Postponement of Preliminary Results

RNS Number : 1992G

GRC International Group PLC

22 July 2019

 

This announcement contains inside information

22 July 2019

GRC International Group plc

("GRC International", the "Company" or the "Group")

Postponement of Preliminary Results

The Company announces that the publication of its preliminary accounts for the year ending 31 March 2019, which were expected to be published today, has been subject to a short delay whilst the Company finalises the deferred consideration due to the vendors (and existing management team) of DQM Holdings Limited ("DQM") that was acquired by the Company at the end of the financial year, as announced on 11 February 2019.

Under the sale and purchase agreement (the "Agreement"), further consideration ("Deferred Consideration") is due to the vendors of DQM based on the accounts for the financial year ending 28 February 2019 ("Earn-out Accounts"). DQM's financial performance was better than originally expected and the final amount of Deferred Consideration is consequently expected to be in the region of £3.7 million, slightly ahead of the top range of the £2.5 - £3.5 million as announced on 11 February 2019.  

Under the Agreement, the Deferred Consideration is intended to be satisfied through cash (as to 60 per cent. of the Deferred Consideration) and the issue of Ordinary Shares (as to 40 per cent. of the Deferred Consideration and based on an issue price per Ordinary Share of 116.5 pence) within five business days of completion of the audit of DQM's Earn Out Accounts.

In advance of the Deferred Consideration falling due, the Company is presently holding constructive discussions with the vendors of DQM, who are mainly Group employees, in order to vary the terms of the existing Agreement, which may result in the timing and/or composition of the deferred consideration being different from that as announced on 11 February 2019.

Negotiations with the vendors will include in what form settlement might take and the Company is considering a range of options which includes, but is not limited to, adjusting the balance of consideration between cash and shares and exploring the feasibility of a payment schedule in order to enable the Company to satisfy the cash element of the deferred consideration that is expected to fall in August or possibly September. The Company will also, if necessary, consider different potential funding options, including but not limited to debt and equity, from existing and other potential investors. Discussions are ongoing and the Company expects to announce its preliminary results once negotiations with the vendors have concluded.

As previously reported, the Company's unaudited preliminary annual results will show revenue of £15.8 million, an underlying EBITDA loss of approximately £4.3 million and a loss before tax, exceptional items and share based payments of approximately £5.1 million.

The year ended 31 March 2019 was a year of significant investment in new business areas and geographies which, as expected, impacted short-term profitability. Within the final quarter of the year ended 31 March 2019 the Group saw a return to positive EBITDA and positive cash generation as the benefits of these investments came through.

Enquiries

GRC International Group plc Alan Calder (CEO) Chris Hartshorne (Finance Director)	www.grci.group [phone]
Grant Thornton UK LLP (Nomad) Philip Secrett/ Jamie Barklem/ Ben Roberts	020 7383 5100
Dowgate Capital Limited (Broker) James Serjeant	020 3903 7717

 

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