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 2020 and the year ended 31 March 2019 does not constitute the company's statutory accounts for those years.

Statutory accounts for the year ended 31 March 2019 have been delivered to the Registrar of Companies.

The auditor's reports on these accounts was unqualified but did draw attention to a material uncertainty related to going concern.

The auditor's report and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The financial information for the year ended March 2020 is preliminary. The statutory accounts for that year will be delivered to the Registrar of Companies in due course. �The audit report will draw attention to the material uncertainty related to going concern which is explained below.

Principal Accounting Policies

Basis of preparation and consolidation

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 International Financial Reporting Standards ("IFRS"), as adopted by the EU, and IFRIC interpretations.

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The Directors of GRC International Group are responsible for the financial information and contents of the consolidated financial statements.

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The results for the year ended 31 March 2020 and 31 March 2019 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.

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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.

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All intra-Group transactions, balances, income and expenses are eliminated in full on consolidation.

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All accounting policies disclosed below apply to the Group for the years presented, unless otherwise explicitly stated.

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IFRS is subject to amendment and interpretation by the IASB and the IFRS Interpretations Committee, and there is an ongoing process of review and endorsement by the European Commission. These accounting policies comply with each IFRS that is mandatory for accounting periods ending on 31 March 2020.

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The consolidated financial statements have been prepared on a historical cost basis, except for the measurement of the contingent consideration which is carried at its fair value.

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The principal accounting policies adopted are set out below.

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Going concern

The Group has recorded a loss for the year of �3.2m (2019: �5.4m) and at 31 March 2020 its current liabilities (excluding deferred income) exceeded its current assets by �1.9m (2019: �4.5m).� Notwithstanding this, the Directors consider it appropriate to prepare the financial statements on a going concern basis.� The key considerations relating to this judgement are described below.�

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During FY20 the Group significantly restructured its operations, including reducing its cost base.� Of the loss for the year of �3.2m, �2.2m (69%) was incurred in H1 and �1.0m in H2 the Group was EBITDA positive in 5 out of the 6 months, with the only exception being known seasonality in the month of December as our customers' businesses wind down for the Christmas period.� Also, during H2 the Group successfully completed a placing of new shares which raised �3.75m (approximately �3.5m net of fees) enabling the Group to settle the cash element of the contingent consideration (�1.6m) due to the vendors of DQM, acquired in March 2019, and repaying a bank borrowing facility (�0.5m). The remainder of the funds raised provided additional working capital for the Group to strengthen the overall balance sheet position.��

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Having been through a transitional year the Group was looking forward to a strong FY21, continuing its H2 FY20 momentum and anticipating profitable results for the year. However, the global COVID-19 pandemic led to an immediate reduction in monthly billings as customers delayed projects, reduced spend seen as not immediately critical to day-to-day operations and focussed on establishing new business processes and procedures to survive the short term. This unprecedented trading environment resulted in a reduction in revenues and the net result for April and May 2020, followed by a recovery towards pre-COVID-19 levels of revenue and profitability in June prior to a flattening out of trading levels over July and August 2020 as is the traditional pattern in the Group's annual cycle.

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In response to the pandemic the Board revisited its FY21 and FY22 forecasts, increased the regularity of its short and medium term cash flow planning, implemented a number of key cost reduction measures and took advantage of government initiatives that have been introduced in the geographies that the Group operates in order to preserve liquidity, supplemented by deferring the payment of certain liabilities to HMRC.

Notably; the Group has made savings in marketing costs, property and training venue costs, and continues to rationalise IT infrastructure.� Having extended the hiring freeze the Group is continuing to see payroll costs reduce.� In particular, early progress on the integration of DQM with the rest of the GRC group enabled one of the founder directors to take early retirement and the other to reduce workload by 60%; and these savings (c. �0.2m annualised) became effective from 1 April 2020.� Furthermore, IT Governance USA Inc. qualified for a $0.1m loan through the Paycheck Protection Programme (PPP) which should qualify in due course for forgiveness.�� The Group also deferred certain liabilities payable to HMRC amounting to approximately �1.0m, representing a rolling 3-4 months of the Group's monthly liability, which the Group has scheduled to repay both in the base case and worst case forecast on an instalment basis commencing from April 2021.�

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Despite the drop in monthly billings the Group has focused operationally on developing new products and services and redesigning existing ones such that all products and services can be delivered remotely or in person as customer preference and rapidly changing regulation and guidance dictate.� As evidenced by the early months of FY21, the Directors believe the Group is in a strong position to continue to support its customers and deliver services in a rapidly changing environment and is well placed to benefit from the need for organisations to change their business processes in a cyber secure and regulatory compliant manner.

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Notwithstanding some easing of trading conditions and subsequent improvement in performance since the outbreak of the global pandemic reached the United Kingdom (which represents around 93% of the Group's revenue in FY20), the Directors acknowledge that trading conditions will necessarily remain uncertain for the foreseeable future.� Those uncertainties having effect include:

�� The possibility of further local or another national "lockdown".

�� The levels of revenue in the context of weakened demand for the Group's products and services.

�� Should the Group need to reduce its scalable cost base, its ability to make those adjustments and realise the benefits from doing that on a timely basis.

�� The continued access to financing, including government support in its various forms, that would be sufficient to fund any further cash requirement over the foreseeable future

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To assess going concern the Directors have prepared an integrated profit and loss, balance sheet and cash flow forecast by month to 31 March 2022 (the 'base case forecast'). A key assumption to the base case forecast is that the level of business interruption caused by the pandemic would gradually ease over the summer with a resumption of more normal pre-COVID-19 levels of billings from September 2020 onwards, though still notably lower than originally budgeted prior to the impact of� COVID-19 . The Group's base case forecast identifies that through the going concern review period the Group is able to meet its liabilities as they fall due subject to settlement of the outstanding HMRC liabilities from April 2021 onwards.

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Additionally, the Directors have prepared a sensitised forecast to the base case forecast where if the COVID-19 pandemic was more prolonged than currently envisaged by the Directors (the 'worst case forecast'). This worst case forecast assumes that revenues between September 2020 and March 2022 are 30% below the base case and cost reduction measures, to reflect the reduced level of billings, have been effected. The worst case forecast does not identify a potential cash flow shortfall in any month, on the basis that outstanding HMRC liabilities are capable of being further deferred.

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The Directors are monitoring actual business performance and cash flow against the base case forecast. Encouragingly, since the year end the Group has traded ahead of the expectations set out in the base case forecast and is currently seeing trading almost back at pre-COVID levels, although behind the growth plans originally budgeted. Furthermore in the view of the Directors any temporary cash flow shortfall can be mitigated through the deferment or removal of selected planned marketing, capital expenditure and other scheduled cash outflows.

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Based on the base case forecasts (including the currently expected payment profile of the deferred liabilities to HMRC referred to above) and the medium and longer term planning in place, the Directors have identified that they have a reasonable expectation of being able to reduce costs sufficiently in the required timeframe should revenue levels reduce by any reasonably foreseeable degree and that the Group will remain within the currently available facility levels, none of which has any financial covenant compliance requirements.� Central to those facilities is the �700,000 unsecured loan facility provided by Andrew Brode which is at present 50% utilised, and which remains in place until at least 31 December 2021, although the Group does also have access to additional liquidity through its invoice discounting facility, which is not currently utilised and is not currently expected to be relied upon in the base case forecast or the short term rolling cash flow forecast reviewed by the Board.

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Nevertheless, in order to trade through the pandemic period without making significant headcount cuts that would have damaged the rate of the Group's recovery, it was necessary for the Group to defer the HMRC liabilities described above without a formal payment arrangement being in place.� At the time of writing this report the Directors' are confident that these liabilities can be settled in the near future, and the Group currently has adequate cash and facilities in place to settle the liabilities in full if required.� Given Government's clear advice to HMRC to be supportive of UK businesses and based on the Group's communications with HMRC to date management do not expect that the immediate need to settle the deferred balance in full is likely.� However, in the event that the liabilities are demanded in full and the effect of COVID-19 on future trading is more prolonged or severe than the Directors' expectations, the two events combined may impact the Group's ability to generate sufficient positive cashflow to settle future liabilities as they fall due and as a result the Parent Company would be required to raise additional funding in order to meet its liabilities with no guarantee such funding would be secured.

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These conditions indicate the existence of a material uncertainty which may cast significant doubt on the Group's and the Company's ability to continue as a going concern.�� Notwithstanding the impact of COVID-19 identified above, the Directors have a reasonable expectation that the Group will have sufficient cash flow and available resources and if necessary will be able to raise additional funds to continue operating for at least 12 months from the approval date of these Financial Statements.� Accordingly, the Directors continue to adopt the going concern basis in preparing the Group and the Company its Financial Statements.

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The financial statements do not include the adjustments that would be required should the going concern basis of preparation no longer be appropriate.

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Revenue

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The type of products and range of services sold across the Group fall within the following four revenue streams:

�� Consultancy

�� Publishing/Distribution

�� Learning

�� Software

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To determine whether to recognise revenue, the Group follows a five-step process:

1.�� Identifying the contract with a customer

2.�� Identifying the performance obligations

3.�� Determining the transaction price

4.�� Allocating the transaction price to the performance obligations

5.�� Recognising revenue when/as performance obligation(s) are satisfied.

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Revenue is recognised either at a point in time or over time, when the Group satisfies performance obligations by transferring the promised goods or services to its customer. The Group often enters into transactions involving a range of the Group's products and services, for example for the delivery of consultancy, training, software and related after-sales service. In all cases, the total transaction price for a�� contract is allocated net of discounts amongst the various performance obligations based on their relative stand-alone selling prices.

The transaction price for a contract excludes any amounts collected on behalf of third parties.

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The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as deferred income in the statement of financial position. Similarly, if the Group satisfies a performance obligation before it�� receives the consideration, the Group recognises either a contract asset or a receivable in its statement of financial position, depending on whether something other than the passage of time is required before the consideration is due. In practice, contract assets rarely arise due�� to the timing of invoices raised under the terms of the Group's contracts.

All material contracts which span a financial reporting period will be reviewed on an individual basis with the five-step application of IFRS 15 applied, based upon the type of product sold.

Customer rights to refunds are limited and are not considered material to the financial statements.

The following chart summarises how the five-step process is applied for each of the four revenue streams:

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Products and services

Nature, timing of satisfaction of performance obligations and significant payment terms

Consultancy

�� On-site and remote support consulting services, helping organisations to design and implement data protection and cyber security policies and procedures.

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The Group recognises revenue over time as the services in the contract are performed, generally based on the consultants' estimate of the progress of the work. Revenue from consultancy services which are either a performance obligation within a larger arrangement or are sold on a stand-alone basis is generally recognised over time where the Group agrees to provide labour hours/days. Contracts state a broad list of activities that� the services may include. The contracts state daily/hourly rates and estimated amounts to be billed. Contracts state that IT Governance will not exceed the total amount without prior written approval.

In cases where contracts are structured on a time basis, the variable amount of the consideration due will be estimated.

Where the performance obligations within an agreement are considered to represent services that are substantially the same, these will form a single performance obligation with labour days/hours representing the progress measure. Several contracts define the only obligation as support for customer-led projects, and again in these cases it will be considered that there is one performance obligation with labour hours being the� progress measure.

Revenue shall be recognised over a time, when the Group's performance does not create an asset with an alternative use to the Group and the entity has an enforceable right for performance completed to date. This is true for all services provided on a time basis. The Group also has an enforceable right for payment for work completed to date.

Publishing/ Distribution

�� The Group sells books, documentation templates and software via its websites, both that it publishes or writes itself, and also supplied by third parties. The Group also creates and sells sets of documentation templates that are used by customers to assist them to document IT systems and procedures.

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The Group recognises revenue at the point in time when control of the asset is transferred to the customer. The product becomes under the control of the customer when the book/software/toolkit is delivered to them. This is when the customer has legal title to the asset or has physical possession of the asset.

For the sale of physical softcopy books and CD-ROMs, revenue is recognised when the goods are delivered.

Where a product with a subscription or licence is sold on behalf of a third party the revenue is recognised straight away as the obligation to fulfil the contract lies with the third party and not the Group. The full cost of the product sold by the Group in respect of a third-party sale is charged to the Income Statement when the revenue is recognised.

Learning

�� The Group sells "in person" classroom- based training courses related to data protection, cyber security, ISO 27001 certification and related topics. The courses range from one to five days in length and are held at hired premises. The Group also provides courses at customers' premises for organisations that require training for a number of their employees. The courses are aimed at various different areas of IT governance and at different skill levels.

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Revenue is recognised on 'Classroom Based Training Courses' and 'Online Training Courses' when the customer obtains control. The product becomes under the control of the customer when they attend the first day of the Training Course.

Revenue is recognised on 'Distance Learning Based Training Courses, when the customer gains control. The product becomes under the control of the customer at the date the online course is made available to them. Once the course is made available the Group has fulfilled its contractual obligation to deliver. The date the user accesses and uses the course is not considered relevant.

Revenue is recognised on 'e-Learning Courses' dependent on the type of service provided. 'e-Learning' is split into four types:

e-Learning Hosting Services - An additional annual fee for LMS (Learning Management System) hosting of the e-Learning courses. Customers are not obliged to but can buy our standard 'off-the-shelf' 'Hosting' area. All hosted client courses will be hosted on our LMS. Each client will be given their own space, which can be branded with their logo and company colours. The e-Learning course files hosted on our LMS will be the same for all clients, and each client will have a space in the course layout to add any extra information they need, such as documents, links and contact details. Revenue is recognised on 'e-Learning Hosting Services' over time as the customer has access to the hosting area. Revenue is then pro-rated equally over the period (normally 12 months) to which the service relates.

Revenue is recognised on 'e-Learning Courses' when the customer obtains control. The course becomes under the control of the customer when the online course is made available to access.

e-Learning Set Up Costs - Organisations/customers can contract the Group to 'Customise' the e-Learning courses to their organisation's specifications (i.e. company logo/branding etc.). Revenue is recognised on 'e-Learning Set Up Costs' when the customer obtains control of the course material. The product becomes under the control of the customer when the online courses are made available to access.

e-Learning Training - Organisations/customers can contract the Group to provide training for the e-Learning courses. This is a one-off fee and the Training is a pre-agreed number of hours or days as requested by the customer. Revenue is recognised on 'e-Learning Training' when the customer gains control. The product comes under the control of the customer on the first day of the Training Course.

Software

�� The Group creates and sells software solutions.

Maintenance and Support ("M&S") arrangements are usually sold on a stand- alone basis as a renewal of an existing arrangement usually running over a 12-month period. Generally, the first time M&S is sold is when the customer initially buys the software. There are no material rights to consider in connection with renewal options.

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Revenue from the sale of software for a fixed fee is recognised when or as the Group gives access to the customer to download the software.

Software revenue recognition.

Performance obligations are satisfied at a point in time when the Group has a right to payment for the software, the customer has legal right to use the software under the terms of the software licence agreement, and the Group has physically transferred the software to the customer. These criteria are all met at the point in time that the Group transfers the software.

The Group does not undertake activities which significantly affect the intellectual property post-delivery of the software which would prevent revenue being recognised at a point in time.

The Group does not provide free Maintenance and Support type services as part of the licensing arrangements. Revenue from the sale of Maintenance and Support arrangements are always sold on a stand-alone basis or as a renewal of an existing arrangement usually running over a 12-month period. The

technical support and software updates are distinct. This is because the customer can benefit from the licence with or without the Maintenance and Support contract.

Technical support: the customer benefits from the technical support as that support is provided. The contracted support period is generally 12 months, so the customer obtains the benefit over the 12-month period. Accordingly, it is appropriate to recognise revenue over a 12-month period.

Software updates: all software updates are unspecified within Maintenance and Support arrangements with updates being made as and when available. The customer will continue to receive updates during the Maintenance and Support period and accordingly will benefit from the updates as they are provided.

Accordingly, it is appropriate to recognise revenue over a 12-month period.

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Exceptional administrative costs

The group presents separately those costs which, by their nature, are material and related to non-routine events such as business combinations or capital transactions.

Finance income and costs

Interest income and expense is recognised using the effective interest method which calculates the amortised cost of a financial asset or liability and allocates the interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial asset or liability to the net carrying amount of the financial asset or liability.

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Goodwill

Goodwill arising on business combinations is reviewed and tested on an annual basis or more frequently if there is indication that goodwill might be impaired.

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Goodwill is allocated to CGUs, which are determined as the lowest level of detail available for the assets to generate cash inflows relating to goodwill.

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Goodwill represents the future economic benefits arising from business combinations which are not individually identified and separately recognised.

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Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If the consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

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Goodwill is carried at cost less any accumulated impairment losses until disposal or termination of the previous acquired business when the profit or loss on disposal or termination will be calculated after charging the gross amount at current exchange rates of any such goodwill through the income statement.

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Intangible assets

Acquired intangible assets

An intangible asset is recognised if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Group and the cost of the asset can be measured reliably.

Internally developed intangible assets

Expenditure on research activities is recognised as an expense as incurred.

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Costs that are directly attributable to a project's development phase are recognised as intangible assets, provided they meet the following recognition requirements:

�� the development costs can be measured reliably;

�� the project is technically and commercially feasible;

�� the Group intends to and has sufficient resources to complete the project;

�� the Group has the ability to use or sell the software; and

�� the software will probably generate future economic benefits.

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Development costs not meeting these criteria for capitalisation are expensed as incurred. Directly attributable costs include an apportionment of employee costs incurred on internal development assets.

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Internal development assets include software, website costs, courseware, marketing tools, consultancy products and publishing products.

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Subsequent measurement

The useful lives of all intangible assets are assessed as finite.

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Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method prospectively.

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The amortisation expense on intangible assets with finite lives is recognised in the income statement as administrative expenses.

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Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.

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Amortisation is calculated on a straight-line basis over the estimated useful life of the asset as follows: Trademarks�� 10 years

Software�� 5 years

Website costs�� 5-10 years

Marketing tools�� 3 years

Courseware�� 10 years

Publishing products�� 4 years

Consultancy products�� 10 years Customer relationships�� 12 years

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Customer relationships

Any capitalised internally developed intangible asset that is not yet complete is not amortised but is subject to impairment testing. Subsequent expenditures on the maintenance of computer software are expensed as incurred.

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Acquired customer relationships comprise principally of existing customer relationships which may give rise to future orders (customer relationships). Acquired customer relationships are recognised at fair value at the acquisition date and are expected to have a finite useful� life of 12 year in line with the expected cashflows. Acquired customer relationships are stated at� cost less accumulated amortisation and impairment.

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Property, plant and equipment

Property, plant and equipment are stated at historical cost less depreciation less any recognised impairment losses. Cost includes expenditure that is directly attributable to the acquisition or construction of these items. Subsequent costs are included in the asset's carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the costs can be measured reliably. All other costs, including repairs and maintenance costs, are charged to the Income Statement in the period in which they are incurred.

Depreciation is provided on all property, plant and equipment and is calculated as follows:

Leasehold improvements�� 10 years straight line basis

Computer equipment�� 25-33% reducing balance basis

Office equipment�� 25% reducing balance basis

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Depreciation is provided on cost less residual value. The residual value, depreciation methods and useful lives are annually reassessed.

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Each asset's estimated useful life has been assessed with regard to its own physical life limitations and to possible future variations in those assessments. Estimates of remaining useful lives are made on a regular basis for all machinery and equipment, with annual reassessments for major items. Changes in estimates are accounted for prospectively.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.

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The gain or loss arising on disposal or scrapping of an asset is determined as the difference between the sales proceeds, net of selling costs, and the carrying amount of the asset and is recognised in the Income Statement.

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Impairment of non-financial assets

For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units that is expected to benefit from�� the synergies of the combination. Each unit to which goodwill is allocated represents the lowest level within the Group that independent�� cash flows are monitored. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more�� frequently when there is indication that the unit may be impaired.

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At each balance sheet date, the Directors review the carrying amounts of the Group's non-current assets, other than goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of�� the asset is estimated in order to determine the extent of the impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Directors estimated the recoverable amount of the cash-generating unit to which the asset belongs.

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Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimated future cash flows have not been adjusted.

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If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. The impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit.

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An impairment loss is recognised as an expense immediately. An impairment loss recognised for goodwill is not reversed in subsequent periods.

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Where an impairment loss on non-financial assets subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying�� amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior periods.�� A reversal of an impairment loss is recognised in the Income Statement immediately.

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Inventory

Inventory is stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a weighted average basis.

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At the balance sheet date, inventories are assessed for impairment. If inventories are impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

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Cash at bank

Cash at bank comprises cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less from inception.

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Financial instruments

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.

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Financial assets and financial liabilities are measured initially at fair value plus transactions costs. Financial assets and financial liabilities are measured subsequently as described below.

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Recognition and derecognition

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.

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Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred.

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A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. When a financial liability and a financial asset relating to the same contract exists these are offset.

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Classification and initial measurement of financial assets

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

Financial assets are classified as "Amortised cost" financial assets.

In the periods presented the Group does not have any financial assets categorised as either FVTPL or FVOCI. The classification is determined by both:

�� The entity's business model for managing the financial asset.

�� The contractual cash flow characteristics of the financial asset.

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All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income� or other financial items, except for impairment of trade receivables which is presented within other administrative expenses.

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Financial assets at amortised cost

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

�� They are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows.

�� The contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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Subsequent measurement of financial assets

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect�� of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

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Impairment of financial assets

IFRS 9's impairment requirements use forward-looking information to recognise expected credit losses - the expected credit loss ("ECL") model. Instruments within the scope of these requirements included loans and other debt-type financial assets measured at amortised cost, trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.

The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

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In applying this forward-looking approach, a distinction is made between:

�� Financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk ('Stage 1') and

�� Financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low ('Stage 2').

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Stage 3 would cover financial assets that have objective evidence of impairment at the reporting date.

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12-month expected credit losses are recognised for the first category while 'lifetime expected credit losses' are recognised for the second category.

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Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

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Trade and other receivables and contract assets

The Group makes use of a simplified approach in accounting for trade receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward- looking information to calculate the expected credit losses using a provision matrix.

The Group assess impairment of trade receivables on a collective basis and as they possess shared credit risk characteristics they have been grouped based on the days past due. Refer to note 15 for further details.

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Classification and measurement of financial liabilities

The Group's financial liabilities include trade and other payables, borrowings and contingent consideration.

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Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss.

Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss.

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All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within finance costs or finance income.

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Borrowings

Borrowings, including bank overdrafts, are classified as current liabilities unless the Group has an unconditional right to defer the settlement of the liability for at least 12 months after the balance sheet date.

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Contingent consideration

Contingent consideration is recognised at fair value at the acquisition date and subsequently at FVTPL. Changes in deferred consideration arising from additional information, obtained within one year of the acquisition date, about facts or circumstances that existed at the acquisition date, are recognised as an adjustment to goodwill.

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Foreign currency

The presentation currency for the Group's consolidated financial statements is Sterling. Foreign currency transactions by Group companies are recorded in their functional currencies at the exchange rate at the date of the transaction. Monetary assets and liabilities have been translated at rates in effect at the balance sheet date, with any resulting exchange adjustments being charged or credited to the Income Statement, within administrative expenses.

On consolidation the assets and liabilities of the subsidiaries with a functional currency other than Sterling are translated into the Group's presentational currency at the exchange rate at the balance sheet date and the Income Statement items are translated at the average rate for the period. The exchange difference arising on the translation from functional currency to presentational currency of subsidiaries is classified as other comprehensive income and is accumulated within equity as a translation reserve.

The balance of the foreign currency translation reserve relating to a subsidiary that is disposed of, or partially disposed of, is recognised in the Income Statement at the time of disposal.

�

Current taxation

Current taxation for each taxable entity in the Group is based on the local taxable income at the local statutory tax rate enacted or substantively enacted at the balance sheet date and includes adjustments to tax payable or recoverable in respect of previous periods.

�

Deferred taxation

Deferred taxation is calculated using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred tax arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. No deferred tax is recognised on initial recognition of goodwill or on investment in subsidiaries.

Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax liabilities are provided in full, and are not discounted.

�

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

�

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the Income Statement, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.

�

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

�

Employment benefits

Provision is made in the financial statements for all employee benefits. Liabilities for wages and salaries, including non-monetary benefits and annual leave obliged to be settled within 12 months of the balance sheet date, are recognised in accruals.

�

Contributions to defined contribution pension plans are charged to the Income Statement in the period to which the contributions relate.

Leases

For any new contracts entered into on or after 1 April 2019, the Group considers whether a contract is, or contains a lease. A lease is defined as 'a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration'.

�

To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:

�� the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group;

�� the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract;

�� the Group has the right to direct the use of the identified asset throughout the period of use. The Group assesses whether it has the right to direct 'how and for what purpose' the asset is used throughout the period of use.

�

a)�� measurement and recognition of leases as a lessee

At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an�� estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

�

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.

�

At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or, if not, the Group's incremental borrowing rate.

�

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

�� fixed payments (including in-substance fixed payments), less any lease incentives receivable;

�� variable lease payment that are based on an index or a rate;

�� amounts expected to be payable by the lessee under residual value guarantees;

�� the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and

�� payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

�

Right-of-use assets are measured at cost comprising the following:

�� the amount of the initial measurement of lease liability;

�� any lease payments made at or before the commencement date less any lease incentives received;

�� any initial direct costs; and

�� restoration costs.

�

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.

�

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-� use asset is already reduced to zero.

�

The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients available under IFRS16. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term. The expense relating to leases falling within this exemption in the year ended 31 March 2020 was �nil

�

b)�� measurement and recognition of leases as a lessor

Lease payments received under operating leases are recognised as income on a straight-line basis over the lease term as part of 'other income'.

�

Equity

Equity comprises the following:

�� "Share capital" represents the nominal value of equity shares issued.

�� "Share premium" represents amounts subscribed for share capital, net of issue costs, in excess of nominal value.

�� "Merger reserve" represents the excess of the fair value of the consideration received for the issue of shares over the nominal value of shares issued in circumstances where the merger relief provisions of the Companies Act 2006 apply.

�� "Share-based payment reserve" represents the accumulated value of share-based payments.

�� "Retained earnings" represents the accumulated profits and losses attributable to equity shareholders.

�� "Capital redemption reserve" represents the nominal value of shares repurchased by the Parent Company.

�� "Translation reserve" represents the exchange differences arising from the translation of the financial statements of subsidiaries into the Group's presentational currency.

�

Share-based payments

Equity-settled share-based payments to employees and Directors are measured at the fair value of the equity instrument. The fair value of the equity-settled transactions with employees and Directors is recognised as an expense over the vesting period. The fair value of the equity instruments is determined at the date of grant, taking into account vesting conditions. The fair value of goods and services received are measured by reference to the fair value of options.

The fair values of share options are measured using the Black Scholes model. The expected life used in the model is adjusted, based on management's best estimate of the effects of non-transferability, exercise restrictions and behavioural considerations.

�

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the "vesting date").

�

The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest.

�

The Income Statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

�

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense as if the terms had not been modified. An additional expense is recognised for any modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

�

Where an equity-settled award is forfeited, the cumulative charge expensed up to the date of forfeiture is credited to the Income Statement.

�

Segment reporting

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses related to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's Chief Operating Decision Maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Chief Operating Decision Maker has been identified as the Board�� of Executive Directors, at which level strategic decisions are made.

Details of the Group's reportable operating segments are provided in note 1.

�

New and amended International Financial Reporting Standards adopted by the Group

The Group has adopted IFRS 16 'Leases' from 1 April 2019 which has changed lease accounting for leases under operating leases. Such agreements now require recognition of an asset, representing the right to use the leased items, and a liability representing future lease payments. Lease costs (such as property rent) are recognised in the form of depreciation and interest, rather than as an operating cost.

�

The Group has adopted the modified retrospective approach with the right of use asset equal to the lease liability at transition date, adjusted by any prepayments or lease incentives recognised immediately before the date of initial application. Under the modified retrospective transition approach, the comparative information is not restated.

�

The Group has elected to apply a single discount rate to assets with similar characteristics.

�

On transition, the Group adopted the practical expedient to apply IFRS 16� to contracts that were previously identified as leases. The Group� has also elected not to recognise right of use assets and lease liabilities for short-term leases (i.e. lease terms less than 12 months) or

low-value assets (i.e. under �5,000). The Group will continue to expense the lease payments associated with these leases on a straight-line basis over the lease term.

�

Leases The Group leases many assets, including office space and office equipment. � � � �	�		�
�	Property �'000	Total �'000
Balance on transition at 1 April 2019	664	664
Net book value at 31 March 2020	470	470
�	�	�	�

�

Impact on Financial Statements

1)�� Impact on transition

On transition to IFRS 16, the Group recognised right of use assets and lease liabilities. This impact on transition is summarised below.

�

Right-of-use assets presented in property, plant and equipment (net of rent incentives)	�664,000
Lease liabilities	�664,000

�

When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments using its incremental borrowing rate at 1 April 2019. The weighted-average rate applied is 10%.

�

�	�'000
Operating lease commitment at 31 March 2019 as disclosed in the Group's consolidated financial statements	(1,025)
Impact of discounting using the incremental borrowing rates at 1 April 2019	130
Recognition exemption for leases with break clauses expected to be exercised at transition	231
Lease liabilities recognised at 1 April 2019	(664)

�

2)�� Impact for the year

As a result of applying IFRS 16, in relation to the leases that were previously classified as operating leases, the Group recognised �664,000 of right of use assets in property, plant and equipment and �664,000 of lease liabilities as at 31 March 2019.

�

Also, in relation to those leases under IFRS 16, the Group has recognised depreciation and interest costs, instead of operating lease expense. During the year ended 31 March 2020, the Group recognised �198,000 of depreciation charges and �60,000 of interest costs from those leases. IFRS 16 had an impact of a decrease in profit before tax of �16,000 and increases our EBITDA by �242,000.

�

For leases excluded from IFRS 16 under the exemption for leases with terms of less than 12 months, and low-value assets (i.e. under

�5,000), the Group recognised less than �10,000 in rent expense in the period.

�

Other new or amended accounting standards

�

Accounting standard

Requirement

Amendment to IAS 19 ''Employee Benefits'

The amendment clarifies that the current service costs and net interest for the period after a plan amendment, curtailment or settlement, are determined using the assumptions used for the remeasurement.

Amendment to IAS 28 'Investments in Associates and Joint Ventures'

�

The amendment clarifies the application of IFRS 9 'Financial Instruments' to long-term interests in associates or joint ventures.

�

IFRIC 23 'Uncertainty over Income Tax'

�

The interpretation clarifies the determination of taxable profits or losses, tax bases, unused tax losses or credits and tax rate, when there is uncertainty over income tax treatments under IAS 12 'Income Taxes'.

�

Amendment to IFRS 9 'Financial Instruments'

�

The amendment allows for more assets to be measured at amortised cost, in particular some prepayable financial assets. The amendment also clarifies how to account for a modification of a financial liability.

�

Annual Improvements to IFRS Standards 2015 - 2017 cycle

�

Amendments to a number of IFRSs including IFRS 3 'Business Combinations', IFRS 11 'Joint Arrangements' providing clarity on control of a business that is a joint operation, IAS 12 'Income Taxes' clarifying income tax consequences of dividends, IAS 23 'Borrowing costs' clarifying borrowings outstanding after the related asset is ready for use or sale.

�

EU endorsed accounting standards effective in future periods

The Directors considered the impact on the Group of other new and revised accounting standards, interpretations or amendments that are currently endorsed but not yet effective. The Directors do not expect any of these standards to have a significant impact on the Group's results.

�

International Financial Reporting Standards in issue but not yet effective

At the date of authorisation of the consolidated financial statements, the IASB and IFRS Interpretations Committee have issued standards, interpretations and amendments which are applicable to the Group.

�

Whilst these standards and interpretations are not effective for, and have not been applied in the preparation of, these consolidated financial statements, the following could have a material impact on the Group's financial statements going forward:

�

New/revised IFRSs	�	Effective date: annual periods beginning on or after	EU adopted
IAS 1 & IAS 8	Amendments to IAS 1 and IAS 8: Definition of Material	1 January 2020	No
IFRS 3	Amendments to IFRS 3 Business Combinations	1 January 2020	No

�

New/revised International Financial Reporting Standards which are not considered likely to have an impact on the Group's financial statements going forwards have been excluded from the above.

�

Management anticipates that all relevant pronouncements will be adopted in the Group's accounting policies for the first period beginning after the effective date of the pronouncement. New standards, interpretations and amendments not listed below are not expected to have a material impact on the Group's financial statements.

�

Significant management judgements in applying accounting policies and key sources of estimation uncertainty

The preparation of financial statements in conformity with generally accepted accounting practice requires management to make estimates and judgements that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the reporting date and the reported amounts of revenues and expenses during the reporting period.

�

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Assumptions and accounting estimates are subject to regular review. Any revisions required to accounting estimates are recognised in the period in which the revisions are made including all future periods affected.

�

Significant management judgements

The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the financial statements.

Capitalisation of internally developed intangible assets

Determining whether the recognition requirements for the capitalisation of development costs are met requires judgement. Management considers the criteria set out in IAS 38 in advance of capitalising any projects. After capitalisation, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired. Should a different judgement be taken, the amounts capitalised may differ from those presented in note 11.

Recognition of deferred tax assets

The extent to which deferred tax assets can be recognised is based on an assessment of the probability that future taxable income will be available against which the deductible temporary differences and timing differences on capital allowances can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.

Judgement is also applied in the recognition of deferred tax assets in respect of losses, based on management's view of the availability of future profits to offset such losses.

Identification of assets acquired in business combinations

Business combinations require management to exercise judgement in measuring the fair value of the assets acquired, equity instruments issued, and liabilities, and contingent consideration incurred or assumed. In particular, a high degree of judgement is applied in determining the fair value of the separate intangible assets acquired, their useful economic lives and which assets and liabilities are included in a business combination.

�

In certain acquisitions, the Group may include contingent consideration which is subject to the acquired company achieving certain performance targets.

�

At each reporting period, GRC International plc estimates the future earnings of acquired companies, which are subject to contingent consideration in order to assess the probability that the acquired company will achieve their performance targets and thus earn their contingent consideration. Any changes in their fair value of the contingent consideration between reporting periods are included in the determination of net income. Changes in fair value arise as a result of changes in the estimated probability of the acquired business achieving its earning targets and the consequential impact of amounts payable under these arrangements.

Identification of performance obligations in customer contracts

The identification of performance obligations in customer contracts requires management to exercise judgement to determine both the nature of the performance obligations and when those obligations are delivered in order to recognise revenue appropriately in the correct amount and in the correct accounting period.

Going Concern

The identification by management of the Group to continue as a Going Concern as further described above.

�

Estimation uncertainty

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

�

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.�� In the future, actual experience may differ from these estimates and assumptions.

�

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

�

Estimates and assumptions

o�� Income taxes - provisions for income taxes in various jurisdictions (note 7)

o�� Level of expected credit loss provision to hold or not hold (note 15)

o�� Useful lives of intangible assets acquired or internally generated (note 11)

o�� Impairment of goodwill - estimate of future cash flows and determination of the discount rate (note 10)

�

Notes to the Financial Statements

�

1.�� Segmental reporting

Operating�segments

For the purposes of segmental reporting, the Group's Chief Operating Decision Maker (CODM) is considered to be the Executive Board of Directors. The Board identifies its operating segments based on the group's service lines, which represent the main product and services provided by the Group. In the opinion of the Board, the Group operates as a single operating segment.

Revenue by geographic destination

Revenue across all operating segments is generated from the UK but includes overseas sales:

�

�	2020	2019
�	�'000	�'000
UK	11,680	12,886
Non-UK	2,466	2,963
�	14,146	15,849

2020 Non-UK Revenue includes Rest of Europe �939k (2019: �1,335k), United States of America �863k (2019: �824k), Australia �180k (�150k) and Rest of the World �484k (2019: �654).

2020 Non-UK non-current assets includes Ireland �33k (2019: �58k), Germany �7k (2019: �10k).

Information about major customers

No customers contributed 10% or more to the Group's revenue in any period presented.

�

2.� Revenue

Revenue is all derived from continuing operations.

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:

�	2020	2019
�	�'000	�'000
Consultancy	8,635	7,228
Publishing and distribution	977	1,337
Software	1,356	1,513
Training	3,178	5,771
Total revenue	14,146	15,849

�

The Group's revenue is analysed by timing of delivery of goods or services as:

�

�	2020	2019
�	�'000	�'000
Point in time delivery	9,023	7,557
Over time	5,123	8,292
Total revenue	14,146	15,849

�

The revenue is analysed as follows for each revenue category:

�

�	2020			2019
�	�'000			�'000
Sale of goods	976			1,333
Provision of services	13,170			14,516
�	14,146			15,849
Other income		99	32
Interest on cash deposits		-	2
Total revenue		14,245	15,883
�	�	�	�	�

Contract liabilities: deferred income

�

�� Deferred income��			�
�	2020 �'000	2019 �'000
At 1 April	971	1,395
On acquisition of DQM	-	19
Amounts included in deferred income that were recognised as revenue in the period from the opening balance	� (971)	� (1,395)
Amounts invoiced in the period and not recognised as revenue in the period	855	952
At 31 March	855	971
�	�	�	�

Contract assets and contract liabilities are included within "trade and other receivables" and "trade and other payables" respectively on the face of the consolidated balance sheet. They arise from the Group's contracts that cover multiple reporting periods as payments received from customers at each balance sheet date do not necessarily equal the amount of revenue recognised on the contracts. No material contract asset balances arise in the ordinary course of business.

The Group recognised deferred income within "trade and other payables". This balance equates to the value of the remaining performance obligations for revenue recognised over time, given the�nature of the Group's invoicing arrangements with�customers.

�

3.� Exceptional administrative�costs

�

�	2020	2019
�	�'000	�'000
Expenses relating to the acquisition of DQM	358	164
�	358	164

�

The Group's exceptional administration costs comprise substantially of professional fees. These professional fees relate to the DQM deed of variation of contract and also to the fundraise to settle the outstanding contingent consideration.

�

4.� Operating�profit

�	2020	2019
�	�'000	�'000
Operating profit is stated after charging:	�	�
Cost of sales	�	�
Wages and salaries	3,533	4,871
Other direct costs including consultancy and training costs, books and manuals	2,549	2,424
�	6,082	7,295
Other administration costs	�	�
Wages and salaries	6,935	9,024
Sales and marketing costs	634	1,205
Depreciation of property, plant and equipment	386	183
Amortisation of intangible fixed assets	1,180	611
Auditor's remuneration:	�	�
-Fees payable for the audit of the annual accounts	141	120
Foreign exchanges charges/(credit)	1	(5)
Operating lease costs	�	�
-Building	-	149
-Other	-	10
Other costs including office administration, legal and professional, IT and website costs.	1,953	2,419
�	11,230	13,716

No non-audit fees were payable to the auditor in respect of services rendered in the year.

�

5.� Employees

The aggregate payroll costs of the employees were as follows:

�

�	2020		2019
�	�'000		�'000
Staff costs	�		�
Wages and salaries	9,706		12,490
Social security costs	866		1,244
Share-based payment charge	-		63
Pension costs	230		160
10,802		13,957
�	�	�	�

�

Directors made gains of �364k on exercise of share options (2019: �nil).

The average monthly number of persons employed by the Group during the year was as follows:

�

�	2020	2019
By activity	�	�
Administration	92	130
Sales and distribution	95	140
�	187	270

Details of key management personnel and their remuneration are disclosed within note 26.

�

6.� Net finance�costs

�

�	2020	2019
�	�'000	�'000
Interest received on cash deposits	-	(2)
Interest on overdrafts	11	-
Interest on loans	138	10
Interest on lease liabilities	61	-
Other interest	12	-
�	222	8

�

7.� Taxation

Analysis of (credit)/charge in the year:

�	2020	2019
�	�'000	�'000
Corporation tax - current year	(60)	72
Corporation tax - adjustment in respect of prior year	(427)	(139)
Foreign tax - current year	-	(119)
Deferred tax - current year movement	50	51
Deferred tax - adjustment in respect of prior year	(8)	164
Total tax (credit)/charge	(445)	29

�

�	2020	2019
�	�'000	�'000
Loss before taxation	(3,651)	(5,365)
Profit by rate of tax (2020: 19%; 2019: 19%)	(694)	(1,019)
Fixed asset timing differences	52	3
Expenses not deductible for tax purposes	33	83
Deferred tax asset not recognised	640	777
Adjustments to in respect of prior periods	(251)	25
Effects of change in tax rate	(41)	113
Losses carried back	52	38
Adjustment in respect of prior period:Research and development tax credit	(184)	-
Other movements	(52)	-
Effects of different tax rates of subsidiaries operating in other jurisdictions	-	2
Total tax	(445)	29

Deferred tax in equity

�

�	2020	2019
�	�'000	�'000
Change in estimated excess tax deductions related to share-based payments	269	251
Total income tax recognised directly in equity	269	251

The Finance Act 2016 included legislation to reduce the main rate of UK corporation tax from 20% to 19% from 1 April 2017 and to 17% from 1 April 2020. Legislation has been substantively enacted following the budget on 11 March 2020 to repeal the reduction of the main corporation tax rate thereby maintaining the current rate of corporation tax at 19%. Temporary differences have been measured using these enacted tax rates.

At the balance sheet date, the Group has the following unused tax losses for which no deferred tax asset has been recognised on the basis that it is not considered probable that there will be future profits available to utilise the tax losses:

�

�	2020	2019
�	�'000	�'000
Trading losses (UK)	4,901	4,319
Trading losses (Ireland)	1,446	1,124
Trading losses (USA)	232	-
Non-trading loan relationship deficits	2	2

At the balance sheet date, a deferred tax asset has not been recognised for excess unrelieved foreign tax of �20,435 (2019: �19,848) on the basis that it is not considered probable that there will be future taxable profits available to utilise the double tax relief credit.

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 Obligations	Share-based payments	Short term timing differences	Tax losses (Ireland)	Tax losses (UK)	Intangibles	Total
�	�'000	�'000	�'000	�'000	�'000	�'000	�'000	�'000
At 1 April 2018	89	(2)	(535)	(171)	(23)	-	-	(642)
Business acquired	2	-	-	-	-	-	421	423
Charge/(credit) to profit or loss	20	2	22	29	(119)	(21)	-	(67)
Credit direct to equity	-	-	251	-	-	-	-	251
Prior year adjustment	2	-	1	141	(2)	22	-	164
Deferred tax (asset)/liability at 31 March 2019	� 113	� -	� (261)	� (1)	� (144)	� 1	� 421	� 129
Charge/(credit) to profit or loss	103	(2)	(7)	(6)	-	-	(40)	48
Credit direct to equity	-	-	269	-	-	-	-	269
Prior year adjustment	(6)	-	(2)	-	-	-	-	(8)
Deferred tax at 31 March 2020	210	(2)	(1)	(7)	210	210	210	210
Asset (Non-UK)	-	-	-	-	(144)	-	-	(144)
Liability (UK)	210	(2)	(1)	(7)	-	1	381	582
Deferred tax at 31 March 2019	�	�	�	�	�	�	�	�
Asset (Non-UK)	-	-	-	-	(144)	-	-	(144)
Liability (UK)	113	-	(261)	(1)	-	-	421	273

�

8.�� Earnings per�share

Basic earnings per share is based on the (loss)/profit after tax for the year and the weighted average number of shares in issue during each year.

�

�	2020	2019
Loss attributable to equity holders of the Group (�)	(3,206)	(5,395)
Weighted average number of shares in issue	68,689,792	57,982,319
Basic loss per share (pence)	(4.67)	(9.30)

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:

�

�	2020	2019
Number of shares	68,689,792	57,982,319
Dilutive (potential dilutive) effect of share options	-	-
Weighted average number of ordinary shares for the purposes of diluted earnings per share	68,689,792	57,982,319
Diluted loss per share (pence)	(4.67)	(9.30)

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 680,680 (2019: 2,360,680) share incentives�outstanding�at�the�end�of�the�year�that�could�potentially�dilute�basic�earnings�per�share�in�the future.

�

9.�� Subsidiaries

Details of the Companys' subsidiaries are as follows:

�

�	�	Place of incorporation and	% ownership held by the Group		�
Name of subsidiary and registered office address	Principal activity	operation	2020	2019
IT Governance Limited*	Information technology governance services	England & Wales	100%	100%
Vigilant Software Limited*	Information technology	England & Wales	100%	100%
�	Software development	�	�	�
IT Governance Europe Limited	Information technology	Ireland	100%	100%
6th Floor, South Bank House, Barrow Street, Dublin 4	governance services	�	�	�
IT Governance USA Inc	Information technology	USA	100%	100%
420 Lexington Avenue, Suite 300, New York, NY 10170, USA	governance services	�	�	�
IT Governance Publishing Limited*	Information technology	England & Wales	100%	100%
�	governance publications	�	�	�
GRCI Law Limited*	Information technology	England & Wales	100%	100%
�	governance legal services	�	�	�
GRC Elearning Limited*	Information technology	England & Wales	100%	100%
�	governance internet- based training	�	�	�
IT Governance Europe Limited*	Dormant company***	England & Wales	100%	100%
IT Governance Consulting Limited*	Dormant company***	England & Wales	100%	100%
IT Governance Franchising Limited*	Dormant company***	England & Wales	100%	100%
IT Governance Sales Limited*	Dormant company***	England & Wales	100%	100%
IT Governance Software Limited*	Dormant company***	England & Wales	100%	100%
IT Governance Training Limited*	Dormant company***	England & Wales	100%	100%
ITG Certifications Limited*	Dormant company***	England & Wales	100%	100%
ITG Qualifications Limited*	Dormant company***	England & Wales	100%	100%
ITG Security Testing Limited*	Dormant company***	England & Wales	100%	100%
ITG Encryption Limited*	Dormant company***	England & Wales	100%	100%
Data Quality Management Limited**	Dormant company***	England & Wales	100%	100%
Data Quality Management Group Limited**	Information technology	England & Wales	100%	100%
�	governance services	�	�	�
Data2 Limited**	Dormant company***	England & Wales	100%	100%
DQM Group Holdings Limited**	Holding Company***	England & Wales	100%	100%	�

*�� Registered Office: Unit 3, Clive Court, Bartholomew's Walk, Cambridge Business Park, Ely, Cambridgeshire CB7�4EA

�

**�� Registered Office: Dqm House, Baker Street, High Wycombe, Buckinghamshire, England, HP11�2RX

***�� Dormant subsidiaries which have taken advantage of the s394A exemption from preparing individual�accounts.

�

10.�� Goodwill

�

� � Cost and NBV	2020 Total �'000	�	2019 Total �'000
At 1 April	6,693	�	-
Measurement period adjustment	111	�	-
Additions	-	�	6,693
At 31 March	6,804	�	6,693

�

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.

�

The global COVID-19 pandemic has brought uncertainty and wider market disruption globally. GRC International has seen a 30% revenue reduction to date and this reduction has not yet been recovered.

�

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 over the next five years, based on management's estimates; the terminal growth rate for revenues beyond that period, which reflects the 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 most recent financial budget for the year ending 31 March 2021 approved by the Board. The extrapolation for the period 2022 to 2024 is based on management estimates.

The impairment model is built to take into account performance over a number of years.� If FY21 were to be further impacted by COVID-19 into the second half of the year, and revenue dramatically reduced as a result, we would realistically expect a recovery to more normal levels in FY22 and then growth in the future. Therefore the approach taken in terms of using the FY21 budget for each year in the model, without any growth, is significantly more cautious in terms of an impairment model than using a very poor current year, a return to normal in FY22 and then growth going forwards.

As of 31 March 2020, the value in use of the cash generating unit was greater by �1,477k than the CGU's carrying amount. The key assumptions used were the forecasts as explained above, the terminal growth rate of 2%, and the pre-tax discount rate of 6.35%.

�

There are reasonably possible changes in key assumptions that would give rise to a material impairment loss.

�

a)�� The discount rate would have to increase by 2% to give rise to an impairment

b)�� Operating costs would have to rise by 7% to give rise to an impairment, this assumes that revenue levels remain constant.

c)�� If Revenue was to fall by 5% (assuming margins remained the same) this would give rise to an impairment.

11.�� Intangible�assets

�

�	� Marketing tools	� Publishing products	Consultancy products and Courseware	Software and Website costs	� � Trademarks	� Customer relationships	� � Total
�	�'000	�'000	�'000	�'000	�'000	�'000	�'000
Cost	�	�	�	�	�	�	�
At 1 April 2018	63	215	534	2,100	8	-	2,920
Additions	-	72	165	2,052	-	-	2,289
Business acquired	-	-	-	188	456	1,843	2,487
Foreign exchange Movement	� -	� -	� (1)	� -	� -	� -	� (1)
At 31 March 2019	63	287	698	4,340	464	1,843	7,695
Additions	-	46	182	894	2	-	1,124
Foreign exchange Movement	� -	� -	� 1	� -	� -	� -	� 1
At 31 March 2020	63	333	881	5,234	466	1,843	8,820
Accumulated depreciation	�	�	�	�	�	�	�
At 1 April 2018	48	172	196	904	3	-	1,323
Charge for year	7	31	56	516	1	-	611
Foreign exchange movement	� -	� -	� 1	� -	� -	� -	� 1
At 31 March 2019	55	203	253	1,420	4	-	1,935
Charge for year	6	31	73	854	50	166	1,180
Foreign exchange Movement	� -	� -	� (1)	� -	� -	� -	� (1)
At 31 March 2020	61	234	325	2,274	54	166	3,114
Net book value	�	�	�	�	�	�	�
At 31 March 2020	2	99	556	2,960	412	1,677	5,706
At 31 March 2019	8	84	445	2,920	460	1,843	5,760
At 1 April 2018	15	44	337	1,196	5	-	1,597

Amortisation is included within administrative expenses.

Intangible assets includes capitialised related party costs incurred as further explained in note 27.

All�intangible�assets�have�been�developed�internally�with�the�exception�of�those�arising�on�the�business acquisition in the prior year (note�29).

The recoverable amounts of the CGU's for the purpose of monitoring impairment are determined from value-in-use calculations.

A review of the carrying amounts of the Group's non-current assets to determine whether there is an indication that these assets have suffered an impairment loss was carried out at the year-end.

Having identified indicators of impairment, management conducted an impairment test to determine recoverable amount of the cash generating unit, and concluded that no impairment of internally generated intangibles had arisen as at 31 March 2020.� Those intangible assets that were acquired in the 2019 acquisition of DQM (note 29) were tested for impairment as explained in note 10.

�

12.�� Property, plant and�equipment

�

�	�		� � Leasehold Improvements		� � Computer equipment		� � Office equipment		� Right of use assets - properties*		� � Total
�	�		�'000		�'000		�'000		�'000		�'000
Cost		�		�		�		�		�		�
At 1 April 2018		88		585		45		-		718		�
Additions		50		162		22		-		234		�
Businesses acquired		1		-		21		-		22		�
Disposals		-		(13)		(2)		-		(15)		�
At 31 March 2019		139		734		86		-		959		�
Additions		1		5		5		-		11		�
IFRS 16		-		-		-		664		664		�
At 31 March 2020		140		739		90		664		1,634		�
Accumulated depreciation		�		�		�		�		�		�
At 1 April 2018		24		250		20		-		294		�
Charge for year		13		158		12		-		183		�
Disposals		-		(7)		-		-		(7)		�
At 31 March 2019		37		401		32		-		470		�
Charge for year		13		150		24		199		386		�
Foreign exchange movement		-		-		-		(5)		(5)		�
At 31 March 2020		50		551		56		194		851		�
Net book value		�		�		�		�		�		�
At 31 March 2020		90		188		35		470		783		�
At 31 March 2019		103		333		53		-		489		�
At 31 March 2018		65		335		24		-		424		�
�	�	�	�	�	�	�	�	�	�	�	�	�

Depreciation is included within administrative expenses.

�

13.�� Investments in equity-accounted joint�ventures

The Group has a 50% interest in a joint venture, IBITGQ GmbH, a separate structured vehicle incorporated and operating in Germany. It was set up as a partnership together with GASQ Service GmbH�dedicated�to�the�provision�of�training�and�the�continued�professional�development�of�information security, business resilience and IT governance professionals.

The contractual arrangement provides the Group with only the rights to the net assets of the joint arrangement, with the rights to the assets and obligations for liabilities of the joint arrangement resting primarily with IBITGQ GmbH. Under IFRS 11 the joint arrangement is classified as a joint venture and has been included in the consolidated financial statements using the equity method.

The principal place of business of the joint operation is in Germany.

�

�	2020	2019
�	�'000	�'000
As at 1 April	10	-
Additions	-	11
Loss for the period	(4)	(1)
Foreign exchange movement	1	-
At 31 March	7	10

�

14.�� Inventories��

�

�	2020	2019
�	�'000	�'000
Finished goods for resale	61	64

�

2020

�'000

2019

�'000

Amounts of inventories recognised as an expense during the period as cost of sales

83�

196

�

�	2020	2019
�	�	�
Amounts of inventories (written back)/impaired during the period	(8)	10

�

15.�� Trade and other�receivables

�

�	2020	2019
�	�'000	�'000
Trade receivables	1,543	1,986
Less: provision for impairment of trade receivables	(15)	-
Net trade receivables	1,528	1,986
Other receivables	129	218
Prepayments	590	700
�	2,247	2,904

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 aging.

The Group's policy for default risk over receivables is based on the on-going 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.�The�Directors�believe�that�there�is�no�requirement�for�a�provision.

All of the Group's trade and other receivables have been reviewed for indicators of impairment.

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 �1,197k (2019: �1,350k) which are past due at the reporting date for which the Group has not recorded a provision as the Directors believe the amounts to be recoverable in full, with an immaterial remaining exposure for amounts remaining uncollected at the date the financial statements were approved and authorised for�issue.

The expected loss rates are based on the Group's historical credit losses experienced over a two year period�prior�to�the�period�end.�The�historical�loss�rates�are�then�adjusted�for�current�and�forward-looking information on macroeconomics factors affecting the Group's customers. The Group has identified gross�domestic�product�growth�rates,�employment�rates�and�inflation�rates�as�the�key�macroeconomics factors�in�the�countries�in�which�the�Group�operates.�The�calculated�expected�credit�loss�allowance�for the�current�and�prior�reporting�periods�has�not�been�included�as�an�impairment�provision�as�the�directors consider it to be�immaterial.

The maturity profile of trade and other receivables is set out in the table below:

�

�	2020	2019
�	�'000	�'000
In one year or less, or on demand	2,247	2,904

The analysis of trade and other receivables by foreign currency is set out in the table below:

�

�	2020	2019
�	�'000	�'000
UK pound	2,158	2,713
US dollars	11	9
Euro	78	182
�	2,247	2,904

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.

�

16.�� Cash and cash�equivalents

�

�	2020	2019
�	�'000	�'000
Cash at bank (GBP)	221	609
Cash at bank (EUR)	20	16
Cash at bank (USD)	-	7
Cash at bank (AUD)	3	7
Cash at bank (other currencies)	1	-
�	245	639

All significant cash and cash equivalents were deposited with major clearing banks with at least 'A' rating. Details of bank overdrafts are given in note 18.

�

17.�� Trade and other�payables

Amounts falling due within one�year:

�		2020	2019
�		�'000	�'000
Trade payables		1,220	2,000
Other taxation and social security		1,043	869
Other payables	204		170
Deferred income	855		971
Accruals	307		357
�	3,629		4,367
�	�	�	�

�

18.�� Borrowings

�

�	�	2020	�	�	2019	�
�	Current	Non-current	Total	Current	Non-current	Total
�	�'000	�'000	�'000	�'000	�'000	�'000
Secured	�	�	�	�	�	�
Bank loans (i)	523	5	528	-	-	-
Bank overdraft	-	-	-	490	-	490
Total secured borrowings	523	5	528	490	-	490
�	�	�	�	�	�	�
Unsecured	�	�	�	�	�	�
Bank Loans	194	396	590	31	-	31
Loans from related parties	700	-	700	-	-	-
Total unsecured borrowings	894	396	1,290	31	-	31
Total borrowings	1,446	401	1,847	521	-	521

�

* Further information relating to loans from related parties is set out in note 20.

(i)�� Secured liabilities and assets pledged as security

Of the Bank loans, �426,000 is secured against future receivables. The remaining secured bank loans and overdrafts are secured against assets of the business.

Lease liabilities are secured as the rights to the leased assets recognised in the financial statements revert to the lessor in the event of default.

�

�	As at 1 April 2019	Cash proceeds from borrowings	Repayments of capital	� Repayments of interest	Interest accruing	As at 31 March 2020
�	�'000	�'000	�'000	� �'000	�'000	�'000
Directors' pension scheme loan	31	�	(28)	(1)	1	3
Paypal	�	246	(108)	(6)	6	138
Wesleyan	�	282	(33)	(12)	12	249
Bute Capital	�	227	(138)	(17)	17�	89
Federal	�	65	(27)	(8)	8	38
You Lend	�	396	(108)	(22)	22	288
LDF Finance No. 3 Ltd	�	150	(110)	(14)	14	40
Portman Asset Finance	�	290	(16)	(30)	30	274
A Brode	�	700	-	-	28	728
Total	31	2,356	(568)	(110)	138	1,847

�

The group has a number of loans in the period presented, and are summarised as follows:

�	Amount Advanced �'000	� Security pledged	� Term	� Effective Interest rate
Directors' pension scheme loan	70	Unsecured	60 Months	9.5%
�	�	�	�	�
Paypal	246	Secured against future receivables	12 Months	4.26% - 10.49%
Wesleyan	262	Parent company guarantee	60 Months	14.32%
Wesleyan	20	Secured against assets of business	36 Months	22%
Bute Capital	227	Secured against assets of business	14-16 Months	6.65% - 10.36%
Federal Capital	65	Director's Guarantee	12 Months	29%
You Lend	396	Secured against future receivables	12 Months	16.67%
LDF Finance No. 3 Ltd	50	Director's Guarantee	36 Months	10.16%
Portman Asset Finance	125	Director's Guarantee	24 Months	29.28%
Portman Asset Finance	165	Director's Guarantee	60 Months	8.8%
Unsecured loan facility provided by Andrew Brode.	700	Unsecured	Available to the Group until at least 31 December 2020 and will automatically renew for a further 12 months unless terminated by either party.	5.0% above the Bank of England base rate
�	�	�	�	�	�
�	�	�	�	�	�

�In addition, the Group has access to Invoicing discounting facility acquired within the DQM acquisition.

�

19.�� Financial instruments - Risk�Management

The Group is exposed through its operations to the following financial risks:

?	Credit risk
?	Interest rate risk
?	Foreign exchange risk
?	Other market price risk, and
?	Liquidity risk.

In common with all other businesses, the Group is also exposed to risks that arise directly from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

I.�� Principal financial�instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

?	Trade receivables
?	Cash and cash equivalents
?	Trade and other payables
?	Bank overdrafts
?	Floating-rate bank loans
?	Fixed rate bank loans
?	Other loans

II.�� Financial instruments by�category

Financial assets

�

Fair value through profit or loss��				Amortised cost ��
�	2020	2019	2020		2019
�	�'000	�'000	�'000		�'000
Cash and cash equivalents	-	-	247		639
Trade and other receivables	-	-	1,528		1,986
Total financial assets	-	-	1,775		2,625
�	�	�	�	�	�

All�of�the�above�financial�assets'�carrying�values�are�approximate�to�their�fair�values,�as�at�each�reporting date disclosed.

Financial liabilities

�

Fair value through profit or loss			Amortised cost �		�
�	2020	2019	2020	2019
�	�'000	�'000	�'000	�'000
Trade and other payables	-	-	1,524	2,170
Borrowings	-	-	1,847	521
Lease payables	-	-	470	6
Contingent consideration	100	3,747	-	-
Total financial liabilities	100	3,747	3,841	2,697
�	�	�	�	�	�

All of the above financial liabilities' carrying values are considered by management to be approximate to their fair values, as at each reporting date disclosed.

III.�� Financial instruments not measured at fair�value

Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, trade and other payables approximate their fair value.

Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, trade and other payables and borrowings approximates their fair value.

IV.�� Financial instruments measured at fair value Classification of financial�instruments

The�fair�value�hierarchy�groups�financial�assets�and�liabilities�into�three�levels�based�on�the�significance of inputs used in measuring the fair value of the financial assets and�liabilities.

The fair value hierarchy has the following levels:

?	Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
?	Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (I.e. as prices) or indirectly (i.e. derived from prices); and
?	Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The�level�within�which�the�financial�asset�or�liability�is�classified�is�determined�based�on�the�lowest�level of significant input to the fair value�measurement.

The Group did not hold any level 1 or 2 financial instruments in any of the periods presented.

31 March 2019

The reconciliation of the opening and closing fair value balance of level 3 financial instruments which comprises the Group's contingent consideration liability is provided below:

�	Contingent
�	consideration
�	�'000
At 1 April 2019	3,747
Adjustment	7
Repaid in cash	(1,726)
Conversion to equity	(1,928)
At 31 March 2020	100

There have not been any changes to the amount recorded between initial recognition of the liability on 5 March 2019 and 31 March 2019. There is limited estimation uncertainty, and expected to be no material change in the value, as the measurement period for determining the amount payable has already concluded.

Any contingent consideration payable is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.

The�fair�value�of contingent�consideration�is�calculated�using�the�income�approach�based�on�the�expected amounts and their associated probabilities (i.e. probability -�weighted).

�

20.�� Financial instrument risk exposure and management

�General objectives, policies and�processes

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure that effective implementation of the objectives and policies to the Group's finance function. The Board receives monthly reports from the Group Finance Director through which it reviews the effectiveness of the processes put in place and the appropriateness�of�the�objectives�and�policies�it�sets.�The�Group's�internal�auditors�also�review�the�risk management policies and processes and report their findings to the Audit�Committee.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly�affecting�the�Group's�competitiveness�and�flexibility.�Further�details�regarding�these�policies�are set out�below:

Credit risk

The Group's credit risk is primarily attributable to its trade receivables, which are presented in note 15.

In�respect�of�trade�and�other�receivables,�the�Group�is�not�exposed�to�any�significant�credit�risk�exposure to any single counterparty, its counterparties have similar characteristics being small to medium sized UK�businesses�with�a�number�of�blue-chip�organisations�now�being�serviced�by�the�Group�following�the DQM acquisition. Trade receivables consist of a large number of customers in various industries and geographical�areas.�Based�on�historical�information�about�customer�default�rates�management�consider the credit quality of trade receivables that are not past due or impaired to be�good.

The credit risk on liquid funds is limited because the third parties are large international banks with a credit rating of at least A.

The Group's total credit risk amounts to the total of the sum of the receivables and cash and cash equivalents. At the 2020 year end, this amounts to �1,773k (2019: �2,625k; 2018: �7,786k).

Interest rate risk

The Group has secured and non-secured debt consisting of bank loans and other loans.

The interest on most of the loans is fixed.,�and�therefore�interest�rate�risk�is�considered�to�be limited.

Interest rate risk arising from borrowing at variable rates is not hedged.

Foreign exchange risk

Most�of�the�Group's�transactions�are�carried�out�in�GBP.�Exposures�to�foreign�currency�exchange�rates arise from the Group's overseas sales and purchases, which are denominated in a number of currencies, primarily USD, EUR and AUD. Cash balances held in these currencies are relatively immaterial (see note 16) and transactional risk is considered manageable due to the values�involved.

The Group does not hold material non-GBP balances and currently does not consider it necessary to take any action to mitigate foreign exchange risk due to the immateriality of that risk.

Liquidity risk

Liquidity risk represents the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing this risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

Prudent liquidity risk management includes maintaining sufficient cash balances to ensure the Group can meet liabilities as they fall due, and ensuring adequate working capital using invoice financing arrangements.

The Group's approach to managing this risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

The table below shows the undiscounted cash flows on the Group's financial liabilities as at 31 March 2020 and 2019, on the basis of their earliest possible contractual maturity.

At 31 March�2020

�

�	� Total	� On Demand	� Within 2 months	� Within 2-6 months	� Within 6-12 months	� Within 1-2 years	Greater than 2 years
�	�'000	�'000	�'000	�'000	�'000	�'000	�'000
Trade payables	1,220	715	505	-	-	-	-
Accruals	308	-	-	308	-	-	-
Lease payables	481	-	-	119	82	82	198
Borrowings	1,847	728	138	263	316	175	227
Contingent consideration	100	-	25	25	50	-	-
�	3,956	1,443	668	715	448	257	425

�

At 31 March�2019

�

�	� Total	� On Demand	� Within 2 months	� Within 2-6 months	� Within 6-12 months	� Within 1-2 years	Greater than 2 years
�	�'000	�'000	�'000	�'000	�'000	�'000	�'000
Trade payables	2,000	-	2,000	-	-	-	-
Accruals	357	-	-	357	-	-	-
Finance lease payables	6	-	2	2	2	-	-
Bank overdrafts	492	492	-	-	-	-	-
Other loans	29	-	9	18	2	-	-
Contingent consideration	3,747	-	-	3,547	200	-	-
�	6,631	492	2,011	3,924	204	-	-

�

21.� Capital�management

The Group's capital management objectives are:

?	to ensure the Group's ability to continue as a going concern; and
?	to provide long-term returns to shareholders.

The�Group�defines�and�monitors�capital�on�the�basis�of�the�carrying�amount�of�equity�plus�its�outstanding loan notes, less cash and cash equivalents as presented on the face of the balance sheet as�follows:

�

�	2020	2019
�	�'000	�'000
Equity	10,378	7,356
Borrowings (note 18)	1,847	521
Less: cash and cash equivalents (note 16)	(245)	(639)
�	11,980	7,238

The Board of Directors monitors the level of capital as compared to the Group's commitments and adjusts the level of capital as is determined to be necessary by issuing new shares or adjusting the level of debt. The Group is not subject to any externally imposed capital requirements.

�

22.�� Leasing arrangements

The Group leased certain items of its equipment under lease arrangements.

The Group's obligation under lease arrangements are secured by the lessors' title to the leased assets.

The following table outlines the maturity analysis of the lease liabilities�� :

�

�	�	2020
�	�	�'000
Contractual discounted cash flows	�	�
Less than one year	�	201
Two to five years	�	286
More than five years	�	-
�	�	487

The following table outlines the maturity analysis of the lease liabilities:

�	1 April 2019	Net cash flow	Currency and non-cash movements	31 March 2020
�	�'000	�'000	�'000	�'000
Lease liabilities	(664)	181	(4)	(487)
Total lease liabilities	(664)	181	(4)	(487)

The Group has elected not to recognise right of use assets and lease liabilities for short-term leases (i.e. lease term less than 12 months) or low-value assets (i.e. under �5,000). The Group will continue to expense the lease payments associated with these leases on a straight-line basis over the lease term. At 1 April 2019, this was less than �1,000.

Variable lease payments that depend on an index or a rate are also less than �5,000.

The Group sub leases office space to Xanthos Limited as outlined in note 27.

The total undiscounted future minimum lease payments under non-cancellable operating lease as at 1 April 2019 was as follows:

�	Property	Other	Total
2019	�'000	�'000	�'000
Within one year	198	-	198
Later than one year and not later than five years	589	-	589
Later than five years	238	-	238
�	1,025	-	1,025

23.�� Retirement benefit�plans

Benefits�from�the�contributory�pension�schemes�to�which�the�Group�contributes�are related�to�the�cash value of the funds at retirement dates. The Group is under no obligation to provide any minimum level of benefits.

The assets of the schemes are administered by trustees in funds independent of the Group.

During the year �33,000 was recognised in the Income Statement in relation to pension contributions (2019: �33,000). As at 31 March 2020, �nil is payable to pension schemes (2019: �nil).

�

24.�� Share�capital

The authorised share capital comprises 99,577,589 (2019: 64,484,172) ordinary shares of �0.001 each.		�	�
�		�	�
�	�'000
1 April 2018 57,462,940 ordinary shares of �0.001	� 57
Issued 5,000,000 ordinary shares of �0.001	� 5
2,021,232 ordinary shares of �0.001	2
31 March and 1 April 2019	64
1,680,000 ordinary shares of �0.001	2
1,288,910 ordinary shares of �0.001	1
3,278,353 ordinary shares of �0.001	4
28,846,154 ordinary shares of �0.001	29
31 March 2020 99,577,589 ordinary shares of �0.001	� 100
�	�	�	�

On 1 March 2019, 5,000,000 ordinary shares with a nominal value of 0.1p were issued at 100p per share by way of a subscription and placing.

On 5 March 2019, 2,021,232 ordinary shares with a nominal value of 0.1p were issued at 116.5p per share by way of issue.

On 31 January 2020, 1,680,000 ordinary shares with a nominal value of 0.1p were issued at 0.003p per share as the result of the exercise of employee share�options.

On 18 February 2020, 28,846,154 ordinary shares with a nominal value of 0.1p were issued at 13p per share by way of a subscription and placing.

On 18 February 2020, 1,288,910 ordinary shares with a nominal value of 0.1p were issued at 116.5p per share� by way of issue.

On 18 February 2020, 3,278,353 ordinary shares with a nominal value of 0.1p were issued at 13p per share by way of issue.

�

25.�� Share�premium

�

�'000

1 April 2018 57,462,940 ordinary shares of �0.001	� 4,793
Issued 5,000,000 ordinary shares of �1.00 less issue costs	� 4,795
31 March and 1 April 2019	9,588
1,680,000 ordinary shares of �0.003	4
28,846,154 ordinary shares of �0.13 less issue costs	3,589
31 March 2020	13,181

�

Consideration received in excess of the nominal value of the 28,846,154 shares issued on 18 February as a result of the subscription and placing has been included in share premium, less registration and commission of��131,000.

Consideration received in excess of the nominal value of the 5,000,0000 shares issued on 1 March 2019 as a result of the subscription and placing has been included in share premium, less registration and commission of��200,000.

�

26.�� Share-based�payments

The Group operates a share option scheme to which the employees of the Group may be invited to participate by the Remuneration Committee.

If the options remain unexercised after a period of ten years from the date of grant, the options expire. Options are forfeited if the employee leaves the Group before the options vest.

Details�of�the�number�of�share�options�and�the�weighted�average�exercise�price�("WAEP")�outstanding during the year are as�follows:

2020

�

�	Number of	WAEP
�	options	�
Outstanding at the beginning of the year	2,460,680	0.08
Exercised	(1,680,000)	0.03
Outstanding at the year end	780,680	0.27
Number vested and exercisable at 31 March 2020	780,680	0.27

�

2019

�

�	Number of	WAEP
�	options	�
Outstanding at the beginning of the year	2,360,680	0.08
Outstanding at the year end	2,460,680	0.08
Number vested and exercisable at 31 March 2019	2,203,180	0.06

The Group recognised no expenses in relation to share options accounted for as equity- settled share-based payment transactions (2019: �63,285) in relation to options issued to Directors- these were recognised as expenses in the Income Statement.

�

27.�� Related party�transactions

Key management personnel are identified as the Directors, including non-statutory directors, and their remuneration is disclosed as�follows:

�

�	2020	2019
�	�'000	�'000
Remuneration of key management	�	�
Remuneration	558	550
Social security costs	73	70
Share-based payment charge	-	63
Pension contributions to defined contributions scheme	37	35
�	668	718

�

Other related party borrowings transactions are as follows

�	Andrew Brode loan	Directors' pension scheme �70,000 loan	Total
�	�'000	�'000	�'000
Principal	�	�	�
At 1 April 2018	-	26	26
Loans repaid	-	(16)	(16)
At 31 March 2019	-	10	10
Loans advanced	700	-	700
Loans repaid	-	(10)	(10)
At 31 March 2019	700	-	700
Interest	�	�	�
At 1 April 2018	-	-	-
Interest accrued	-	2	2
Interest paid	-	(2)	(2)
At 31 March 2019	-	-	-
Interest accrued	28	1	29
Interest paid	-	(1)	(1)
At 31 March 2020	28	-	28

�

Alan Calder and his wife are the trustees of the IT Governance Pension Fund.

All loan notes terms' are described in note 18. Interest is accounted for on an effective interest basis and included within borrowings on the balance sheet.

Other related party transactions are as follows

Xanthos Limited is considered a related party entity as Alan Calder is a co-owner of that company�with his spouse (who runs the�business).

Xanthos�sub-lets�office�space�from�the Group, which is included within other income. During the year to 31 March 2020 this totalled �20k (2019:�20k). Transactions were carried out on an arm's length basis. Outstanding amounts due from Xanthos at 31 March 2020 totalling �2k (2019:��nil).

The Group also makes purchases from Xanthos. During the year to 31 March 2020, the Group made purchases�totalling��532,512�from�Xanthos�(2019:��661,690) of which �420,000 (FY19: �500,279) was capitalised. Outstanding�amounts�payable�to�Xanthos at 31 March 2020 totalled �95,982 (2019:��99,491).

�

28.�� Ultimate controlling�party

In the opinion of the Directors, there is no one individual who exercises control over the Group.

�

29.�� Business combinations completed in prior period

�

On 5 March 2019 the Group acquired 100% of the voting equity instruments of DQM Group Holdings Limited, and its subsidiaries (see note 9), a company whose principal activity is a provider of data consulting and technology solutions.

As disclosed in last year's Annual Report, the value of the identifiable net assets of DQM group Holdings Limited had only been determined on a provisional basis due to an independent valuation being carried out on certain assets not being finalised when the 2019 financial statements were issued. Had the valuation been finalised the 2019 financial statements would have differed to those previously reported by �111k.

Details of the (restated) fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:

�

�	Book value	Adjustment	Fair value
�	�'000	�'000	�'000
Goodwill	-	6,804	6,804
Intangible assets:	�	�	�
- Non-contractual customer lists and relationships	-	1,843	1,843
- Software	11	177	187
- Trade Name and Trademarks	-	456	456
Property, plant and equipment	22	-	22
Receivables	840	-	840
Cash	1,019	-	1,019
Payables	(1,308)	-	(1,308)
Deferred tax liability	(2)	(421)	(423)
Total net assets	582	8,859	9,441

Fair value of consideration paid

Fair value		�
�'000		�
Cash	3,532
Issued ordinary shares	2,355
Contingent cash consideration	1,626
Contingently issuable ordinary shares	1,928
Total consideration	9,441
�	�	�

The 2019 comparatives have been not been restated in these financial statements to include the effect of the adjustments noted on the previous page. Under paragraph 10(f) of IAS 1 Presentation of financial statements, this restatement would ordinarily require the presentation of a third consolidated statement of financial position as at 1 April 2019. However, as the restatement of the provisional fair values would have no effect on the statement of financial position as at that date, the Directors do not consider that this would provide useful additional information and, in consequence, have not presented a third consolidated statement of financial position due to prior period business combinations.

The primary reasons for acquiring the business, aside from DQM being a profitable and cash generative business in its own right, were as set out below:

�� To extend the Group's existing offering to include high margin, data governance services

�� To add market share to the Group, by introducing additional household name clients with ongoing contracts

�� To provide cross-selling and upselling opportunities through the companies' complementary offerings

�� To broaden and strengthen the Group's second tier management team, through the retention of existing DQM management

�� To add customer account management capability

�� To provide strategic opportunities, such as enabling the Group to gain Data Privacy Seal accreditation

�� To provide sector crossover, such as an increased financial sector exposure

In terms of methods of valuing contingent consideration, the cash is measured in line with the financial instruments note and the contingent shares will be issued at a price of 116.5 pence per share, as set out in the sale and purchase agreement.

GRC International Group plc	+44 (0) 330 999 0222
Alan Calder, Chief Executive Officer Christopher Hartshorne, Finance Director	�
� Grant Thornton UK LLP (Nominated Adviser)		+44 (0) 20 7383 5100
Philip Secrett Jen Clarke Seamus Fricker �		�
Dowgate Capital Limited (Broker)		+44 (0) 20 3903 7715
James Serjeant		�
�	�	�

� �'000	� Consultancy	Publishing and Distribution	� Software	� Training	� Total
FY17	2,898	1,042	410	2,483	6,833
FY18	5,274	1,649	399	8,366	15,688
FY19	7,228	1,337	1,513	5,771	15,849
FY20	8,635	977	1,356	3,178	14,146
� �	�	�	�	�	�
Period-on-period %	Consultancy	Publishing and� Distribution	Software	Training	Total
FY18	82%	58%	(3)%	237%	130%
FY19	37%	(19)%	279%	(31)%	1%
FY20	19%	(27)%	(10)%	(45)%	(11)%

�'000	� HY1 FY20	� HY2 FY20	� FY20	� FY19
Operating loss	(2,149)	(1,276)	(3,425)	(5,357)
Depreciation	194	192	386	183
Amortisation	586	594	1,180	611
Exceptional costs	63	295	358	164
Share-based payments	-	-	-	63
Underlying EBITDA	(1,306)	(195)	(1,501)	(4,336)

�	�	2020	2019
�	Notes	�'000	�'000
Revenue	2	14,146	15,849
Cost of sales	�	(6,082)	(7,295)
Gross profit	�	8,064	8,554
Administrative expenses:	�	�	�
- Other administrative expenses	�	(11,230)	(13,716)
- Share-based payment charge	�	-	(63)
- Exceptional administrative expenses	3	(358)	(164)
Total administrative expenses	�	(11,588)	(13,943)
Other operating income	�	99	32
Operating loss	4	(3,425)	(5,357)
Net finance costs	6	(222)	(8)
Share of post-tax loss of equity accounted joint ventures	13	(4)	(1)
Loss before taxation	�	(3,651)	(5,366)
Taxation	7	445	(29)
Loss for the financial year	�	(3,206)	(5,395)
Loss for the financial year attributable to:	�	�	�
Equity shareholders of the parent	�	(3,206)	(5,395)
Basic loss per share (pence)	8	(4.67)	(9.30)
Diluted loss per share (pence)	8	(4.67)	(9.30)

21 September 2020

Preliminary results for the year ended 31 March 2020

�

Commenting on the results, Alan Calder, Chief Executive Officer, said:

�

�

�

�

Although the macro-economic environment remains turbulent, I believe that GRC International is well-placed to deliver the strategy we are pursuing, which enables us to continue to take advantage of the growing recognition that cyber crime is a major business issue.

Enquiries:

About GRC International Group plc

Chairman's Statement

Overview

I am pleased to share GRC International's results for the year ended 31 March 2020, the Group's third set of results since admission to the London Stock Exchange's AIM market in March 2018.

Overall, the Group believes that cyber security, business continuity and privacy compliance issues will become increasingly critical for all companies in sectors with ongoing business operations. The Group is well-positioned to deliver the required products and services to address client needs.

Performance

I was, therefore, pleased to note that the Group was EBITDA-positive in each of the three months of Q4.

COVID-19

People

Outlook

In its pandemic response plan, the Group modelled a significant decline in FY21 Q1 performance. GRC International traded well ahead of that model in terms of billings, and with all costs under tight control.

Whilst the Group is unable to provide financial guidance for FY21 given the prolonged uncertainty caused by the pandemic, we are confident that the Group operates in global markets that are set to grow significantly over the medium and long term, whilst gaining in importance.

We have made the necessary investments to broaden the range of our products and services and will continue to do so.

Andrew Brode

Chief Executive Officer's Review

Alan Calder

Market Overview

A global market driven by the growing volume and scale of cyber security threats

The market for cyber security solutions and services is driven predominantly by the rising number of cyber-attacks globally, which are becoming increasingly sophisticated, coupled with increased regulatory pressure for data security and privacy and a growing demand for data processing transparency.

������ 53% saw an increase in their budget;

������ 51% are spending more on cyber analytics;

������ 65% foresee an increase in their budget;

������ Many organisations are currently outsourcing cyber security functions, including functions of their security operations centres.

Accenture reported that cyber security breaches had increased by 11% since 2018 and 67% since 2014, and that 68% of business leaders felt their cyber security risks were increasing.

End-to-end compliance across the supply chain with legal and regulatory obligations further increasing demand for our products and services

In addition to laws and regulations, companies are increasingly required to provide assurance to their customers, regulators and stakeholders that their data protection and cyber security systems are adequate for the current risk environment.

We operate in a growing and global market

GRC International offers a unique proposition to the market

Financial Review

Revenue

The Group has four key revenue streams:

������ Consultancy

������ Publishing and Distribution

������ Software

������ Training

As demonstrated by the tables below, the Group's overall revenue has grown strongly from �6.8m FY17 to �14.4m FY20.

Gross profit

Operating expenses

Other operating expenses (excluding share-based payment expenses and exceptional costs) decreased by �2.5 million to �11.2 million, down 18% (FY19: �13.7 million).

By the end of FY20 overheads were running at an annualised run rate more than �4 million lower than the full year FY19 figure.

Underlying EBITDA

FY20 includes the adoption of the new IFRS16 leases which has increased EBITDA by �242k compared to FY19.

Finance expense

The net finance expense of �222k (FY19: �8k) relates mainly to interest on the Group's new borrowings (�139k) and leases (�61k) due to the increase in borrowings and the change in accounting policy relating to the introduction of IFRS16 respectively.

Loss before tax

Taxation

A tax credit of �0.4 million has been recognised in the period (FY19: �29k charge). The tax credit recognised relates primarily to the unwinding of deferred tax on the acquisition of DQM and a Research and Development tax credit.

Earnings per share

Loss per share was 4.67 pence (FY19: loss per share 9.30 pence).

Statement of financial position

Net current liabilities at period end were �2.8 million, reduced from �5.5 million at 31 March 2019.

Property, plant and equipment has increased to �0.8m (31 March 2019 �0.5m) due to the addition of Right of Use Assets under the introduction of IFRS16.

The Board continues to pay close attention to the working capital management of debtors and creditors.

Accounting for lease under IFRS 16

During the period the Group has adopted IFRS 16 under the modified retrospective method. Further information is provided in note 22.

Lease obligations under IFRS 16 at 31 March 2020 were: Current �0.2 million, Non-current �0.3 million.

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 �1.1 million largely relate to software development of �0.9 million and consultancy and courseware products of �0.2 million.

Cash flow, cash/debt.

Going concern

������ The possibility of further local or another national "lockdown".

������ The levels of revenue in the context of weakened demand for the Group's products and services.

������ Should the Group need to reduce its scalable cost base, its ability to make those adjustments and realise the benefits from doing that on a timely basis.

������ The continued access to financing, including government support in its various forms, that would be sufficient to fund any further cash requirement over the foreseeable future

The financial statements do not include the adjustments that would be required should the going concern basis of preparation no longer be appropriate.

Capital structure

Risks and uncertainties

Chris Hartshorne

Consolidated Income Statement

�� 53% saw an increase in their budget;

�� 51% are spending more on cyber analytics;

�� 65% foresee an increase in their budget;

�� Many organisations are currently outsourcing cyber security functions, including functions of their security operations centres.

�� Consultancy

�� Publishing and Distribution

�� Software

�� Training

�� The possibility of further local or another national "lockdown".

�� The levels of revenue in the context of weakened demand for the Group's products and services.

�� Should the Group need to reduce its scalable cost base, its ability to make those adjustments and realise the benefits from doing that on a timely basis.

�� The continued access to financing, including government support in its various forms, that would be sufficient to fund any further cash requirement over the foreseeable future

1.�� Segmental reporting

8.�� Earnings per�share

9.�� Subsidiaries

10.�� Goodwill

11.�� Intangible�assets

12.�� Property, plant and�equipment

13.�� Investments in equity-accounted joint�ventures

14.�� Inventories��

16.�� Cash and cash�equivalents

17.�� Trade and other�payables

18.�� Borrowings

19.�� Financial instruments - Risk�Management

I.�� Principal financial�instruments