REG - Merit Group PLC - Disposal of Media, Events and Training Operations

MeritAnnouncement

27/10/2022 07:00

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RNS Number : 2556E  Merit Group PLC  27 October 2022

27 October 2022

Merit Group plc

("Merit", the "Company" or the "Group")

 

Disposal of Media, Events and Training Operations

Merit Group plc (AIM: MRIT), the data and intelligence business, announces
that it has agreed to sell the Media, Events and Training operations of its
Dods Political Engagement business (together, the "MET Operations") to
Political Holdings Limited, a private company owned by Lord Ashcroft KCMG PC,
for a cash consideration of £4.5 million (the "Disposal").

In the year ending 31 March 2022, the MET Operations generated revenue of
£9.3 million and an adjusted EBITDA of approximately £0.5 million, with net
assets of £0.5 million as at 31 March 2022.

Merit expects the Disposal to complete in the current calendar year. The
Disposal remains subject to the satisfaction of certain conditions, including
satisfaction of financing by Political Holdings Limited. Following completion
the Group will use the net proceeds((1)) to pay down its net debt((2)), which
as at 30 September 2022 was £3.2m, and to fund the growth plans of its
ongoing business intelligence operations.

(1)    Net proceeds comprise £4.5m consideration, to be adjusted for
normalised working capital, less transaction costs

(2)    Net debt/net cash comprises the aggregate of gross debt, excluding
IFRS16 lease liabilities and cash and cash equivalents

Background to and reasons for the Disposal

Following the Group's change of name and new strategic focus announced in
March 2021, and having conducted an internal review of its operations, the
Board of Merit concluded earlier this year that the Group was overly diverse
and complex given its market size and that it needed to focus its future
strategy on its core data and intelligence offerings. These core operations
comprise; the market leading Dods Political Intelligence service with over 800
subscribers in the UK and Europe, which generated £6.9 million of
subscription revenue in the last financial year; and the data and intelligence
business of Merit Data & Technology which generated £10.7 million, the
significant majority of which is recurring revenue.

The Board of Merit believes focussing on business intelligence will allow it
to grow its core business operations and improve returns to shareholders.

Political Holdings Limited owns three companies in the media sector, focused
on politics and government: Biteback Publishing (Britain's leading political
publisher), Campaigns & Elections (the non-partisan go-to resource for
political campaign professionals in the USA and Mexico), and ConservativeHome
(the UK's premier independent conservative news and analysis site). Merit
believes that its MET Operations will benefit from the focus that will come
from being part of a company specialising in media and events.

David Beck, CEO of Merit Group plc, said:

"This is an important step for Merit. The Disposal will allow us to focus on
the parts of the Group with recurring or subscription revenue, attractive
margins and strong cash generation. Following the Disposal we will become
fully focussed on the business intelligence sector.

"This transaction, together with the disposal of our minority stake in Social
360 announced in July, will mean we have raised £5m from the disposal of non
core assets. When set against our market capitalisation of approximately
£8.5m these are obviously significant strategic developments."

 

Related Party Transaction

 

Political Holdings Limited is owned by Lord Ashcroft KCMG PC, a substantial
shareholder in the Company as defined by the AIM Rules. Further, Angela
Entwistle, a non-executive director of the Company, is a director of Political
Holdings Limited.

The Disposal therefore constitutes a related party transaction under Rule 13
of the AIM Rules. The Independent Directors of the Company (being all
Directors save for Angela Entwistle) consider, having consulted with Canaccord
Genuity Limited in its capacity as the Company's nominated adviser for the
purposes of the AIM Rules, the terms of the Disposal to be fair and reasonable
insofar as the Company's shareholders are concerned.

 

About Merit's Media, Events and Training Operations

Included in the MET Operations in the Disposal are the leading political news
website Politics Home and magazines such as The House, Holyrood and The
Parliament as well as the online publication Civil Service World. Under the
Dods brand the Company runs events such as its Diversity & Inclusion
Series that includes Women into Leadership events; in Scotland the annual
Holyrood Garden Party and Political Awards and in Brussels the MEP Awards. The
Company also runs events for others, notably Government Departments including
Civil Service Live and the CS Awards. Dods Training runs training courses for
civil servants as well as NGOs and commercial organisations.

 

 

For further information contact:

 

Merit Group plc

David Beck -
CEO
   020 7593 5500

www.meritgroupplc.com (http://www.meritgroupplc.com)

 

Canaccord Genuity Limited (Nomad and Broker)

Bobbie Hilliam
 
020 7523 8150

 

This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication
of this announcement, this information is now considered to be in the public
domain.

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