow)/inflow from operating activities (346) 1,121
Investing activities
Purchase of intangible assets 7 (1,506) (1,231)
Purchase of plant and equipment (50) (47)
Acquisition of joint venture investment - (13)
===================================================== ======= =======
Net cash outflow from investing activities (1,556) (1,291)
===================================================== ======= =======
Financing activities
Proceeds from issue of shares - 3,000
Costs of share issue - (207)
Proceeds from borrowings 10 875 546
Repayment of borrowings 10 (658) (836)
Interest paid (155) (245)
Interest on lease liability on right-of-use assets (14) (69)
Payments of lease liabilities on right-of-use assets (109) (155)
===================================================== ======= =======
Net cash (outflow)/inflow from financing activities (61) 2,034
Net (decrease)/increase in cash and cash equivalents (1,963) 1,864
Cash and cash equivalents at beginning of financial
year 2,099 233
Effects of exchange rate changes on cash and cash
equivalents 3 2
===================================================== ======= =======
Cash and cash equivalents at end of financial year 139 2,099
===================================================== ======= =======
Comprising
Cash at bank 139 2,099
===================================================== ======= =======
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 2023 and
the year ended 31 March 2022 does not constitute the company's
statutory accounts for those years. Statutory accounts for the year
ended 31 March 2022 have been delivered to the Registrar of
Companies. The statutory accounts for the year ended 31 March 2023
will be delivered to the Registrar of Companies in due course.
The auditors' report on the accounts for 31 March 2023 and 31
March 2022 respectively 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.
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 2023 and 31 March 2022
include the results of GRC
International Group plc and its s ubsidiaries.
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 2023.
Going concern
The financial statements have been prepared on a going concern
basis.
The Group has recorded a loss for the year of GBP1.3m (2022:
GBP1.0m) and as at 31 March 2023 its current liabilities exceeded
its current assets by GBP4.8m (2022: GBP3.2m).
The Group has been through a transitionary period, pivoting the
business from a predominantly consulting and training business to a
more comprehensive cyber security 'defence in depth' business,
still incorporating consultancy and training products but
increasingly focused on platform-based technology services sold on
subscription or retainer style contracts. This transition was
significantly impacted by the COVID-19 pandemic in FY21 and, to a
much lesser extent, by the macro-economic and political uncertainty
through the current year Q3 (calendar Q4 of 2022), with positive
momentum and revenue growth returning in Q4. The Group has now
delivered two consecutive EBITDA positive trading years, being FY22
and FY23, and the positive momentum seen through Q4 FY23 has
continued into FY24.
During the COVID-19 pandemic the Group accumulated PAYE and VAT
arrears of GBP1.7m as part of its response to the unprecedented
trading environment, in respect of which it has formally agreed
repayment plans with HMRC and GBP1.4m had been repaid at the
balance sheet date, with the remaining GBP0.3m to be paid through
FY24.
The Directors have prepared an integrated income statement,
balance sheet and cash flow forecast by month which runs to 31
March 2025. For the purposes of Management's assessment of going
concern a shortened period to 12 months from approval of the Group
financial statements to 30 September 2024 has been used by
Management for their assessment ("the going concern review
period"). Additionally, the Directors have prepared a sensitised
forecast with lower than expected revenues and appropriate cost
reduction measures. The revenues in the sensitised forecast are 15%
lower than the Group's base case forecast in FY24 and 22% lower in
FY25, representing a 2% reduction in FY24 against the current year
revenue achieved and only 3% year on year growth to FY25. Both the
forecast and the sensitised forecast show the Group operating
within facilities already available to the Group through the going
concern review period to 30 September 2024 and include the Group's
fixed commitments in terms of settlement of HMRC liabilities,
borrowings, and lease liabilities. The Directors note that the
Group has good forward visibility of revenue, with 73% of FY23
revenue coming from recurring revenue products, and consultancy
projects typically scheduled 1 to 3 months in advance giving
Management clear visibility to structure an affordable cost base
and programme for capital expenditure through the going concern
review period. Further comfort is drawn from the Group's track
record of trading successfully through volatile and uncertain
trading conditions, demonstrating the ability to adjust the cost
base appropriately and manage cash.
The Directors have reviewed the Group's going concern forecasts
and projections to 30 September 2024 which, taking account
of reasonably possible changes in trading performance, show that
the Group is able to generate sufficient liquidity to continue in
operational existence for the foreseeable future. Specifically, the
forecasts include estimates for the impact of inflation. To the
extent that these estimates turn out to be insufficient in the
current climate the Directors are confident that there is
sufficient flexibility in discretional or uncommitted capital spend
to absorb unexpected cost increases or cash outflows resulting from
the current macro-economic climate. On this basis the Directors
believe that the Group will be able to generate sufficient cash
through its normal business trading and there is sufficient
flexibility in its ongoing cost base and capital expenditure spend
to enable it to continue to meet its liabilities as they fall due
during the going concern review period. In making this assessment
the Directors have assessed the maturity of the Group's
liabilities, which at 31 March 2023 were comprised of the amounts
set out in note 16. Consideration has also been given to the aging
and recoverability of the Group's receivables, the continuance
through the going concern review period of facilities provided by
Mr Andrew Brode (refer to note 24) and the access to additional
liquidity via undrawn available facilities in excess of GBP0.5m
comprising; undrawn and committed facilities from Mr Andrew Brode
(refer to note 24) and available invoice discounting facilities
within DQM. For this reason, the Directors continue to adopt the
going concern basis in the preparation of its financial
statements.
3. Taxation
Analysis of credit in the year:
2023 2022
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Current tax - current period - -
Current tax - adjustment in respect of prior period (328) (4)
Deferred tax - current period movement (36) (40)
Deferred tax - adjustment in respect of prior period (1) 38
----------------------------------------------------- -------- --------
Total tax credit (365) (6)
----------------------------------------------------- -------- --------
2023 2022
GBP'000 GBP'000
------------------------------------------------------- -------- --------
Loss before taxation (1,615) (1,003)
------------------------------------------------------- -------- --------
Loss by rate of tax (2023: 19%; 2022: 19%) (307) (191)
Expenses not deductible for tax purposes 10 47
Income not taxable for tax purposes (7) -
Deferred tax asset not recognized 304 144
Deferred tax - current period movement (36) (40)
Adjustments to deferred tax in respect of prior period (1) 38
Other adjustments to current tax in respect of prior
period - (4)
Adjustment in respect of prior period: research and
development tax credit (328) -
------------------------------------------------------- -------- --------
Total tax credit (365) (6)
------------------------------------------------------- -------- --------
An increase to the UK Corporation tax rate to 25% with effect
from 1 April 2023 was enacted by the Finance Act 2021 on 14 May
2021.
As a result deferred tax balances as at 31 March 2023 are
measured at 25%.
At the balance sheet date, the Group has the following unused
tax losses:
2023 2022
GBP'000 GBP'000
------------------------------------- -------- --------
Trading losses (UK) 6,485 6,249
Trading losses (Ireland) 1,842 1,781
Trading losses (USA) 922 483
Non-trading loan relationship debits 214 198
------------------------------------- -------- --------
At the balance sheet date, a deferred tax asset has not been
recognised for these amounts on the basis that at the present time
the Group has not recorded a recent taxable profit.
The Group records tax credits for research and development tax
credits in the financial statements when the claims have been
quantified. No amount has been quantified at the current time in
relation to the year ended 31 March 2023. As explained in note 15,
as and when credits are claimed and credited to the tax accounts of
the Group, the amounts are expected to reduce the Group's
outstanding balances payable to HMRC.
Tax credits of GBP164,000 and GBP164,000 were claimed in
relation to the year ended 31 March 2021 and 31 March 2022
respectively and were recorded in the year ended 31 March 2023.
DEFERRED TAX
The following are the major deferred tax liabilities and assets
recognised by the Group and movements thereon during the current
and prior reporting period.
Deferred tax assets and liabilities are offset where the Group
has a legally enforceable right to do so.
Fixed asset Retirement Short-
timing benefit Share-based term Tax Tax Intangibles Total
differences obligations timing losses losses
payments differences (Ireland) (UK)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------------------------- ------- ---------------- ----------------- ------------- ---------------- --------------- -------
At 1 April 2021 - (2) (1) - - - 343 340
(Credit)/charge
to profit or loss - (2) - - - - (38) (40)
Prior year adjustment - - 1 - - - 37 38
---------------------------- --------------------------- ------- ---------------- ----------------- ------------- ---------------- --------------- -------
Deferred tax (asset)/
liability at 31
March 2022 - (4) - - - - 342 338
---------------------------- --------------------------- ------- ---------------- ----------------- ------------- ---------------- --------------- -------
(Credit)/charge
to profit or loss - 5 - - - - (41) (36)
Prior year adjustment - (1) - - - - - (1)
---------------------------- --------------------------- ------- ---------------- ----------------- ------------- ---------------- --------------- -------
Deferred tax at
31 March 2023
Liability - - - - - - 301 301
---------------------------- --------------------------- ------- ---------------- ----------------- ------------- ---------------- --------------- -------
Deferred tax at
31 March 2022
Liability - (4) - - - - 342 338
---------------------------- --------------------------- ------- ---------------- ----------------- ------------- ---------------- --------------- -------
4. 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
services provided in support of the Group's different revenue
streams, the Board considers that the Group has only one operating
segment.
REVENUE BY GEOGRAPHIC DESTINATION
Revenue across all operating segments is generated from the UK
but includes overseas sales:
2023 2022
GBP'000 GBP'000
UK 11,576 10,880
Non-UK 3,084 3,022
======= ==================== =====================
14,660 13,902
======= ==================== =====================
2023 Non-UK revenue includes United States of America
GBP1,581,000 (2022: GBP1,150,000), Ireland GBP484,000 (2022:
GBP442,000), Italy GBP75,000 (2022: GBP141,000), Rest of Europe
GBP582,000 (2022: GBP461,000), Australia GBP44,000 (2022:
GBP121,000) and Rest of the World GBP318,000 (2022:
GBP707,000).
2023 Non-UK non-current assets includes Ireland GBP19,000 (2022:
GBP29,000) and Germany GBP15,000 (2022: GBP17,000).
INFORMATION ABOUT MAJOR CUSTOMERS
No customers contributed 10% or more to the Group's revenue in
any period presented.
5. 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:
2023 2022
GBP'000 GBP'000
============================ ======== ========
Consultancy 9,350 8,882
Publishing and Distribution 794 838
Software 1,760 1,481
Training 2,756 2,701
============================ ======== ========
Total revenue 14,660 13,902
============================ ======== ========
6. Goodwill
Cost and Net book value 2023 2022
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 indications
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 and EBITDA over the next
five years, based on management's estimates; the terminal growth
rate for revenues and EBITDA 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 DQM element of the Group's 5-year business plan. The plan
incorporates the Group's approved FY24 granular budget model and 4
further years forecast in marginally less detail. The figures have
been reviewed and approved by the Board and include input from
divisional managers around the business. The figures have not been
prepared specifically for the impairment review but are used for
wider business planning, setting management objectives, and
informing market guidance. The forecast includes revenue growth
averaging approximately 15% per year across the 5-year period and
EBITDA growth in line with the revenue growth, assuming that EBITDA
remains a consistent percentage of revenue. It is noted that whilst
the FY24 budget includes revenue up only 12% on the FY23 result the
EBITDA is forecast to improve from 33% of revenue to 51% of
revenue. The improvement comes from a range of operational
efficiencies that management expect to be the result of investment
taking place to grow higher margin revenue lines and internal
projects designed to integrate DQM more fully with the rest of the
Group, making better use of central resources.
As of 31 March 2023, the value in use of the CGU was greater by
GBP3,160k than its carrying amount. The key assumptions used were
the revenue and EBITDA growth assumptions as explained above, the
terminal growth rate of 2%, and the pre-tax discount rate of
12.53%. Management's methodology includes a 4% small company
premium derived from independent third-party data, as would be
expected for a Company the size of DQM. Management also notes the
inherent uncertainty of results expected to be delivered through
the planned operational efficiencies and takes comfort from the
fact that a specific risk premium of up to 3% could be added to the
WACC to allow for this without triggering an impairment. A 3%
specific risk premium added to the WACC would result in the value
of the CGU being greater by GBP230k than its carrying amount.
Management also notes the fact that current year WACC rates have
been pushed up because of high interest rates designed to tackle
inflation, and that official Bank of England forecasts show
inflation (and therefore interest rates) should reduce again within
the forecast period. The growth in cash flows and the selection of
the discount rate are judgements 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 3.4%;
b) Either operating costs would have to rise, or future revenue
increases would need to be less than forecast (assuming margins
remained the same) such that EBITDA was more than 25% less than
forecast, all other variables remaining constant.; or
c) EBITDA margin would have to fall to less than 38% on the forecast revenue numbers.
7. Intangibles Assets
Consultancy Software
Marketing Publishing products and Customer
and website
tools products courseware costs Trademarks relationships Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================== =========== ============ =========== ======== ========== ============= =======
Cost
At 1 April 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
Additions - 83 374 1,049 - - 1,506
Foreign exchange movement - - 3 - - - 3
========================== =========== ============ =========== ======== ========== ============= =======
At 31 March 2023 66 534 1,595 8,221 466 1,843 12,725
========================== =========== ============ =========== ======== ========== ============= =======
Accumulated depreciation
At 1 April 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
Charge for year 1 55 119 1,148 46 154 1,523
At 31 March 2023 64 372 645 5,208 193 627 7,109
========================== =========== ============ =========== ======== ========== ============= =======
Net book value
At 31 March 2023 2 162 950 3,013 273 1,216 5,616
========================== =========== ============ =========== ======== ========== ============= =======
At 31 March 2022 3 134 692 3,112 319 1,370 5,630
-------------------------- ----------- ------------ ----------- -------- ---------- ------------- -------
At 1 April 2021 - 134 622 3,120 366 1,523 5,765
========================== =========== ============ =========== ======== ========== ============= =======
Amortisation is included within administrative expenses.
Intangible assets includes capitalised related party costs
incurred as further explained in note 25.
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.
8. Trade and Other Receivables
2023 2022
GBP'000 GBP'000
==================================================== ======== ========
Trade receivables 1,036 1,284
Less: provision for impairment of trade receivables - (124)
==================================================== ======== ========
Net trade receivables 1,036 1,160
Other receivables 38 32
Prepayments 537 420
==================================================== ======== ========
1,611 1,612
==================================================== ======== ========
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 macroeconomic 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 Directors consider that the carrying amount of trade and
other receivables approximates to the fair value. Included in the
Group's trade receivable balance as at the year end were customer
balances with a carrying amount of GBP197,000 (2022: GBP396,000)
which
are past due at the reporting date for which the Group has not
recorded a provision, however the Directors still believe the
amounts to be recoverable in full.
The maturity profile of trade and other receivables is set out
in the table below:
2023 2022
GBP'000 GBP'000
================================== ======== ========
In one year or less, or on demand 1,611 1,612
================================== ======== ========
The analysis of trade and other receivables by foreign currency
is set out in the table below:
2023 2022
GBP'000 GBP'000
================== ======== ========
UK pound 1,406 1,476
US dollar 92 83
Euro 113 51
Australian dollar - 2
================== ======== ========
1,611 1,612
================== ======== ========
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.
9. Trade and other payables
Amounts falling due within one year:
2023 2022
GBP'000 GBP'000
=================================== ======== ========
Trade payables 1,422 1,018
Other taxation and social security 1,137 2,273
Other payables 424 436
Deferred income 1,961 1,847
Accruals 347 361
=================================== ======== ========
5,291 5,935
=================================== ======== ========
Amounts falling due after one year:
2023 2022
GBP'000 GBP'000
=================================== ======== ========
Other taxation and social security 8 73
=================================== ======== ========
8 73
=================================== ======== ========
Amounts falling due after one year relate to the non-current
element of the other tax and social security arrangements agreed
with HMRC on the basis of time to pay arrangements (see Note 18).
The balance payable will reduce as cash payments are made and is
also expected to reduce as R&D tax credits are claimed from
HMRC as and when quantified in respect of year ended 31 March
2023.
10. Borrowings
2023 2022
Non-current Non-current
Current GBP'000 Total Current GBP'000 Total
GBP'000 GBP'000 GBP'000 GBP'000
=========================== ========= =========== ========= ========= =========== =========
Secured
Other loans (i) 309 - 309 205 - 205
=========================== ========= =========== ========= ========= =========== =========
Total secured borrowings 309 - 309 205 - 205
=========================== ========= =========== ========= ========= =========== =========
Unsecured
Bank loans 41 142 183 40 193 233
Other loans 317 73 390 91 136 227
Loans from related parties 407 - 407 386 - 386
=========================== ========= =========== ========= ========= =========== =========
Total unsecured borrowings 765 215 980 517 329 846
=========================== ========= =========== ========= ========= =========== =========
Total borrowings 1,074 215 1,289 722 329 1,051
=========================== ========= =========== ========= ========= =========== =========
(I) SECURED LIABILITIES AND ASSETS PLEDGED AS SECURITY
Of the loans, GBP77,000 (2022: GBP82,000) is secured against
receipts from sales. The remaining secured loans are secured
against assets of the business.
As at 1 April Cash proceeds Repayments Repayments Interest As at
2022 from borrowings of capital of Interest accruing 31 March
GBP'000 GBP000 GBP'000 GBP'000 GBP'000 2023
=========================== ============= ================ =========== ============ ========= =========
Secured loans 205 608 (490) (55) 55 323
Unsecured loans 460 267 (168) (53) 53 559
Loans from related parties 386 - - - 21 407
=========================== ============= ================ =========== ============ ========= =========
Total 1,051 875 (658) (108) 129 1,289
=========================== ============= ================ =========== ============ ========= =========
As at 1 April Cash proceeds Repayments Repayments Interest As at
2021 from borrowings of capital of Interest accruing 31 March
GBP'000 GBP000 GBP'000 GBP'000 GBP'000 2022
=========================== ============= ================ =========== ============ ========= =========
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
=========================== ============= ================ =========== ============ ========= =========
The Group has a number of loans in the period presented, and
they are summarised as follows:
Security pledged Term Expiry/maturity Effective interest
date rate
======================== ===================== ======================== ================ ==================
Bank
======================== ===================== ======================== ================ ==================
Lloyds Bank - CBILS
Loan Unsecured 72 months October 2026 2.45%
======================== ===================== ======================== ================ ==================
Other
======================== ===================== ======================== ================ ==================
Parent company
Wesleyan guarantee 60 months September 2024 14.32%
======================== ===================== ======================== ================ ==================
Portman Asset Finance Director's Guarantee 36 months August 2023 10.16%
======================== ===================== ======================== ================ ==================
Secured against
Bute Capital assets of business 12 months November 2023 11.52%
======================== ===================== ======================== ================ ==================
You Lend Director's Guarantee 12 months October 2023 26.63%
======================== ===================== ======================== ================ ==================
Paypal Secured against 12 months April 2023 4.26% -10.49%
receipts from
sales
======================== ===================== ======================== ================ ==================
Secured against
receipts from
Stripe sales 17 months May 2024 12.87%
======================== ===================== ======================== ================ ==================
Fleximize Director's Guarantee 24 months December 2024 29.4%
======================== ===================== ======================== ================ ==================
My Cashline Director's Guarantee 24 months January 2025 3%
======================== ===================== ======================== ================ ==================
Federal capital Director's Guarantee 12 months January 2024 46.74%
======================== ===================== ======================== ================ ==================
Loans from related
parties
=========================================================================================== ==================
Unsecured loan facility Unsecured Available to December 2023 5% above the
provided by Andrew the Group until Bank of England
Brode at least 31 base rate
December 2024
and will automatically
renew for a
further
12 months unless
terminated by
either party
======================== ===================== ======================== ================ ==================
In addition, the Group has access to an invoicing discounting
facility.
11. 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.
2023 2022
GBP'000 GBP'000
================================================= ======== ========
Loss attributable to equity holders of the Group
(GBP) (1,250) (997)
Weighted average number of shares in issue 107,826 101,510
================================================= ======== ========
Basic loss per share (pence) (1.16) (0.98)
================================================= ======== ========
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:
2023 2022
Number of shares 107,826,246 101,510,456
Dilutive (potential dilutive) effect of share options - -
Weighted average number of ordinary shares for the
purposes of diluted earnings per share 107,826,246 101,510,456
====================================================== =========== ===========
Diluted loss per share (pence) (1.16) (0.98)
====================================================== =========== ===========
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 526,760 (2022: 426,760) share
options outstanding at the end of the year that could potentially
dilute basic earnings per share in the future.
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END
FR BLGDCISGDGXS
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