Trading Update - Replacement

RNS Number : 6399Q

GRC International Group PLC

22 June 2020

 

The following replaces the notice released 22 June 2020 at 07:00, RNS Number  5846Q. The section headed 'Finances' was incorrectly omitted, all other details remain the same. The full amended text appears below.

GRC International Group PLC ("GRC" or the "Group")

GRC, a leading supplier of IT governance, risk management and compliance products and services, is pleased to announce the following trading update, including the trading performance of Q1 2021.

COVID-19 Operational Performance

· V-Shaped Recovery: Our pandemic response plan allowed for a substantial drop in revenue immediately following initiation of the UK-wide lockdown on 23 March. We assumed that April would be the nadir and we planned for a V-shaped recovery starting in May and continuing through Q2.

We are pleased to report that we are currently trading ahead of that plan. Billings are almost 20% ahead of management's expectations, costs have been carefully controlled and are as a result lower than anticipated and, as a consequence, our cash position is better than we allowed for. Website traffic and transaction volume both started a sustained rebound from April.

· Business Adaptation: The Group has quickly adapted for the post-lock down environment.

o  The  majority of our previously office-based staff in all our geographic locations are now permanently home-based.

o  Our classroom training business is now completely online, with a bio-secure training centre opening in Cambridgeshire with an innovative 'Learn from Anywhere' multi-channel delivery model.

o  We are successfully delivering 95% of our cyber security, privacy and continuity services remotely to customers across the world.

o  Since lockdown, the volume of contracts in our GRCI Law business has nearly doubled.

o  DQM's revenues have, in line with expectations, increased month-on-month through Q1.

· Subscription products: The Group has continued investing in its growing range of subscription businesses. In particular:

o  We have licenced 8,700 new users on our e-Learning Staff Awareness platform.

o  We now have 13 documentation toolkits available on a subscription model. Sales recovered in May to the level they were at prior to lockdown. 

o  We were appointed an IASME Certification Body for Cyber Essentials in late May and sales of this product range, which is sold on an annual subscription basis, are growing rapidly.

o  We continue to launch new content and module upgrades on the CyberComply risk and privacy management platform, sold by our Vigilant Software subsidiary.

o  Newly launched subscription products include a CREST-accredited Vulnerability Scanning service and, within DQM, the BreachTrak subscription service.

o  GRCI Law's Privacy-as-a-Service model, which has a strong annual retainer element, continues to see increasing uptake.

· Customer Demand: Although the onset of the Coronavirus crisis, which led into the steep demand decline in March and April, compromised the revenue growth we had expected in Q4 of FY20, we have seen steady week-on-week improvements in demand since the start of May.

o  During Q1, the Group has also secured 3 relatively large longer term contracts that will contribute £400k in billings during this FY.

Market

In the prevailing highly volatile climate, the Board's view currently is that security, business continuity and privacy compliance projects will continue to be critical for clients in those sectors that have ongoing business operations. Moreover, the widespread shift to remote working creates new vulnerabilities for clients and new opportunities for our products and services.

Finances

· Funds raised from the February placing strengthened the balance sheet and working capital position of the Group.  During Q1 2021 cash has tracked ahead of the Board's expectations and headroom in banking facilities has consequently increased.  The Group's invoice discounting facility remains unused.

· Preparation and audit of the FY2020 Annual Report is continuing satisfactorily despite the challenges presented by remote working, and The Group intends to release the Annual Report in early September .

· Despite the impact of Covid 19, turnover for the second half was broadly similar to the first half and full year revenue is expected to be between £14m and £14.5m. As expected, cost savings from the first half restructuring lead to a much improved performance at EBITDA level. Q3, which includes the traditionally quiet month of December, delivered a small EBITDA loss and this was offset by a marginally positive EBITDA Q4 despite the adverse impact of Covid 19 on revenue.

· Looking ahead, as the economic impact of COVID-19 continues to evolve, the Board expects that it may continue to impact business development and new business, although this is difficult to fully quantify at this stage. Even as lockdown restrictions begin to be eased, the impact on business development remains unquantifiable and therefore the Board is not in a position to give future financial performance guidance until the economic situation can be more clearly assessed.

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Enquiries

GRC International Group plc Alan Calder (CEO) Chris Hartshorne (Finance Director)	www.grci.group 033 3800 7000
Grant Thornton UK LLP (Nomad) Philip Secrett / Jen Clarke / Seamus Fricker	020 7383 5100
Dowgate Capital Limited (Broker) James Serjeant	020 3903 7717

 

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