GRC International Group PLC Trading Statement (7598U)

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RNS Number : 7598U

GRC International Group PLC

02 April 2019

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. 
 --   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. 
 --   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 GBP0.1 million and ahead of expectations. 
 --   Billings for H2 were down 31% to GBP7.0 million (H2 2018: GBP10.1 million). Billings for the 
       year were down 3% to GBP15.8 million (FY 2018: GBP16.3 million). 
 --   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. 
 --   Integration of recently acquired DQM Group is progressing as planned, with performance of 
       the newly acquired business ahead of expectations. 
 --   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. 
 --   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. 
 --   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."

- ends -

Enquiries:

 
 GRC International Group plc             [phone] 
 Alan Calder, Chief Executive Officer 
  Christopher Hartshorne, Finance 
  Director 
 Grant Thornton UK LLP (Nominated 
  Adviser)                               [phone] 
 Philip Secrett / Jen Clarke 
 Citigate Dewe Rogerson                  [phone] 
 Nick Hayns / Lucy Eyles / Claire 
  Dansie 
 Dowgate Capital Stockbrokers Limited 
  (Broker)                               [phone] 
 James Serjeant / David Poutney 
 

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.

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April 02, 2019 02:01 ET (06:01 GMT)