Last checked at 2 Apr 2019 07:00
2 April 2019
GRC International Group plc
("GRC International" or the "Group")
Trading Update
GRC International Group plc, a leading supplier of IT governance, risk management and compliance products and services, is pleased to announce a Trading Update ahead of its Preliminary Results for the year ended 31 March 2019.
Highlights:
· | Trading in the six months to 31 March 2019, against an uncertain macro-economic and political backdrop, was mixed, particularly in Q4. Cyber-security-focused products and services delivered a strong performance, while billings from our general data protection services were significantly down on the same period a year ago when companies were seeking to make themselves compliant ahead of new regulations being introduced on 25 May 2018.
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· | Sales in Q4 included a number of high value multi-year contracts giving us a strong run-rate as we enter the the new financial year. Meanwhile, the Group saw smaller clients delaying discretionary spending as they await the outcome of the ongoing Brexit negotiations.
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· | In line with expectations, the Group was cash flow positive in the month of March, which had a number of one-off inflows and outflows, following ongoing tight control of costs. The Group's year-end net cash position was £0.1 million and ahead of expectations.
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· | Billings for H2 were down 31% to £7.0 million (H2 2018: £10.1 million). Billings for the year were down 3% to £15.8 million (FY 2018: £16.3 million).
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· | 2018/19 was a year of significant investment in new business areas and geographies which, as expected, has impacted short-term profitably. This programme is largely complete and we are already gaining the benefit of these investments as we enter the new financial year.
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· | Integration of recently acquired DQM Group is progressing as planned, with performance of the newly acquired business ahead of expectations.
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· | Good acquisition pipeline, with management continuing to explore strategic, earnings accretive bolt-on opportunities which we expect to finance with an appropriate amount of debt.
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· | Given the strong exit run rate to the period, we are cautiously optimistic about the outlook for the new financial year and maintain our guidance for 2020. Whilst we are not yet seeing any pickup in our GDPR services following the spike (as explained above) in the run up to 25 May 2018, we continue to expect to see some significant fines by the Information Commissioner's Office for breaches of the regulations and renewed efforts by companies to become compliant.
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· | Demand for our cyber security services continues to be very strong. |
Alan Calder, Chief Executive Officer, said:
"This year has been one of significant investment and strategic development for GRC International, most recently with the acquisition of DQM Group. We are pleased that the integration of DQM is progressing as planned, with performance of the newly-acquired business already ahead of expectations.
"Whilst trading over the past six months has been mixed, particularly in Q4, against an uncertain macro-economic and political backdrop, we are pleased that Q4 also saw us sign a number of high value multi-year contracts, giving us a strong-run rate into the new financial year. As expected, March was cash flow positive, as we continued our tight control of costs.
"We continue to explore strategic, earnings accretive bolt-on opportunities and are encouraged by our current pipeline.
"As we enter the new financial year, given our strong exit run-rate, we are cautiously optimistic on outlook and maintain guidance for FY20."
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Enquiries:
GRC International Group plc | +44 (0) 330 999 0222 |
Alan Calder, Chief Executive Officer Christopher Hartshorne, Finance Director
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Grant Thornton UK LLP (Nominated Adviser) | +44 (0) 20 7383 5100 |
Philip Secrett / Jen Clarke
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Citigate Dewe Rogerson | +44 (0) 20 7638 9571 |
Nick Hayns / Lucy Eyles / Claire Dansie
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Dowgate Capital Stockbrokers Limited (Broker) | +44 (0) 20 3903 7715 |
James Serjeant / David Poutney
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About GRC International Group plc
GRC International Group plc was admitted to trading on the London Stock Exchange's AIM market in March 2018.
GRC provides a comprehensive suite of products and services to address the IT governance, risk management and compliance requirements of organisations seeking to address a wide range of data protection and cyber security regulation. The Company provides a range of services and products through three divisions: Training, Consultancy, and Publishing and Distribution.
The Group has an international customer base which is expected to grow as GRC expands its geographical footprint. Since admission to AIM, the Group has expanded internationally with operations now established in Ireland, the US and Northern Europe.