Final results for the year ended 31 March 2023

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 £14.7m (FY22: £13.9m).

·      International revenue up 3% to £3.1m (FY22: £3.0m).

·      SaaS revenue up 11% - the Group's highest gross margin generating division.

·      ARR (Annualised Recurring Revenue) at period end up 31% to £10.9m (FY22: 8.3m).

·      Recurring and contracted revenue up 30% to £10.7m (FY22: £8.2m).

·      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 EBITDA1 of £0.3m (FY22: £1.0m).

·      Loss before tax of £1.6m (FY22: £1.0m.) Investment in capital expenditure to fuel future growth of £1.6m (FY22: £1.3m).

·      Cash balances at period end of £0.1m (FY22: £2.1m). Borrowings (excluding lease obligations) of £1.3m (FY22 £1.1m).

Operational highlights

 

·      Increased the value of SaaS subscriptions customers - at period end we had over 3,000 SaaS customers with an average value of £1.2k, 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 billings2 growth in our CyberComply business. At the end of August, the Group's cumulative billings2 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                                                                                            [phone]

Alan Calder, Chief Executive Officer

Christopher Hartshorne, Finance Director

Singer Capital Markets (Nominated Adviser and Joint Broker)                                 [phone]

Phil Davies, James Fischer 

Dowgate Capital Limited (Joint Broker)                                                                          [phone]

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 £50m, 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 £2.3m (£2.2m 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% (£2.4m) to £10.7m, 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 £1.3m 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 £14.9m (FY22: £14.8m). 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 £14.7m (FY22: £13.9m). 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 £10.7m (FY22: £8.2m). 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.

£'m	Services	Software as a Service (SaaS)	E-Commerce	Total
FY FY22	7.0	4.1	3.6	14.7
FY FY22	6.6	3.7	3.6	13.9

Period-on-period %	Services	Software as a Service (SaaS)	E-Commerce	Total
FY23 vs FY22	6%	11%	-%	6%

International

International revenue was up 3% to £3.1m (FY22: £3.0m), 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 £8.9m (FY22: £8.2m), 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 change		FY23
	Revenue	Margin			%		Revenue	Margin
	£	£	%				£	£	%
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 £1.3m (14%) to £10.4m (FY22: £9.1m), 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 £0.3m (FY22: £1.0m). 

£'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 £0.2m (FY22: £0.3m) relates to interest on the Group's borrowings and leases accounted for under IFRS 16.

Loss before tax

Loss before tax was £1.6m (FY22: loss £1.0m).

Taxation

No provision for tax has been made in the period (FY22: £Nil). 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 £0.1m (31 March 2022: £2.1m).

 

Borrowings (excluding lease obligations) at period end were £1.3m (31 March 2022: £1.1m).

 

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 £700,000 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, £350,000 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 £7.4m (31 March 2022: £8.7m).

Net current liabilities at period end were up by £1.4m to £4.6m (31 March 2022: £3.2m).

In January 2022, GRC International completed a successful £3m 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 £1.4m 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 £2.0m (31 March 2022: £1.8m), 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 £1.5m (FY22: £1.2m) relate to software, website development and the development of courseware.

 

Amortisation of intangible fixed assets was £1.5m (FY22: £1.4m).

 

Goodwill arising from business combinations has been allocated to the Group's DQM cash-generating unit ('CGU').

 

Goodwill was £6.8m (31 March 2022: £6.8m).

 

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 £0.001 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 YEAR ENDED 31 MARCH

 

Notes	2023 £'000	2022 £'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 YEAR ENDED 31 MARCH

 

	2023 £'000	2022 £'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 YEAR ENDED 31 MARCH

 

	2023 £'000	2022 £'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 YEAR ENDED 31 MARCH

For the year ended 31 March 2023

 

	Share capital £'000	Share premium £'000	Merger reserve £'000	Share-based payment reserve £'000	Retained deficit £'000	Translation reserve £'000	Total £'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	Share	Merger	Share-based payment	Retained	Translation
	Capital	premium	reserve	reserve	Deficit	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'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 YEAR ENDED 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 subsidiaries.

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 £1.3m (2022: £1.0m) and as at 31 March 2023 its current liabilities exceeded its current assets by £4.8m (2022: £3.2m).

 

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 £1.7m as part of its response to the unprecedented trading environment, in respect of which it has formally agreed repayment plans with HMRC and £1.4m had been repaid at the balance sheet date, with the remaining £0.3m 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 £0.5m 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 £'000	2022 £'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 £'000	2022 £'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 £'000	2022 £'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 £164,000 and £164,000 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 timing differences		Retirement benefit Share-based obligations                 payments		Short-term timing differences	Tax losses (Ireland)	Tax losses (UK)	Intangibles	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'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 £'000	2022 £'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 £1,581,000 (2022: £1,150,000), Ireland £484,000 (2022: £442,000), Italy £75,000 (2022: £141,000), Rest of Europe £582,000 (2022: £461,000), Australia £44,000 (2022: £121,000) and Rest of the World £318,000 (2022: £707,000).

 

2023 Non-UK non-current assets includes Ireland £19,000 (2022: £29,000) and Germany £15,000 (2022: £17,000).

 

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 £'000	2022 £'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 £'000	2022 £'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 £3,160k 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 £230k 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

	Marketing	Publishing	Consultancy products and	Software and website		Customer
	tools	products	courseware	costs	Trademarks	relationships	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'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 £'000	2022 £'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 £197,000 (2022: £396,000) 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 £'000	2022 £'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 £'000	2022 £'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 £'000	2022 £'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 £'000	2022 £'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
	Current £'000	Non-current £'000	Total £'000	Current £'000	Non-current £'000	Total £'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, £77,000 (2022: £82,000) is secured against receipts from sales. The remaining secured loans are secured against assets of the business.

	As at 1 April 2022 £'000	Cash proceeds from borrowings £000	Repayments of capital £'000	Repayments of Interest £'000	Interest accruing £'000	As at 31 March 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 2021 £'000	Cash proceeds from borrowings £000	Repayments of capital £'000	Repayments of Interest £'000	Interest accruing £'000	As at 31 March 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 date	Effective interest rate
Bank
Lloyds Bank - CBILS Loan	Unsecured	72 months	October 2026	2.45%
Other
Wesleyan	Parent company guarantee	60 months	September 2024	14.32%
Portman Asset Finance	Director's Guarantee	36 months	August 2023	10.16%
Bute Capital	Secured against assets of business	12 months	November 2023	11.52%
You Lend	Director's Guarantee	12 months	October 2023	26.63%
Paypal	Secured against receipts from sales	12 months	April 2023	4.26% -10.49%
Stripe	Secured against receipts from 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 provided by Andrew Brode	Unsecured	Available to the Group until at least 31 December 2024 and will automatically renew for a further 12 months unless terminated by either party	December 2023	5% above the Bank of England base rate

 

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 £'000	2022 £'000
Loss attributable to equity holders of the Group (£)	(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.

 

END