REG - Merit Group PLC - Final Results
18/07/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240718:nRSR8457Wa&default-theme=true
RNS Number : 8457W Merit Group PLC 18 July 2024
Merit Group plc
("Merit", the "Company" or the "Group")
AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2024
18 July 2024
Merit Group plc (AIM: MRIT), the data and intelligence business today
publishes its audited results for the year ended 31 March 2024.
Financial Highlights of the Continuing Operations of the Group
· Group revenues grew to £19.9m, up 7.0% on FY23
· Merit Data & Technology (MD&T) business unit contributed
£12.9m of revenue, an increase of 10.5% on FY23
· Adjusted EBITDA of £4.0m, (FY22 £2.7m) up 50%
· Adjusted EBITDA of Dods at £2.2m (up £0.4m) and MD&T at £2.8m
(up £1.0m)
· Net margin improvement to 20.0% (FY23 14.3%)
· Profit before tax of £0.9m (FY23 loss of £3.7m), the first Profit
before tax for the year reported since 2018
· The Group's Continuing Operations generated operating cash of £2.3
million
· Net debt reduced from £2.6m to £1.9m
Continuing Operations FY 2024 FY 2023 Change((5))
£m £m
Revenue 19.9 18.6 +7.0%
Gross profit 9.2 8.6 +7.2%
Gross margin %((1)) 46.1% 46.0% -
Adjusted EBITDA((2)) 4.0 2.7 +50.4%
Net margin %((3)) 20.0% 14.3%
Profit/(loss) before tax 0.9 (3.7) +124.3%
Profit/(loss)before tax and non-recurring items 1.2 (0.2) +500.4%
Earnings per share (pence) 2.3p (14.9p +17.2p
Adjusted earnings per share (pence) ((4)) 7.6p 0.8p +6.8p
Net debt((6)) (1.9) (2.6) -27.6%
( )
((1)) Gross margin is Gross profit as a percentage of Revenue
((2)) Adjusted EBITDA is calculated as earnings before tax, depreciation,
amortisation of intangible assets, share-based payments and non-recurring
items
((3)) Net margin is Adjusted EBITDA as a percentage of Revenue
((4)) Adjusted EPS is calculated based on the profit/(loss) for the year
before amortisation of intangible assets, share-based payments and
non-recurring items (see note 13)
((5)) Year-on-year percentage change figures are calculated on unrounded
numbers
((6)) Net (debt)/cash comprises the aggregate of gross debt, excluding IFRS16
lease liabilities, and cash and cash equivalents (see note 23)
Mark Smith, Chairman, commented;
"Having successfully completed its restructuring, the Group has demonstrated
its underlying prospects and profitability in FY24. It has a clear focus on
data and intelligence and the recurring nature of revenues within its Data and
Political Intelligence segments underpin what is expected to be a solid FY25
performance. Further investment in sales & marketing resource is being
largely funded from organic growth and we will continue to explore
opportunities to generate growth beyond what we can expect organically within
the context of maximising value for shareholders."
Phil Machray, CEO & CFO, said;
"These results for the first full year post the 2022 disposals clearly show
the potential of our two operating businesses. MD&T has achieved double
digit revenue growth and an Adjusted EBITDA margin in excess of 20%, whilst
Dods Political Intelligence has achieved a 30% Adjusted EBITDA margin from
flattish year-on-year revenues. Together, these businesses have delivered
over £5 million of combined EBITDA, which together with a focus on overhead
reduction, have allowed the Group to deliver Adjusted EBITDA up 50%
year-on-year.
Data is the building block on which Artificial Intelligence applications are
built as it serves as the foundation for training and improving machine
learning models. The Group's more than five year experience in the field of
Artificial Intelligence and Machine Learning and its expertise in data capture
and analysis present the Group with exciting opportunities."
With our experience and focus on data, intelligence and data engineering very
much aligned to evolving market trends - which demand greater volumes and
better quality data to drive businesses' AI and automated models, we are well
positioned to benefit from further market growth. Our current activities are
focused on building the sales & marketing capabilities to convert that
into further revenue growth in the new financial year."
Current trading and outlook
The Group has demonstrated its underlying prospects and profitability in FY24,
following a significant period of restructuring. The recurring nature of its
Data and Political Intelligence revenues underpin what is expected to be a
solid FY25 performance. Further investment in sales & marketing resource
is being largely funded from organic growth but will impact margin performance
in FY25 as the Group positions itself for future growth.
The Group has made a solid start to FY25 and whilst Software & Technology
Resourcing revenues have been impacted by the natural completion of some
significant projects, the Board remains confident in anticipating overall
growth in revenue for FY25. As highlighted above, profit in FY25 will be
impacted by investment and the Board therefore currently anticipates Adjusted
EBITDA will be approximately 15% lower than reported in FY24.
For further information contact:
Merit Group plc
Mark Smith -
Chairman
020 7593 5500
Philip Machray - CEO & CFO
www.meritgroupplc.com (http://www.meritgroupplc.com)
Canaccord Genuity Limited (Nomad and Broker)
Bobbie Hilliam
020 7523 8150
Harry Pardoe
Inside Information
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.
Forward looking statements
This announcement has been prepared in relation to the financial results for
the year ended 31 March 2023. Certain information contained in this
announcement may constitute 'forward-looking statements', which can be
identified by the use of terms such as 'may', 'will', 'would', 'could',
'should', 'expect', 'seek, 'anticipate', 'project', 'estimate', 'intend',
'continue', 'target', 'plan', 'goal', 'aim', 'achieve' or 'believe' (or the
negatives thereof) or words of similar meaning. Forward-looking statements can
be made in writing but also may be made verbally by members of management of
the Company (including, without limitation, during management presentations to
financial analysts) in connection with this announcement. These
forward-looking statements include all matters that are not historical facts
and include statements regarding the Company's intentions, beliefs or current
expectations concerning, among other things, the Company's results of
operations, financial condition, changes in global or regional trade
conditions, changes in tax rates, liquidity, prospects, growth and strategies.
By their nature, forward-looking statements involve risks, assumptions and
uncertainties that could cause actual events or results or actual performance
or other financial condition or performance measures of the Company to differ
materially from those reflected or contemplated in such forward-looking
statements. No representation or warranty is made as to the achievement or
reasonableness of and no reliance should be placed on such forward-looking
statements. The forward-looking statements reflect knowledge and information
available at the date of this announcement and the Company does not undertake
any obligation to update or revise any forward-looking statement, whether as a
result of new information or to reflect any change in circumstances or in the
Company's expectations or otherwise.
Chairman's statement
A return to profit and growth
The year under review is the first full year following the Group's disposal of
non-core assets. Having restructured the portfolio, resized the cost base
and stabilised the Group's core businesses, we're now able to demonstrate the
long-term potential of the Group and its two operating businesses.
We've reported growth in Revenue, Gross profit and EBITDA, resulting in a
positive Profit before tax for the Group for the first time since 2018.
We will continue to invest in sales and marketing resource, combined with
product and technology investments, to drive the future organic revenue growth
of our two businesses. We will continue to focus on optimising operational
performance, and where appropriate, we will continue to explore opportunities
to generate growth beyond what we can expect organically within the context of
maximising value for shareholders.
Results for the financial year
The Group grew revenue from Continuing Operations by 7.0% to £19.9 million in
the year (FY23 £18.6 million), with the growth being driven by MD&T's
double digit revenue growth, particularly in software and technology
resourcing projects. This growth has been organically funded, with gross
margins held flat at 46% despite the Group's investment in additional sales
& marketing resource.
Good cost management, with the help of a favourable year-on-year exchange rate
movement on the Group's Indian cost base, has seen the Group extend EBITDA
margins to 20% (FY23: 14.3%) and report year-on-year EBITDA growth of 50% to
£4.0m.
The profit before tax from Continuing Operations of £0.9 million (FY23: loss
of £3.7 million) is pleasingly the first reported full year profit since
2018.
Continuing Operations FY 2024 FY 2023 Change((6))
£m £m
Revenue 19.9 18.6 +7.0%
Gross profit 9.2 8.6 +7.2%
Gross margin %((1)) 46.1% 46.0%
Adjusted EBITDA((2)) 4.0 2.7 +50.4%
Net margin %((3)) 20.0% 14.3%
Profit/(loss) before tax 0.9 (3.7) +124.3%
Profit/(loss) before tax and non-recurring items 1.2 (0.2) +500.4%
Adjusted earnings per share (pence) ((4)) 7.4p 0.8p +6.6p
Net debt ((5)) (1.9) (2.6) -27.6%
( )
((1)) Gross margin is Gross profit as a percentage of Revenue
((2)) Adjusted EBITDA is calculated as earnings before tax, depreciation,
amortisation of intangible assets, share-based payments and non-recurring
items
((3)) Net margin is Adjusted EBITDA as a percentage of Revenue
((4)) Adjusted EPS is calculated based on the profit/(loss) for the year
before amortisation of intangible assets, share-based payments and
non-recurring items (see note 13)
((5)) Net debt comprises the aggregate of gross debt, excluding IFRS16 lease
liabilities, and cash and cash equivalents (see note 22)
((6)) Year-on-year percentage change figures are calculated on unrounded
numbers
Chairman's statement continued
Cashflows and net debt
The Group's Continuing Operations generated consistent operating cash inflows
amounting to £2.3 million (FY23: £2.9 million), allowing headroom for
capital investment and for the repayment of £2.1 million of term loans and
RCF borrowings.
The year-on-year change to the Group's net debt((6)) position is a reduction
of £0.7 million, from £2.6 million at March 2023 to £1.9m in March 2024.
Strategy
Data and Intelligence is, and will remain, at the core of everything that we
do. We use technology, human expertise and Artificial Intelligence to collate,
transform and add the greatest value to the data we provide our customers.
We aim to grow through the expansion of the sectors and markets we address and
by constantly improving the proprietary technology platforms our customers use
to access our data and business intelligence. This growth will be driven by
our excellent reputation for the provision of valuable data and intelligence
at a competitive price point, and our ability to deliver comprehensive
solutions to our clients' data management needs.
Our business benefits from very high levels of recurring revenue from long
standing customers; we will maintain our focus on these subscription and
recurring revenue customers. We will continue to manage our profit margins
with technology-led efficiencies and a tightly controlled cost base.
Having successfully completed its restructuring, the Group is in a much
stronger position. It benefits from less complexity, greater focus, and a
clear strategy for growth, supported by investment in its core businesses.
Board Changes
With a simplified Group and a clear strategy, the Board took the opportunity
to restructure the Executive during the year, combining the roles of CEO and
CFO, thereby reducing the overall Board size and cost. David Beck, who had
served the Board well since September 2021, left the Board in January 2024.
Timothy Briant was appointed as a non-executive Director and member of the
Audit Committee in February 2024.
Following the Executive restructure and strengthening of the non-executive
team, Lord Ashcroft KCMG PC, the Company's largest shareholder, retired from
the Board in April 2024.
People
Our people are central to our success as a Group and it is their combined
efforts that make Merit a fantastic place to work. The Group aims for every
employee to have the tools, training and professional development to
facilitate a healthy and fulfilling work environment.
The Board is grateful to all employees for the contributions they have made to
a successful year and to the management team that have delivered the
transformation of the Group.
Chairman's statement continued
Current trading and outlook
The Group has demonstrated its underlying prospects and profitability in FY24,
following a significant period of restructuring. The recurring nature of its
Data and Political Intelligence revenues underpin what is expected to be a
solid FY25 performance. Further investment in sales & marketing resource
is being largely funded from organic growth but will impact margin performance
in FY25 as the Group positions itself for future growth.
The group has made a solid start to FY25 and whilst Software & Technology
Resourcing revenues have been impacted by the natural completion of some
significant projects, the Board remains confident in anticipating overall
growth in revenue for FY25. As highlighted above, profit in FY25 will be
impacted by investment and the Board therefore currently anticipates Adjusted
EBITDA will be approximately 15% lower than reported in FY24.
Mark Smith
Chairman
17 July 2024
Chief Executive's Review
Overview
The year under review is the Group's first full year of stability, following
the significant disposals and restructuring of FY23. As such, the FY24 results
provide a clear picture of the capabilities and performance of the current
Group and, I believe, a compelling view on its potential.
As a reminder, in FY23 we disposed of the Dods Media, Events and Training
operations ("MET business"); we disposed of the investments in Associates we
held; and we exited the onerous Shard lease. We also amended our debt
financing facilities to fund the Shard lease exit.
Whilst we continued to deal with some hangover of this restructuring - both in
the provision of transitional services to the MET business and the repayment
of debt taken out to fund the Shard lease exit - we entered FY24 focused on
the next phase of our strategy, to deliver growth, and I'm pleased to report
we've delivered on that. Within these results we report growth in revenues, in
EBITDA, in Operating profit and in EPS. This year we reported the Group's
first profit (both before and after tax) since 2018.
We have reduced Net debt, despite making further investment in our Software
platforms and IT infrastructure. We therefore exit FY24 in good shape, with
clear plans to drive the Group forward and to maximise shareholder value.
Operating results
The Group's revenue has increased by £1.3 million (7.0%) during the year to
£19.9 million, driven by strong growth in Merit Data & Technology's
("MD&T") software & technology resourcing segment, as we delivered
significant data engineering and tech-build projects for new and existing
clients. Gross margins were held flat at 46% but the benefit of operational
gearing and tight control of operating cost and administration cost, together
with a favourable year-on-year movement in GBP/INR exchange rates, led to an
increase in Adjusted EBITDA of 50%, up from £2.7 million to £4.0 million for
the year.
The restructured Group benefits from very good visibility of its revenues,
with Dods PI's income being almost entirely subscription based and MD&T
data business having a very stable long term customer base with 84% of revenue
recurring.
MD&T revenue was up by 10.5% to £12.9 million; this business unit now
representing nearly two thirds of the Group's revenues. MD&T's Adjusted
EBITDA of £2.8 million (FY23: £1.8 million) benefited from the additional
profitable revenue, strong cost control and a favourable sterling to rupee
foreign exchange rate movement compared to the prior FY23 period which had a
period of sterling weakness. This favourable movement contributed around £0.6
million of the year-on-year improvement, with more stability of the exchange
rate in FY24 and the early parts of FY25.
Dods Political Intelligence revenues were up marginally (1.2%) at £7.0
million (FY23: £6.9 million); however, Adjusted EBITDA rose 22% to £2.2
million as it benefited from a restructured, lower cost base. This
improvement was despite a fall in non-operating income from the provision of
transitional services to the disposed of MET Operations, which contributed
around £250k of EBITDA benefit in the year, which will fall away in FY25.
Chief Executive's Review continued
Focus on growth
The newly restructured Group is now able to focus on its future growth plan.
The Group's more than five years of experience in the field of Artificial
Intelligence and Machine Learning and its expertise in data capture and
analysis present the Group with exciting opportunities.
MD&T is already benefiting from investments made throughout FY23 and FY24
that will help accelerate the growth of the business. We have an expanded and
reinvigorated sales and marketing team that is focused on the key verticals
where we have experience and a track record.
MD&T is also benefiting from a clearer technology proposition and won
£1.2 million of new business delivering data engineering solutions to both
existing and new customers in the year. Whilst such projects have a shorter
delivery period that the Group's long-term Data revenues, we are building a
good pipeline of opportunities to mature this into a similarly recurring
revenue segment.
Dods PI is benefiting from having a simpler business entirely focused on its
core political intelligence service. Whilst the economic challenges facing
companies are having an impact on its customer base, Dods PI is an essential
service to many of its customers, and FY24 has been a period of preparation
for elections in both its core territories - Westminster and the European
parliament. The unit continues to mitigate the impacts of cost inflation with
price increases on renewing contracts.
With a new government in the UK and a new parliament in Brussels, Dods PI is
set for a busy year. The business has expanded is Sales & Marketing team
with the appointment of a new Sales & Marketing Director and more recently
a new Marketing manager. We have also restructured our consulting team and are
looking to recruit specialist consultants in specific service areas where we
see opportunity to grow market share.
People
My colleagues, in Europe and in India, have been key to delivering the growth
reported in FY24, and their development will be key to our future success.
We aim for every employee to have the tools, training and professional
development to facilitate a healthy and fulfilling work environment for them
to prosper professionally in a healthy working environment.
In FY24, we commenced an equipment refresh of new laptops and other IT
equipment, together with the deployment of new AI software solutions, to
ensure that people have the technology they need to carry out their roles. We
are also investing more heavily than ever in training and development to give
people the technical and personal skills they require in an ever-evolving
global market.
Chief Executive's Review continued
Merit Data & Technology ("MD&T")
MD&T is an AI-driven technology business, specialising in data collection,
enrichment and data engineering. We work for many of the world's leading
information businesses, where we harvest large data sets from hundreds of
sources and apply AI in order to transform diverse, raw data into actionable
insight and intelligence. We provide a highly bespoke service for each
client, combining tech solutions, AI and manual analysis. We help clients to
source and manage data in multiple industries, including retail, shipping,
construction, automotive, energy, healthcare and pharma.
The business has very long-standing client relationships, and many of our most
significant clients have been working with us for over ten years. We are very
focused on developing technology tools to manage and transform data in a
scalable way, in addition to operational excellence and a level of customer
service which helps us enjoy very high levels of customer satisfaction and
recurring revenue.
Our model of servicing global clients with a highly skilled staff base located
in India continues to be successful. With the advent of higher inflation, we
continue to offer customers a technology-led and cost effective solution to
their data intelligence needs.
With almost ten years' experience in applying machine learning techniques to
data transformation, we have a proven capability to enable AI innovation
amongst our clients, where data will be critical to the development of new
models and AI-led solutions.
Alongside our data business, we provide strong technology solutions to
multiple customers. Merit has been a trusted partner in digital transformation
for some of the world's largest B2B information businesses for over 15 years.
Our agile solutions are industry and platform agnostic, client centric and
cover a wide range of project sizes and scope. We undertake large scale
digital upgrades, cloud migration and data engineering projects and in
addition to developing simpler systems for Data Engineering, Data Operations,
Data Migration and AI-driven data products.
Leveraging years of data and digital expertise, MD&T's solutions help
customers to build robust systems, uncover deep insights, drive automation and
accelerate growth.
We have built a very distinct and attractive corporate culture with a
progressive mix of Western and Indian best practices at our offices in India,
where we employ over 850 people, 97% of whom are graduates. 32% of our
employees have been with us for over 5 years.
Our employee value proposition is very strong with the right mix of learning
& development and career growth opportunities. Our values and policies
nurture, develop and engage employees to the highest level of their potential.
Chief Executive's Review continued
Dods Political Intelligence
Dods Political Intelligence (Dods PI) is a leading provider of a comprehensive
subscription-based monitoring and analysis service covering political and
policy developments across the UK and EU. We help our clients make informed
decisions and develop effective strategies to deal with a fast-changing and
complex political and policy environment. We also offer the leading database
of stakeholders in the world of politics and policy, including
Parliamentarians, Government officials and civil servants in both the UK and
the EU.
Dods Political Intelligence delivers objective, relevant and contextual
insights through a unique combination of expert consultants and innovative
technologies. The political landscape in the EU and the UK generates lots of
complex information; Dods PI acts as an expert guide. We draw on human
connection, real-time analysis, and our deep understanding of people,
parliaments and policy to bring our customers impartial insights that matter.
Our monitoring service is delivered through a market leading platform allowing
customers greater control of the content and sectors that they wish to be
informed about. Our technology allows us to monitor over 13,000 sources of
information from 35 different sectors and provide customers with real time
updates. Our premium offering gives customers access to advice from our
specialist consultants and their dedicated research. In addition, Dods PI's
stakeholder management tools enable our customers to identify and engage with
key decision makers and influencers in their sector.
We provide political intelligence to more than 700 customers from a wide range
of sectors: corporates, charities, NGOs and even Government departments. The
main service covers both the EU and Westminster parliaments, and we also offer
both French and German language monitoring. During the year we have won new
mandates from, amongst others, European Savings Bank, Flint Global and
Revolut.
Philip Machray
Chief Executive Officer and Chief Financial Officer
17 July 2024
Financial Review
The Group's financial results for the year ended 31 March 2024 and its
financial position at that date are presented on pages 49 to 107.
FY 2024 FY 2023
£m £m
Revenue from Continuing Operations 19.9 18.6
Gross profit from Continuing Operations 9.2 8.6
Gross margin %((1)) from Continuing Operations 46.1% 46.0%
Adjusted EBITDA((2)) from Continuing Operations 4.0 2.7
Statutory operating profit/(loss) from Continuing Operations 1.7 (3.7)
Statutory profit/(loss) before tax from Continuing Operations 0.9 (3.7)
Income tax (charge)/credit from Continuing Operations (0.3) 0.1
Profit/(loss) for the year from Continuing Operations 0.5 (3.6)
Profit/(loss) for the year 0.2 (2.7)
Statutory EPS (pence per share) 0.8p (11.2p)
Adjusted EPS (pence per share) ((3)) 7.4p (3.1p)
Net debt((4)) (1.9) (2.6)
( )
((1)) Gross margin is Gross profit as a percentage of Revenue
((2)) Adjusted EBITDA is calculated as earnings before tax, depreciation,
amortisation of intangible assets, share-based payments and non-recurring
items
((3)) Adjusted EPS is calculated based on the profit/(loss) for the year
before amortisation of intangible assets, share-based payments and
non-recurring items (see note 13).
((4)) Net debt comprises the aggregate of gross debt, excluding IFRS16 lease
liabilities, and cash and cash equivalents (see Note 22)
Adjusted results are prepared to provide a more comparable indication of the
Group's core business performance by removing the impact of certain items
including non-recurring items, depreciation and amortisation relating to
investment activities, share-based payments and other separately reported
items.
In addition, the Group also measures and presents performance in relation to
various other non-GAAP measures including Adjusted EBITDA. Adjusted results
are not intended to replace statutory results. These have been presented to
provide users with additional information and analysis of the Group's
performance, consistent with how the Board monitors results.
Revenue and operating results
The Group's revenue from Continuing Operations increased by 7.0% to £19.9
million (2023: £18.6 million) and gross profit increased by 7.2% to £9.2
million (2023: £8.6 million). Gross margin remained stable at 46.1% (2023:
46.0%).
Adjusted EBITDA from Continuing Operations increased to £4.0 million (2023:
£2.7 million), exceeding pre-pandemic and pre-disposal levels. The Group's
operating profit from Continuing Operations was £1.7 million (2023: operating
loss of £3.7 million), after non-cash items including an amortisation charge
of £0.6 million (2023: £0.6 million) for business combinations and an
amortisation charge of £0.3 million (2023: £0.3 million) for intangible
software assets. The depreciation charge for property, plant and equipment in
the year decreased slightly to £0.2 million (2023: £0.6 million) and a
right-of-use depreciation charge was £0.8 million (2023: £1.3 million), both
reflecting the reduction in the size and cost of office accommodation in the
year. Non-recurring costs, including profits and losses on disposals,
people-related costs and other costs, were £0.3 million (2023: £3.4
million).
Financial Review continued
The profit before tax from Continuing Operations for the year was £0.9
million, compared to a loss before tax of £3.7 million in 2023, driven by the
higher EBITDA and the much reduced level of non-recurring items. The profit
for the year from Continuing Operations was £0.5 million, compared to a loss
of £3.6 million in 2023.
Taxation
The Group has a tax charge on Continuing Operations of £0.3 million for the
year resulting from the current year profit (2023: tax credit of £0.1
million).
Earnings per share
Earnings per share, both basic and diluted, in the year were 0.8 pence (2023:
loss of 11.2 pence) and were based on the profit for the year of £0.2 million
(2023: loss of £2.7 million) with a basic weighted average number of shares
in issue during the year of 23,956,124 shares (2023: same).
Adjusted earnings per share in the year, both basic and diluted, were 7.4
pence (2023: loss of 3.1 pence) and were based on the Adjusted profit after
tax for the year of £1.8 million (2023: loss of £0.8 million).
Dividend
No dividends have been paid or proposed in the year (2023: £nil).
Assets
Non-current assets of £37.3 million (2023: £37.7 million) comprise goodwill
of £26.9 million (2023: £26.9 million), intangible assets of £7.3 million
(2023: £7.9 million), property, plant and equipment of £0.6 million (2023:
£0.3 million), IFRS16 right-of-use assets of £1.9 million (2023: £1.9
million), Investments of £0.4 million (2023: £0.5 million) and deferred tax
assets of £0.3 million (2023: £0.2 million).
The amortisation of intangibles and right-of-use assets more than offset the
addition of new software assets and IFRS16 leases in the year. Non-current
asset Investments have decreased by £0.1 million during the year, reflecting
the fair value movement in the Group's investment in DataWorks. Trade and
other receivables, excluding deferred consideration receivable and deferred
tax, have decreased by £0.8 million to £4.2 million (2023: £5.1 million).
Liabilities
Current liabilities fell by £1.9 million to £8.8 million (2023: £10.8
million) due to a reduction in Trade and other payables. Amounts payable under
the bank facility decreased by £1.3 million to £2.1 million (2023: £3.4
million) in line with the bank loan repayment schedule at the year-end date,
which requires £0.8 million of the term loans to be repaid within the next 12
months.
Non-current liabilities fell by £1.1 million to £1.7 million (2023: £2.8
million). Key changes in the year were a reduction in bank debt of £0.8
million and a reduction in lease liabilities of £0.3 million.
Financial Review continued
Capital and Reserves
Total equity increased by £0.1 million to £31.9 million (2023: £31.8
million), reflecting the total comprehensive profit for the year.
Liquidity and capital resources
At 31 March 2024, the Group had bank debt of £2.6 million (2023: £4.7
million), comprising amounts owed on term loans and amounts drawn down on a
revolving credit facility (RCF).
The Group had a term loan with £0.7 million outstanding (2023: £0.9 million)
taken out in July 2022 over a five-year period, with interest at 4.75% over
Bank of England interest rate. A further £1.8 million term loan was taken out
in March 2023 over an 18-month period, to part-fund disposal of the Shard
lease. This loan has the same interest rates and covenants as the Group's
existing term loan and £0.6 million was outstanding at 31 March 2024 (2023:
£1.8 million).
In addition, the Group has a £2.0 million RCF of which £1.3 million was
drawn and was outstanding at end of the financial year (2023: £2.0 million).
The Group had a cash and cash equivalents balance of £0.8 million (2023:
£2.1 million) and a net debt position of £1.9 million (2023: net debt of
£2.6 million).
Statement of Directors' Responsibilities
The directors are responsible for preparing the Audited Results Announcement
in accordance with applicable laws and regulations. The responsibility
statement below has been prepared in connection with the Company's full Annual
Report for the year ended 31 March 2024. Certain points thereof are not
included within this Audited Results Announcement.
The directors confirm to the best of their knowledge:
§ the consolidated financial statements, which have been prepared in
accordance with both international accounting standards in conformity with the
requirements of the Companies Act 2006 and international financial reporting
standards adopted in the UK, give a true and fair view of the assets,
liabilities, financial position and profit and loss of the Group; and
§ the Audited Results Announcement includes a fair review of the development
and performance of the business and the position of the Group together with a
description of the principal risks and uncertainties that it faces.
Financial Statements
Consolidated income statement
For the year ended 31 March 2024
2024 2023
Continuing Operations Note £'000 £'000
Revenue 3 19,895 18,585
Cost of sales (10,730) (10,033)
Gross profit 9,165 8,552
Administrative expenses (7,850) (12,628)
Other operating income 4 346 416
1,661 (3,660)
Operating profit/(loss) from Continuing Operations
Memorandum:
Adjusted EBITDA((1)) 3,989 2,652
Depreciation of property, plant and equipment 16 (173) (620)
Depreciation of right-of-use assets 25 (833) (1,313)
Amortisation of intangible assets acquired through business combinations 15 (587) (587)
Amortisation of software intangible assets 15 (345) (314)
Adjusted EBIT((2)) 2,051 (182)
Share-based payments 26 (63) (63)
Non-recurring items
Loss on disposal of Investments in Associates 5 - (303)
Loss on disposal of Shard lease 5 - (2,927)
People-related costs 5 (202) (123)
Fair value movement on Investments 5 (125) -
Other non-recurring items 5 - (62)
1,661 (3,660)
Operating profit/(loss) from Continuing Operations
Net finance expense 10,11 (777) (249)
Share of profit of Associate 18 - 252
Profit/(loss) before tax from Continuing Operations 7 884 (3,657)
Income tax (charge)/credit 12 (336) 88
Profit/(loss) for the year from Continuing Operations 548 (3,569)
(Loss)/profit for the year from Discontinued Operations 6 (354) 884
194 (2,685)
Profit/(loss) for the year
( )
((1)) Adjusted EBITDA is defined as the operating loss after adding back
depreciation, amortisation, share-based payments, and non-recurring items.
((2)) Adjusted EBIT is defined as the operating loss after adding back
share-based payments and non-recurring items.
100% of the loss is attributable to owners of the parent.
2024 2023
Note p per share p per share
Earnings per share (pence)
13 2.29p (14.90p)
Basic from Continuing Operations
13 2.29p (14.90p)
Diluted from Continuing Operations
13 (1.48p) 3.69p
Basic from Discontinued Operations
13 (1.48p) 3.69p
Diluted from Discontinued Operations
13 0.81p (11.21p)
Basic
13 0.81p (11.21p)
Diluted
The Notes to the consolidated financial statements form part of these
financial statements.
Consolidated statement of comprehensive income
For the year ended 31 March 2024
Note 2024 2023
£'000 £'000
Profit/(loss) for the year 194 (2,685)
Items that may be subsequently reclassified to Consolidated income:
Foreign currency translation:
Exchange differences on translation of foreign operations (138) (27)
Loss reclassified to Consolidated income on disposal of foreign - (48)
operations
(138) (75)
Remeasurement of defined benefits obligations 27 (15) 45
Other comprehensive income for the year (153) (30)
Total comprehensive profit/(loss) for the year 41 (2,715)
The Notes to the consolidated financial statements form part of these
financial statements.
Consolidated statement of financial position
As at 31 March 2024
2024 2023
Note £'000 £'000
Non-current assets
Goodwill 14 26,919 26,919
Intangible assets 15 7,300 7,908
Property, plant and equipment 16 584 341
Right-of-use assets 25 1,914 1,874
Investments 18 350 450
Deferred tax assets 23 277 184
Total non-current assets 37,344 37,676
Current assets
Trade and other receivables 20 4,299 5,502
Cash and cash equivalents 19,20 782 2,144
Total current assets 5,081 7,646
Total assets 42,425 45,322
Current liabilities
Trade and other payables 21 5,692 6,648
Defined benefit pension obligation 27 79 76
Bank loan / RCF 19, 22 2,091 3,373
Lease liability 25 977 678
Total current liabilities 8,839 10,775
Non-current liabilities
Defined benefit pension obligation 27 283 249
Bank Loan 19, 22 552 1,342
Lease liability 25 893 1,202
Total non-current liabilities 1,728 2,793
Capital and reserves
Issued capital 24 6,708 6,708
Share premium 1,067 1,067
Retained profit 10,541 10,347
Capital redemption reserve 13,680 13,680
Translation reserve (262) (124)
Other reserves (12) 3
Share option reserve 136 73
Total equity 31,858 31,754
Total equity and liabilities 42,425 45,322
The Notes to the consolidated financial statements form part of these
financial statements.
Consolidated statement of changes in equity
For the year ended 31 March 2024
Share Capital Share Total
Share Premium Retained redemption Translation Other option shareholders'
capital reserve((1)) earnings reserve((2)) reserve((3)) reserves reserve((4)) funds
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2022 6,708 1,067 13,032 13,680 (49) (42) 10 34,406
Total comprehensive income
Loss for the year - - (2,685) - - - - (2,685)
Currency translation differences - - - - (75) - - (75)
Remeasurement of defined benefit pension obligation - - - - - 45 - 45
Share-based payment - - - - - - 63 63
At 31 March 2023 6,708 1,067 10,347 13,680 (124) 3 73 31,754
At 1 April 2023 6,708 1,067 10,347 13,680 (124) 3 73 31,754
Total comprehensive income
Profit for the year - - 194 - - - - 194
Currency translation differences - - - - (138) - - (138)
Remeasurement of defined benefit pension obligation - - - - - (15) - (15)
Share based payments - - - - - - 63 63
At 31 March 2024 6,708 1,067 10,541 13,680 (262) (12) 136 31,858
1 The share premium reserve represents the amount paid to the Company by
shareholders above the nominal value of shares issued.
2 The capital redemption reserve is a non-distributable reserve created
on cancellation of deferred shares.
3 The translation reserve comprises foreign currency translation
differences arising from the translation of financial statements of the
Group's foreign entities into Sterling.
4 The share option reserve represents the cumulative expense recognised
in relation to equity-settled share-based payments.
The Notes to the consolidated financial statements form part of these
financial statements.
Consolidated statement of cash flows
For the year ended 31 March 2024
Note 2024 2023
£'000 £'000
Cash flows from operating activities
Profit/(loss) for the year 194 (2,685)
Depreciation of property, plant and equipment 16 173 678
Depreciation of right-of-use assets 25 833 1,338
Amortisation of intangible assets acquired through business combinations 15 587 770
Amortisation of other intangible assets 15 345 322
Share-based payments charge 26 63 63
Share of profit of Associate - (252)
Lease interest expense 25 124 298
Loss on disposal of fixed assets 7 2 -
Fair value movement on investments 5,18 125 -
Loss/(profit) on disposal of operations (before tax) 6 354 (2,074)
Loss on disposal of IFRS16 finance lease 5 - 2,927
Loss on disposal and impairment of investments in associates 5,18 - 303
Interest income 10 (26) (77)
Interest expense 11 407 378
Foreign exchange charge on operating items 6 1
Income tax charge 12 336 638
Operating cash flows before movement in working capital 3,523 2,628
Increase in inventories - (16)
Decrease/(Increase) in trade and other receivables 176 (1,520)
(Decrease)/Increase in trade and other payables (1,412) 233
Cash generated by operations 2,287 1,325
Taxation paid (426) (429)
Net cash generated from operating activities 1,861 896
Cash flows from investing activities
Interest and similar income received 10 26 77
Additions to intangible assets 15 (324) (175)
Additions to property, plant and equipment 16 (418) (69)
Acquisition of investment 18 (25) -
Proceeds from disposal of Associate - 654
Proceeds from disposal of operations 6 450 3,846
Repayment of long-term loan by Associate 28 - 210
Net cash generated from/(used in) investing activities (291) 4,543
Consolidated statement of cash flows continued
Note 2024 2023
£'000 £'000
Cash flows from financing activities
Interest and similar expenses paid (407) (378)
Payment of lease liabilities 25 (1,003) (1,901)
Receipt/(Payment) on disposal of lease liabilities 25 577 (3,683)
Net drawdowns/(repayments) on bank loans 19 (2,072) 337
Net cash used in financing activities (2,905) (5,625)
Net decrease in cash and cash equivalents (1,335) (186)
Opening cash and cash equivalents 2,144 2,321
Effect of exchange rate fluctuations on cash held (27) 9
Closing cash at bank 782 2,144
Comprised of:
Cash and cash equivalents 782 2,144
Closing cash at bank 20 782 2,144
The Notes to the consolidated financial statements form part of these
financial statements.
Notes to the consolidated financial statements
1. Statement of significant accounting policies and judgements
Merit Group plc is a public limited company incorporated in England and Wales.
Its registered office is 9(th) Floor, The Shard, 32 London Bridge Street,
London, SE1 9SG.
The consolidated financial statements of Merit Group plc have been prepared
and approved by the Directors in accordance with UK-adopted International
Accounting Standards in conformity with the requirements of the Companies Act
2006. The Company has elected to prepare its Parent Company financial
statements in accordance with FRS 102; these are presented after the notes to
the consolidated financial statements.
The consolidated financial statements consolidate those of the Company and its
subsidiaries (together referred to as the "Group"). The Parent Company
financial statements present information about the Company as a separate
entity and not about its Group.
The accounting policies set out below have, unless otherwise stated, or as
outlined in the 'Standards adopted' section below, been applied consistently
to all periods presented in these Group financial statements. The consolidated
financial statements and the Parent Company financial statements are presented
in Sterling (£) and are rounded to the nearest thousand pounds (unless stated
otherwise).
Judgements made by the Directors in the application of these accounting
policies that have a significant effect on the financial statements and
estimates with a significant risk of material adjustment in the next year are
discussed in Note 2.
Accounting developments
This report has been prepared based on the accounting policies detailed in the
Group's financial statements for the year ended 31 March 2024 and is
consistent with the policies applied in the previous financial year.
The following IFRS standards, amendments or interpretations became applicable
during the year ended 31 March 2024 but have not had a material effect on the
consolidated financial statements:
Standard Effective Date*
IFRS 17 Insurance Contracts 1 Jan 2023
Amendments to IFRS 17 Disclosure of accounting policies 1 Jan 2023
Amendments to IAS 1 Disclosure of accounting policies 1 Jan 2023
Amendments to IAS 8 Definition of accounting estimates 1 Jan 2023
Amendments to IAS 12 Deferred tax relating to assets and liabilities arising from a single 1 Jan 2023
transaction; and
International Tax Reform - Pillar Two Model Rules
*Effective for accounting periods starting on or after this date
There are no other new standards, amendments and interpretations which are
effective for periods beginning on or after 1 April 2023, which had any impact
on the Group's accounting policies and disclosures in these financial
statements.
1. Statement of significant accounting policies and judgements continued
New and revised accounting standards in issue but not yet effective
Accounting standards, amendments and interpretations issued, but not yet
effective, up to the date of the issuance of the consolidated financial
statements are disclosed below. The Group expects to adopt these standards, if
applicable, in the accounting period in which they become effective.
Standard Effective Date*
Amendments to IAS 1 Classification of Liabilities as Current or Non-Current; and 1 Jan 2024
Non-Current Liabilities with Covenants
Amendments to IAS 16 Lease Liability in a Sale and Leaseback 1 Jan 2024
Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements 1 Jan 2024
*Effective for accounting periods starting on or after this date
Basis of preparation
The financial statements have been prepared in accordance with applicable
accounting standards, and under the historical cost accounting rules, except
for forward contracts (stated at fair value at year end) and defined benefit
pension obligations (stated at the projected unit credit method in accordance
with IAS 19 at year end).
In addition to statutory disclosures, the Group also measures and presents
performance in relation to various other non-GAAP measures including Adjusted
EBITDA. Adjusted results are not intended to replace statutory results. These
have been presented to provide users with additional information and analysis
of the Group's performance, consistent with how the Board monitors results.
Adjusted EBITDA is presented to provide a more comparable indication of the
Group's core business performance by removing the impact of certain items,
including non-recurring items, depreciation and amortisation relating to
investment activities, share-based payments and other separately reported
items.
1. Statement of significant accounting policies and judgements continued
Going Concern
The Directors have considered the implications for going concern below, for a
period of at least twelve months from the signing of these accounts.
The Directors have prepared and approved monthly-phased projections for the 21
months from the balance sheet date. The Directors consider the projections to
be reasonable. The Directors have assessed the future funding requirements of
the Group within the projections, compared them with the level of available
borrowing facilities, and assessed the impact of them on the Group's cash
flow, facilities and headroom within its future banking covenants. In
addition, the Directors have considered reasonable downside risks and their
potential impact on the projections and headroom.
Based on this work, the Directors are satisfied that the Group has adequate
resources to continue in operational existence for the foreseeable future.
In the 12-month period from the balance sheet date, capital repayments of
£0.8 million on Term Loans were due to the bank, with the remaining £0.6
million Term Loan due in subsequent periods. The Group's Revolving Credit
Facility, of which £1.3 million was drawn and £0.7 million undrawn as at 31
March 2024, is available until July 2027.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control is achieved where
the Group is exposed to, or has rights to, variable returns and has the
ability to affect those returns. The results of subsidiaries acquired or sold
are included in the consolidated financial statements from the date that
control commences to the date that control ceases. Where necessary,
adjustments are made to the results of the acquired subsidiaries to align
their accounting policies with those of the Group. All intra-group
transactions, balances, income and expenditure are eliminated on
consolidation.
Business combinations
Business combinations are accounted for using the acquisition method at the
acquisition date, which is the date on which control is transferred to the
Group. In assessing control, the Group takes into consideration potential
voting rights that currently are exercisable.
The Group measures goodwill as the fair value of the consideration transferred
(including the fair value of any previously held equity interest in the
acquiree) and the recognised amount of any non-controlling interest in the
acquiree, less the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed, all measured as at the
acquisition date. When the excess is negative, a bargain purchase gain is
recognised immediately in the income statement.
Any contingent consideration payable is recognised at fair value at the
acquisition date. If the contingent consideration is classified as equity, it
is not remeasured and settlement is accounted for within equity. Otherwise,
subsequent changes to the fair value of the contingent consideration are
recognised in the income statement.
1. Statement of significant accounting policies and judgements continued
Revenue policy
Revenue is the total amount of income generated by the sale of goods or
services relating to the Group's primary operations. The Group has multiple
revenue streams, being revenue from Data, Software & Technology
Resourcing, Political Intelligence, and Political Engagement (now Discontinued
- see note 6).
Our Merit Data and Technology ("MD&T") business provides services within
Data and Software & Technology Resourcing. Across each of these services,
the performance obligation is the delivery of the service as agreed with the
client in the contract. The performance obligation is satisfied over time as
the customer simultaneously receives and consumes the benefits provided by the
Group or via periodic delivery of data where that is the contractual
requirement. Revenue is recognised either:
§ in line with the hours used under the contract for services in line with
our right to invoice for the actual hours used at a fixed contractual rate per
hour; or
§ on delivery of the data where this reflects the completion of the
contractual deliverable;
in each case in accordance with IFRS15 and dependent upon the nature of the
contractual arrangement.
Political Intelligence is a subscription-based service; the revenue is
recognised on a straight-line basis over the life of the subscription. The
performance obligation is the provision and availability of the subscription
platform; the obligation is deemed to be satisfied as the client has ongoing
access to the subscription platform. Where subscriptions are paid in advance,
the contract balances for services not yet delivered are treated as deferred
income.
Leases
A contract contains a lease if the contract gives a right to control the use
of an asset for a period of time in exchange for consideration. Leases which
meet the criteria of "short-term," for which the lease term is less than 12
months, or "low-value assets" are exempt from IFRS 16. Lease payments
associated with "short-term" and "low-value assets" are expensed on a
straight-line basis over the life of the lease.
For all other leases, at the lease commencement date, a right-of-use asset and
corresponding lease liability are recognised in the Consolidated statement of
financial position. The lease liability is initially measured at the present
value of the remaining lease payments, discounted using the Group's
incremental borrowing rate. Right-of-use assets are measured at the value of
the associated lease liability plus any initial direct costs incurred,
adjusted for any prepaid or accrued lease payments. The right-of-use asset is
initially recognised at cost, and subsequently measured at cost less
accumulated depreciation and impairment losses. Right-of-use assets are
depreciated over the shorter of the asset's useful life and the lease term on
a straight-line basis. The lease liability is increased by the interest cost
and decreased by the lease payments made.
Post-retirement benefits - defined contribution
The Group contributes to independent defined contribution pension schemes. The
amount charged to the profit and loss account represents the contributions
payable to the schemes in respect of the accounting period.
1. Statement of significant accounting policies and judgements continued
Defined benefits pensions
The Group operates a defined benefit pension plan for eligible employees based
in India. The assets of the scheme are held separately from those of the
Group.
Pension scheme assets are measured using market values. Pension scheme
liabilities are measured using the projected unit credit method.
Past service cost and settlement gains are recognised immediately in the
Consolidated income statement. Remeasurements comprising of actuarial gains
and losses as well as the difference between the return on plan assets and the
amounts included in net interest on the net defined benefit liability/asset,
are recognised in other comprehensive income (OCI), net of income taxes.
The pension scheme surplus (to the extent that it is recoverable) or deficit
is recognised in full.
Non-recurring items
Non-recurring items are items which in management's judgement need to be
disclosed by virtue of their size, incidence or nature. Such items are
included on the income statement on an independent line to which they relate
and are separately disclosed either in the notes to the consolidated financial
statements or on the face of the Consolidated income statement.
Non-recurring items are not in accordance with any specific IFRS definition
and therefore may be different to other companies' definition of non-recurring
items.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
Current tax is based on taxable profit for the year and any adjustment to tax
payable in respect of previous years. Taxable profit differs from net profit
as reported in the income statement because it excludes items of income or
expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible.
The Group's assets and liabilities for current tax are calculated using tax
rates that have been enacted or substantively enacted by the balance sheet
date.
Deferred tax is tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profit will be available against which temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of goodwill or
from the initial recognition of other assets and liabilities in a transaction
that affects neither the tax nor the accounting profit other than in a
business combination.
Deferred tax liabilities are recognised for temporary differences arising on
investments in subsidiaries except where the Group is able to control the
reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
1. Statement of significant accounting policies and judgements continued
Taxation (continued)
The carrying amount of the deferred tax asset is reviewed at each balance
sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax is calculated at the tax rates enacted or that are expected to
apply (substantively enacted) at the balance sheet dated when the liability is
settled or the asset is realised. Deferred tax is charged or credited to the
income statement, except when it relates to items charged or credited directly
to equity, in which case the deferred tax is also dealt with in equity.
Goodwill
Goodwill represents the difference between the cost of acquisition of a
business and the fair value of identifiable assets, liabilities and contingent
liabilities acquired. Identifiable intangibles are those which can be sold
separately or which arise from legal rights regardless of whether those rights
are separable. Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash generating units and is tested annually
for impairment. Any impairment is recognised immediately in profit or loss.
Intangible assets
Intangible assets acquired by the Group are stated at cost less accumulated
amortisation and impairment losses, if any. Intangible assets are amortised on
a straight-line basis over their useful lives in accordance with IAS 38
Intangible Assets. Intangible assets are not revalued. The amortisation period
and method are reviewed at each financial year end and are changed in
accordance with IAS 8 Accounting Policies, "Changes in Accounting Estimates
and Errors" if this is considered necessary. There were no changes from last
year. The estimated useful lives are as follows:
Publishing rights and brands 20-75 years (one specific right is deemed to have a useful economic life of 75
years)
Customer relationships 1-8 years
Customer list 4-8 years
Other assets 1 year
Software which is not integral to a related item of hardware is included in
intangible assets and amortised over its estimated useful lives of between
3-10 years. The salaries of staff employed in the development of new software
relating to the Group's information services products and salaries of staff
employed in building our digital platform architecture within the Group are
capitalised into software.
1. Statement of significant accounting policies and judgements continued
Intangible assets - research and development
Research costs are expensed as incurred. Development expenditure on an
individual project is recognised as an intangible asset when the Group can
demonstrate:
§ the technical feasibility of completing the intangible asset so that the
asset will be available for use;
§ its intention to complete and its ability and intention to use the asset;
§ how the asset will generate future economic benefits;
§ the availability of resources to complete the asset; and
§ the ability to measure reliably the expenditure during development.
Following initial recognition of the development expenditure as an asset, the
asset is carried at cost less any accumulated amortisation and accumulated
impairment losses.
Amortisation of the asset begins from the date development is complete and the
asset is available for use. It is amortised over the period of expected future
benefit. Amortisation is charged to the income statement. During the period of
development, the asset is tested for impairment.
The Directors assess the useful life of the completed capitalised projects to
be 3-10 years from the date of when benefits begin to be realised and
amortisation will begin at that time.
Intangible assets - Impairment
The carrying amounts of the Group's intangible assets are reviewed at each
reporting date to determine whether there is any indication of possible
impairment. If any such indication of possible impairment exists, then the
asset's recoverable amount is estimated and compared with the asset's carrying
value. For goodwill, the recoverable amount is estimated each year at each
balance sheet date.
The recoverable amount of an asset or cash-generating unit (CGU) is the
greater of its value in use and its fair value less costs to sell.
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 the purpose of impairment testing, assets are grouped together into the
smallest group of assets that generates cash inflows from continuing use that
are largely independent of the cash inflows of other assets or groups of
assets (the CGU). The goodwill acquired in a business combination, for the
purpose of impairment testing, is allocated to cash-generating units that are
expected to benefit from the synergies of the combination.
An impairment loss is recognised whenever the carrying amount of an asset or
its cash-generating unit exceeds its estimated recoverable amount. Impairment
losses are recognised in profit or loss. Impairment losses recognised in
respect of cash-generating units are allocated first to reduce the carrying
amount of any goodwill allocated to the units and then to reduce the carrying
amounts of the other assets in the unit (group of units) on a pro rata basis.
1. Statement of significant accounting policies and judgements continued
Intangible assets - Impairment (continued)
An impairment loss in respect of goodwill is not reversed. In respect of other
intangible assets, impairment losses recognised in prior periods are assessed
at each reporting date for any indications that the loss has decreased or no
longer exists. An impairment loss is reversed if there has been a change in
the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had been
recognised.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation
and impairment losses, if any.
Depreciation is provided to write off the cost less estimated residual value
of property, plant and equipment by equal instalments over their estimated
useful economic lives as follows:
Leasehold improvements Over the shorter of the life of the asset or lease period
IT Equipment, fixtures & fittings 3-10 years
Depreciation methods, useful lives and residual values are reviewed at each
balance sheet date.
Cash
Cash is represented by cash in hand and deposits with financial institutions
repayable without penalty on notice of not more than 24 hours. Cash
equivalents are highly liquid investments that mature in no more than three
months from the date of acquisition and that are readily convertible to known
amounts of cash with insignificant risk of change in value.
Foreign currencies
The individual financial statements of each Group Company are presented in the
currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each Group Company are
expressed in Pounds Sterling, which is the presentation currency of the Group.
In preparing the financial statements of the individual companies,
transactions in currencies other than the entity's functional currency
(foreign currencies) are recorded at the rates of exchange prevailing on the
dates of the transactions. At each balance sheet date, monetary assets and
liabilities that are denominated in foreign currencies are retranslated at the
rates prevailing on the balance sheet date.
Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated but remain at the exchange rate at the date of
the transaction.
1. Statement of significant accounting policies and judgements continued
Foreign currencies (continued)
Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in profit or loss for the
period. Exchange differences arising on the retranslation of non-monetary
items carried at fair value are included in the income statement for the
period except for differences arising on the retranslation of non-monetary
items in respect of which gains and losses are recognised directly in equity.
For such non-monetary items, any exchange component of that gain or loss is
also recognised directly in equity.
For the purpose of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations are translated at exchange
rates prevailing on the balance sheet date. Income and expense items are
translated at the average exchange rates for the period ended on the balance
sheet date. Exchange rate differences arising, if any, are recognised directly
in equity in the Group's translation reserve. Such translation differences are
recognised as income or as expense in the income statement in the period in
which the operation is disposed of.
Provisions
A provision is recognised on the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, and it is
probable that an outflow of economic benefits will be required to settle the
obligation.
Financial Instruments
Financial assets
Financial assets are recognised on the Group's Consolidated statement of
financial position when the Group becomes a party to the contractual
provisions of the instrument.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. Equity instruments
issued by the Company are recorded at the proceeds received, net of direct
issue costs.
Derivative financial instruments
All of the Group's derivatives and forward contracts are measured at their
fair value at the end of each period. Derivatives and forward contracts that
mature within one year are classified as current.
Financial assets
Financial Assets are measured at amortised cost, fair value through other
comprehensive income (FVTOCI) or fair value through income statement (FVTPL).
The measurement basis is determined by reference to both the business model
for managing the financial asset and the contractual cash flow characteristics
of the financial asset. The Group's financial assets comprise of trade and
other receivables and cash and cash equivalents.
Trade receivables
Trade receivables are measured at amortised costs and are carried at the
original invoice amount less allowances for expected credit losses.
1. Statement of significant accounting policies and judgements continued
Trade receivables (continued)
Expected credit losses are calculated in accordance with the simplified
approach permitted by IFRS 9, using a provision matrix applying a historical
credit loss experience to the trade receivables. The expected credit loss rate
varies depending on whether, and the extent to which, settlement of the trade
receivables is overdue, and it is also adjusted as appropriate to reflect
current economic conditions and estimates of future conditions. For the
purpose of determining credit loss rates, customers are classified into
groupings that have similar loss patterns. The key driver of the loss rates is
the ageing of the debtor. When a trade receivable is determined to have no
reasonable expectation of recovery it is written off, firstly against any
credit loss allowance available, and then to the income statement.
Subsequent recoveries of amounts previously provided for or written off are
credited to the income statement. Long term receivables are discounted where
the effect is material.
Financial Liabilities
The Group's financial liabilities consist of trade payables, loans and
borrowings, and other financial liabilities. Trade payables are non-interest
bearing. Trade payables are initially recognised at their fair value and
subsequently measured at their amortised cost. Loans and borrowings and other
financial liabilities are initially measured at fair value, net of transaction
costs, and are subsequently measured at amortised cost using the effective
interest rate method. Interest expense is measured on an effective interest
rate basis and recognised in the income statement over the relevant period.
Fixed asset investments
Investments in unlisted entities which are held for long term investment
purposes are held at fair value through profit and loss ("FVTPL"). The
carrying amount of the Group's fixed asset investments are reviewed at each
reporting date with changes in fair value recognised in other gains/(losses)
in the consolidated income statement.
Associated companies
Associated companies are entities over which the Group has significant
influence, but not control, generally accompanied by a shareholding giving
rise to voting rights of 20% and above, but not exceeding 50%. Investments in
associated companies are accounted for in the consolidated financial
statements using the equity method of accounting less impairment losses.
Investments in associated companies are initially recognised at cost. The cost
of an acquisition is measured at the fair value of the assets given, equity
instruments issued, or liabilities incurred or assumed at the date of
exchange, plus costs directly attributable to the acquisition. Periodically
management assesses whether there is any sign of impairment in the investment
in Associate, management make judgement in regard to the investee's ability to
fulfil financial obligations, significant adverse changes in the environment
where the investee operate. If management judges that evidence of impairment
exists, an impairment test will be conducted. The entire carrying amount of
the investment is tested for impairment as a single asset by comparing its
carrying amount to its recoverable amount. Recoverable amount is the higher of
value in use and fair value less costs to sell. If the carrying amount of an
investment in Associate is higher than its recoverable amount, an impairment
charge is recognised in the Consolidated income statement.
1. Statement of significant accounting policies and judgements continued
Associated companies (continued)
In applying the equity method of accounting, the Group's share of its
associated companies' post-acquisition profits or losses are recognised in the
income statement and its share of post-acquisition other comprehensive income
is recognised in other comprehensive income. These post-acquisition movements
and distributions received from the associated companies are adjusted against
the carrying amount of the investment. When the Group's share of losses in an
associated company equals or exceeds its interest in the associated company,
including any other unsecured non-current receivables, the Group does not
recognise further losses, unless it has obligations or has made payments on
behalf of the associated company.
Unrealised gains on transactions between the Group and its associated
companies are eliminated to the extent of the Group's interest in the
associated companies. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred.
Gains and losses arising from partial disposals or dilutions in investments in
associated companies are recognised in the income statement. Investments in
associated companies are derecognised when the Group loses significant
influence. Any retained interest in the entity is remeasured at its fair
value. The difference between the carrying amount of the retained investment
at the date when significant influence is lost and its fair value is
recognised in profit or loss.
Share based payments
Where share options are awarded to employees, the fair value of the options at
the date of grant is charged to the statement of comprehensive income on a
straight-line basis over the vesting period. Fair value is calculated using
the Monte Carlo simulation model, details of which are given in Note 26.
Non-market vesting conditions are taken into account by adjusting the number
of options expected to vest at each statement of financial position date so
that, ultimately, the cumulative amount recognised over the vesting period is
based on the number of options that eventually vest. Market vesting conditions
are factored into the fair value of the options granted. The cumulative
expense is not adjusted for failure to achieve a market vesting condition.
2. Critical accounting estimates and judgements and adopted IFRS not yet
effective
The key assumptions concerning the future and other key sources of estimation
and judgements at the balance sheet date that have a risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
Significant Judgements and Estimates
a) Continuing and Discontinued Operations
During the prior year, the Group completed the disposal of the Media, Events
and Training operations of its Dods segment, including the trade and assets of
Le Trombinoscope SAS, which together constituted the entire Media, Events and
Training operations of the Group. Further details of the disposals are
disclosed in Note 6. Whilst these operations were only part of the Dods CGU,
they generated approximately 60% of the revenues of that CGU and 35% of total
Group revenues. It was management's judgement that these operations
represented separate major lines of business, were part of a single
coordinated plan to dispose of that line of business, and given the scale of
these operations, it was appropriate to consider the disposed activities as
Discontinued Operations under IFRS 5. Accordingly, management adopted IFRS 5
disclosures in presenting the Consolidated Income Statement and supporting
Notes on a Continuing Operations basis, including the results of the
Discontinued Operations as a single line within the Consolidated Income
Statement and restating the comparative figures accordingly.
b) Going concern
Management applies judgement when determining to apply the going concern basis
for preparation of the financial statements, through evaluation of financial
performance and forecasts. See "Going concern" section on pages 41 to 42 for
further details.
c) Non-recurring administrative expenses
Due to the Group's significant restructuring and acquisition related activity
in recent years, there are a number of items which require judgement to be
applied in determining whether they are non-recurring in nature. In the
current year these relate largely to disposals, restructuring and redundancy
costs. See Note 5 for further details.
d) Impairment testing
Where indicators of a possible impairment are identified, the Directors use
the value in use or fair value less costs to sell to determine recoverable
value.
In the current year, the Directors have used the value in use model. The key
judgements and estimates required in this model are:
· the identification of cash-generating units (CGUs). The Directors
have judged that the primary CGUs used for impairment testing should be
MD&T and Dods;
· the assessment of value in use, which was derived from a discounted
cashflow model using the expected post-tax earnings and cashflows of each CGU;
and
· the estimated discount rate, which was based on management's estimate
of the long-term cost of capital available to the Group to fund each CGU.
In the prior year, the Directors used the fair value less costs to sell model.
The key judgements and estimates required in this model are:
2. Critical accounting estimates and judgements and adopted IFRS not yet
effective continued
Significant Judgements and Estimates continued
d) Impairment testing (continued)
· the identification of cash-generating units (CGUs). The Directors
have judged that the primary CGUs used for impairment testing should be
MD&T and Dods;
· the assessment of fair value, which was assessed using the expected
recurring earning of the CGUs and the average earnings multiples for a group
of listed businesses which the Directors consider comparable to the MD&T
and Dods CGUs and for which published information allowing a comparable
assessment is available, with the key judgement being the identification of
comparable entities for which the Directors used their own experience to
identify entities that could be considered comparable;
· the estimate of costs to sell, which was based on management's
knowledge and experience of costs incurred on transactions to buy and sell
similar assets.
See Note 14 for further details.
e) Capitalisation of development costs
Management applies judgement when determining the value of development costs
to be capitalised as an intangible asset in respect of its product development
program. Judgement includes the technical feasibility, intention and
availability of resources to complete the intangible asset so that the asset
will be available for use and assessment of likely future economic benefits.
Details of intangible assets capitalised are available in Note 15.
f) Recognition of deferred tax assets
Judgement is applied in the assessment of deferred tax assets in relation to
losses to be recognised in the financial statements. Deferred tax assets are
recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. The
carrying amount of deferred tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
See Note 23 for further details.
g) Investments
The Group takes into account the power over its investee, its exposure and
rights to variable returns from its involvement with the investee, and its
ability to use the power over the investee to affect the amount of the
investor's return to determine whether the investment is treated as an
Associate or a controlling interest. See Note 18 for further details. Where a
controlling interest exists, the investee is consolidated.
Adopted IFRS not yet applied
This report has been prepared based on the accounting policies detailed in the
Group's financial statements for the year ended 31 March 2024 and is
consistent with the policies applied in the previous financial year. There are
no other new standards, amendments and interpretations which are effective for
periods beginning on or after 1 April 2023, which had any impact on the
Group's accounting policies and disclosures in these financial statements.
None of the new standards, amendments and interpretations, which are effective
for periods beginning after 1 April 2023 and which have not been adopted
early, are expected to have a significant effect on the consolidated financial
statements of the Group.
3. Segmental information
The basis on which operating results are reviewed and resources allocated is
examined from both a business and geographic perspective by the senior
management team.
Business segments
The Group considers that it has two operating business segments, Merit Data
& Technology (MD&T) and Dods, plus a (non-revenue generating) central
corporate segment.
§ The Merit Data & Technology business segment focuses on the provision
of data, data engineering and machine learning, and on the provision of
software and technology resourcing.
§ The Dods business segment concentrates on the provision of key information
and insights into the political and public policy environments around the UK
and the European Union.
§ The central corporate segment contains the activities and costs associated
with the Group's head office functions.
On 30 November 2022, the Group completed the disposal of the Media, Events and
Trading operations (the 'MET operations') of its Dods segment. On 13 January
2023, the Group completed the disposal of the trade and assets of Le
Trombinoscope from its Dods segment. Prior year figures are presented on a
Continuing Operations basis, excluding the results of these disposed
operations (the "Discontinued Operations"), as outlined in Note 6.
The following table provides an analysis of the Group's segment revenue by
business segment.
2024 2023
Revenue by business segment - continuing operations((1)) £'000 £'000
Merit Data & Technology 12,869 11,644
Dods 7,026 6,941
19,895 18,585
((1) ) Comparative figures for the year ended 31 March 2023
include Continuing Operations only, as outlined in Note 6.
No client accounted for more than 10 percent of total revenue.
2024 2023
Revenue by stream - continuing operations((1)) £'000 £'000
Data 6,760 6,743
Software & Technology Resourcing 6,109 4,901
Political Intelligence 7,026 6,941
19,895 18,585
((1) ) Comparative figures for the year ended 31 March 2023
include Continuing Operations only, as outlined in Note 6.
3. Segmental information continued
2024 Profit/(loss) before tax by business segment MD&T Dods Central Total
2024 2024 2024 2024
Continuing operations £'000 £'000 £'000 £'000
Adjusted EBITDA 2,761 2,249 (1,021) 3,989
Depreciation of property, plant and equipment (98) (75) - (173)
Depreciation of right-of-use assets (517) (316) - (833)
Amortisation of intangible assets acquired through business combinations (510) (77) - (587)
Amortisation of software intangible assets (61) (284) - (345)
Share based payments - - (63) (63)
Non-recurring items
Profits and losses on disposals - - - -
People-related costs - (27) (175) (202)
Other non-recurring items - - (125) (125)
Operating profit/(loss) 1,575 1,470 (1,384) 1,661
Net finance expense (297) (98) (382) (777)
Share of profit of Associate - - - -
Profit/(loss) before tax from continuing operations 1,278 1,372 (1,766) 884
2023 Profit/(loss) before tax by business segment MD&T Dods Central Total
2023 2023 2023 2023
Continuing operations((1)) £'000 £'000 £'000 £'000
Adjusted EBITDA 1,809 1,838 (995) 2,652
Depreciation of property, plant and equipment (252) (368) - (620)
Depreciation of right-of-use assets (552) (517) (244) (1,313)
Amortisation of intangible assets acquired through business combinations (510) (77) - (587)
Amortisation of software intangible assets - (314) - (314)
Share based payments - - (63) (63)
Non-recurring items
Profits and losses on disposals - - (3,230) (3,230)
People-related costs (35) 10 (98) (123)
Other non-recurring items - - (62) (62)
Operating profit/(loss) 460 572 (4,692) (3,660)
Net finance expense 83 (226) (106) (249)
Share of profit of Associate - - 252 252
Profit/(loss) before tax from continuing operations 543 346 (4,546) (3,657)
((1) ) Comparative figures for the year ended 31 March 2023
include Continuing Operations only, as outlined in Note 6.
3. Segmental information continued
Geographical segments
The following table provides an analysis of the Group's segment revenue by
geographical market. Segment revenue is based on the geographical location of
customers.
Revenue by geographical segment - continuing operations((1)) 2024 2023
£'000 £'000
UK 15,811 15,333
Belgium 1,857 1,707
USA 619 662
Germany 475 424
France 322 321
Rest of world 811 138
19,895 18,585
((1) ) Comparative figures for the year ended 31 March 2023
include Continuing Operations only, as outlined in Note 6.
2024 2023
(restated *)
Non-current assets by geographical segment((2)) £'000 £'000
UK 34,928 35,136
Goodwill 26,919 26,919
Intangible assets 7,267 7,873
Property, plant and equipment 61 76
Right-of-use asset 681 268
India 1,789 1,906
Intangible assets 33 35
Property, plant and equipment 523 265
Right-of-use asset 1,233 1,606
36,717 37,042
((2) ) Excluding Investments held as non-current assets (see Note
18) and deferred tax assets (see Note 23).
* Prior period numbers have been restated to correctly disclose £35,000 of
intangible assets held in India, which had previously been categorised as held
within the UK.
3. Segmental information continued
Group Deferred revenue
The following table provides an analysis of the Group's deferred revenue:
2024 2023
Aggregate Deferred Revenue £'000 £'000
Merit Date & Technology - 10
Dods 3,073 3,132
3,073 3,142
Of revenue deferred at the year-end date, the Group expects to recognise
£2,830,000 over the next year ending 31 March 2025.
During the current year, the Group recognised £2,882,000 of deferred revenue
from the prior period, based on the performance obligation being satisfied.
The remaining £260,000 is yet to be recognised, and is expected to be
recognised in the year ending 31 March 2025. This also forms part of the
current year balance.
4. Other operating income
During the year and the prior year, the Group provided transitional services
to the Political Holdings Limited group, the purchaser of the disposed Media,
Events and Training operations, as part of the agreed disposal. These services
included finance, IT and occupancy services, for which the costs are primarily
incurred within the Dods segment. The fees of £346,000 arising in the year
have been recognised within Other operating income (4 months to 31 March 2023:
£416,000).
5. Non-recurring items
2024 2023
Continuing operations((1)) £'000 £'000
Fair value movement on Investments (125) -
People-related costs (202) (123)
Other: Professional services, consultancy and finance fees - (62)
Transaction-related non-recurring items:
Loss on disposal of investments in Associates - (303)
Loss on disposal of Shard lease - (2,927)
(327) (3,415)
((1) ) Comparative figures for the year ended 31 March 2023
include Continuing Operations only, as outlined in Note 6.
Fair value movements on investments relate to the valuation of the Group's
investment in unlisted entities (see Note 18).
People-related costs include redundancy costs reflecting the effect of Group
initiatives to appropriately restructure the Board and the business.
Other non-recurring costs in the prior year relate to one-off professional
fees in respect of the debt refinancing associated with the assignment of the
former London lease. These costs are classified as non-recurring as they
related to a one-off exercise, and are therefore highly unlikely to arise
again.
6. Disposal
On 30 November 2022, the Group completed the disposal of the Media, Events and
Training operations of its Dods segment (together, the "MET Operations") for a
cash consideration of £4.5 million to Political Holdings Limited.
On 12 January 2023, the Group completed the disposal of the trade and assets
of Le Trombinoscope SAS, the Paris-based activities of the Dods segment ("Le
Trombinoscope") to Trombimedia Limited for £0.1 million cash consideration.
As a consequence of the disposals, the activities of the MET Operations and Le
Trombinoscope were classified as Discontinued Operations in the Consolidated
income statement.
6. Disposal continued
The results of Discontinued Operations for the year, which for 2023 includes
the results of the MET operations for 8 months and Le Trombinoscope for 9.5
months, are as follows:
6(a) - Profit from Discontinued Operations
Discontinued Operations 2024 2023
£'000 £'000
Revenue - 6,913
Cost of sales - (5,861)
- 1,052
Gross profit
Administrative expenses - (1,450)
Other operating income - -
- (398)
Operating loss
Memorandum:
- (69)
Adjusted EBITDA
- (58)
Depreciation of property, plant and equipment
Depreciation of right-of-use assets - (25)
Amortisation of intangible assets acquired through business combinations - (183)
Amortisation of software intangible assets - (8)
Non-recurring items - people-related costs - (55)
- (398)
Operating loss
Net finance expense - (66)
Loss before tax - (464)
- 58
Income tax credit
- (406)
Loss for the period from Discontinued Operations
(354) 1,290
(Loss)/profit on disposal of Discontinued Operations after tax
(see note 6(c))
(354) 884
(Loss)/profit from Discontinued Operations for the period
6. Disposal continued
6(b) - Cashflows from Discontinued Operations
Cashflows generated by the Discontinued Operation for the period were as
follows:
Discontinued Operations 2024 2023
£'000 £'000
Net cash outflow from operating activities - (1,621)
Net cash inflow from investing activities 450 3,846
Net cash outflow from financing activities - (95)
450 2,130
Net increase in cash, cash equivalents and bank overdrafts from Discontinued
Operations
6(c) Disposal details
2024 2023
£'000 £'000
Consideration received and receivable:
Cash (net of transaction costs) - 3,846
Deferred consideration - 450
Total disposal consideration - 4,296
Carrying amount of net assets sold 354 2,290
(Loss)/gain on disposal before tax and reclassification of foreign currency (354) 2,006
translation reserve
Reclassification of foreign currency translation reserve - 68
Tax charge on disposal - (784)
(Loss)/profit on disposal of Discontinued Operations after tax (354) 1,290
7. Profit/(loss) before tax
Profit/(loss) before tax from Continuing Operations((1)) has been arrived at
after charging / (crediting):
Note 2024 2023
Continuing Operations((1)): £'000 £'000
Depreciation of property, plant and equipment 16 173 620
Depreciation of right-of-use assets 25 833 1,313
Amortisation of intangible assets acquired through business combinations 15 587 587
Amortisation of software intangible assets 15 345 314
Staff costs 9 11,296 11,991
Non-IFRS16 operating lease expense 25 41 40
Non-recurring items 5 327 3,415
Share of profit of Associate 18 - 252
Interest income 10 (26) (77)
Interest expense 11 531 607
Net foreign exchange loss/(gain) 10 250 (297)
Loss on disposal of fixed assets 16 2 -
((1) ) Comparative figures for the year ended 31 March 2023
include Continuing Operations only, as outlined in Note 6.
Profit/(loss) before tax has been arrived at after charging:
2024 2023
Auditor's remuneration £'000 £'000
Fees payable to the Company's auditor for the audit of the Company's 50 51
annual accounts
Fees payable to the Company's auditor and its associates for other services:
- The audit of the Company's subsidiaries, pursuant to legislation 50 137
- Non-audit services in relation to review of interim accounts - 5
- Non-audit services in relation to review of ERS tax returns - 4
100 197
8. Directors' remuneration
The remuneration of the Directors of the Group for the years ended 31 March
2024 and 31 March 2023 is set out below:
Salaries Committee Pension Other
/fees Bonus fees Contrib'ns Benefits((8)) Total
£ £ £ £ £ £
Executive Directors
Philip Machray((1)) 2024 212,083 28,500 - 8,483 2,284 251,350
CEO and CFO 2023 197,900 25,000 - 658 2,071 225,629
Cornelius Conlon 2024 151,372 - - 3,375 33,532 188,279
Managing Director 2023 153,459 - - 3,375 270,708 427,542
David Beck((2)) 2024 189,583 - - 7,583 150,977 348,143
Former CEO 2023 227,820 25,000 - - 2,379 255,199
Munira Ibrahim((3)) 2024 - - - - - -
Former Managing Director 2023 145,000 - - 5,800 149,379 300,179
Non-Executive Directors
Lord Ashcroft KCMG PC((4)) 2024 - - - - - -
Non-Executive Director 2023 - - - - - -
Richard Boon((5)) 2024 2,083 - 417 - - 2,500
Non-Executive Director 2023 25,000 - 5,000 - - 30,000
Angela Entwistle((6)) 2024 25,000 - 5,000 - - 30,000
Non-Executive Director 2023 25,000 - 5,000 - - 30,000
Diane Lees 2024 25,000 - 5,000 - 9,500 39,500
Non-Executive Director 2023 25,000 - 5,000 - - 30,000
Mark Smith 2024 50,000 - 5,000 - - 55,000
Non-Executive Chairman 2023 50,000 - 5,000 - - 55,000
Vijay Vaghela((5)) 2024 2,083 - 833 - - 2,916
Non-Executive Director 2023 25,000 - 10,000 - - 35,000
Tim Briant((7)) 2024 2,276 - 455 - - 2,731
Non-Executive Director 2023 - - - - - -
Total for 2024 659,480 28,500 16,705 19,441 196,293 920,419
Total for 2023 874,179 50,000 30,000 9,833 424,537 1,388,549
1 Chief Financial Officer additionally appointed as Chief Executive
Officer from 26 January 2024.
2 Resigned as Chief Executive Officer on 26 January 2024.
3 Resigned as a Director on 30 November 2022.
4 Lord Ashcroft was appointed to the Board on 13 December 2022 and
resigned on 26 April 2024. During the period he received £nil remuneration.
5 Resigned as a Director on 31 January 2023.
6 The £30,000 (2023: £30,000) paid for the services of Angela Entwistle as
a Non-Executive Director is paid to Deacon Street Partners Limited. See also
related party transactions - Note 28.
7 Appointed as a Director on 28 February 2024.
8 Other benefits are health insurance, overseas living allowance, and (i)
deferred cash consideration on acquisition of Meritgroup Limited in respect of
Cornelius Conlon, and (ii) redundancy and compensation for loss of office
payments in respect of David Beck and Munira Ibrahim.
During FY24, the highest paid Director received remuneration of £348,143,
which included pension contributions of £7,583. In 2023, the highest paid
Director received remuneration of £427,542, which included pension
contributions of £3,375.
During the year, three (2023: three) directors accrued benefits under money
purchase pension schemes.
The current Directors and their interests in the share capital of the Company
at 31 March 2024 are disclosed within the Directors' Report on page 26.
9. Staff costs
The average number of persons employed by the Group (including Executive
Directors) during the year within each category was:
2024 2023
Continuing Operations((1)) Number Number
Editorial and production staff 41 39
Sales and marketing staff 30 17
Managerial and administration staff 100 17
Technology and support staff 788 904
959 977
2024 2023
Continuing Operations((1)) £'000 £'000
Wages and salaries 10,319 10,810
Social security costs 783 976
Pension and other costs 131 142
Share-based payment charge/(credit) 63 63
11,296 11,991
((1) ) Comparative figures for the year ended 31 March 2023
include Continuing Operations only, as outlined in Note 6.
Staff costs do not include deferred cash consideration in relation to the
Meritgroup Limited acquisition. This is treated as non-recurring (see Note 5)
and is included in Directors' Remuneration (see Note 8).
10. Finance income
2024 2023
Continuing Operations((1)) £'000 £'000
Bank interest income 26 77
Pension finance credit 3 8
Net foreign exchange gain((2)) - 297
29 382
((1) ) Comparative figures for the year ended 31 March 2023
include Continuing Operations only, as outlined in Note 6.
((2) ) Net foreign exchange gain/(loss) includes £203k FX loss
on derivatives (2023: £5k FX loss).
11. Finance expense
2024 2023
Continuing Operations((1)) £'000 £'000
Bank interest expense 407 313
Pension finance charge 25 24
Lease interest expense 124 294
Net foreign exchange loss((2)) 250 -
806 631
((1) ) Comparative figures for the year ended 31 March 2023
include Continuing Operations only, as outlined in Note 6.
((2) ) Net foreign exchange gain/(loss) includes £203k FX loss
on derivatives (2023: £5k FX loss).
((3) )
12. Income tax credit
2024 2023
Continuing Operations((1)) £'000 £'000
Current tax
Current tax on income for the year at 25% (2023: 19%) - 32
Adjustments in respect of prior periods 13 10
13 42
Overseas tax
Current tax expense on income for the year 424 364
Total current tax expense 437 406
Deferred tax (see Note 23)
Origination and reversal of temporary differences (120) (416)
Effect of change in tax rate - -
Adjustments in respect of prior periods 19 (78)
Total deferred tax income (101) (494)
Total income tax charge/(credit) 336 (88)
((1) ) Comparative figures for the year ended 31 March 2023
include Continuing Operations only, as outlined in Note 6.
The tax charge for the year differs from the standard rate of corporation tax
in the UK of 25% (2023: 19%). A reconciliation is provided in the table below:
2024 2023
Continuing Operations((1)) £'000 £'000
Profit/(loss) before tax 884 (3,657)
221 (695)
Notional tax charge/(credit) at standard rate of 25% (2023: 19%)
Effects of:
Expenses not deductible for tax purposes 63 429
Non-qualifying depreciation 7 -
Adjustments to brought forward value 19 (78)
Non-taxable income (5) -
Deferred tax not recognised - 32
Utilisation of losses not provided for (81) 5
Tax losses carried forward 56 104
Adjustment to agree foreign tax charge 42 119
Other 14 (4)
Total income tax charge/(credit) 336 (88)
((1) ) Comparative figures for the year ended 31 March 2023
include Continuing Operations only, as outlined in Note 6.
13. Earnings per share
2024 2023
Continuing Operations((1)) £'000 £'000
Profit/(loss) attributable to shareholders 548 (3,569)
Add: non-recurring items 327 3,415
Add: amortisation of intangible assets acquired through business combinations 587 587
Add: net exchange losses/(gains) (Note 11 / Note 10) 250 (297)
Add: share-based payment expense 63 63
Adjusted post-tax profit attributable to shareholders 1,775 199
((1) ) Comparative figures for the year ended 31 March 2023
include Continuing Operations only, as outlined in Note 6.
2024 2023
Discontinued Operations £'000 £'000
(Loss)/profit attributable to shareholders (354) 884
Add: non-recurring items 354 (2,019)
Add: amortisation of intangible assets acquired through business combinations - 183
Adjusted post-tax profit/(loss) attributable to shareholders - (952)
2024 2023
Ordinary Ordinary
shares shares
Weighted average number of shares
In issue during the year - basic 23,956,124 23,956,124
Adjustment for share options - -
In issue during the year - diluted 23,956,124 23,956,124
Performance Share Plan (PSP) options over 1,420,791 Ordinary shares have not
been included in the calculation of diluted EPS for the year ended 31 March
2024 because their exercise is contingent on the satisfaction of certain
criteria that had not been met at that date.
13. Earnings per share continued
2024 2023
Pence Pence
Continuing Operations((1)) per share per share
Earnings per share - continuing operations
Basic 2.29 (14.90)
Diluted 2.29 (14.90)
Adjusted earnings per share - continuing operations
Basic 7.41 0.83
Diluted 7.41 0.83
((1) ) Comparative figures for the year ended 31 March 2023
include Continuing Operations only, as outlined in Note 6.
2024 2023
Pence Pence
Discontinued Operations per share per share
Earnings per share - discontinued operations
Basic (1.48) 3.69
Diluted (1.48) 3.69
Adjusted earnings per share - discontinued operations
Basic - (3.97)
Diluted - (3.97)
2024 2023
Pence Pence
TOTAL per share per share
Earnings per share
Basic 0.81 (11.21)
Diluted 0.81 (11.21)
Adjusted earnings per share
Basic 7.41 (3.14)
Diluted 7.41 (3.14)
14. Goodwill
2024 2023
£'000 £'000
Cost as at 1 April 26,919 28,911
Disposals in the year - (1,992)
Cost as at 31 March 26,919 26,919
Goodwill acquired in a business combination is allocated at acquisition to the
cash-generating units (CGUs) that are expected to benefit from that business
combination. The CGU is the smallest identifiable group of assets that
generates cash inflows that are largely independent of the cashflows from
other groups of assets. Management determined that the smallest level that
they could reasonably allocate the group of assets to was MD&T CGU and
Dods CGU.
Of the carrying value of goodwill, £15.6 million has been allocated to the
MD&T CGU (2023: £15.6 million), and £11.3 million had been allocated to
the Dods CGU (2023: £11.3 million).
Goodwill is not amortised but is tested annually for impairment.
In the prior year, the assessment for impairment was undertaken with the
recoverable amount being determined as fair value less costs to sell, under
Level 3 of the fair value hierarchy of IFRS 13, the key assumptions being the
assessment of fair value and the estimate of costs to sell. The Group assessed
fair value using the expected recurring earnings of the CGUs, based on the
Board's approved projections, and the average earnings multiples for a group
of listed businesses which the Directors considered comparable to the MD&T
and Dods CGUs and for which published information allowing a comparable
assessment was available. The estimate of costs to sell was based on
management's knowledge and experience of costs incurred on transactions to buy
and sell similar assets.
In the current year, the assessment for impairment has been undertaken with
the recoverable amount being determined from value in use calculations. The
key assumptions for the value in use calculations are those regarding the
discount rate, growth rates and forecasts of income and costs. The Group
assessed whether the carrying value of goodwill was supported by the
discounted cash flow forecasts of the Group based on financial forecasts
approved by management covering a five-year period, considering past
performance, known developments and committed plans, and expectations for
future business developments. Management selected a pre-tax discount rate
(14.3%) reflective of the Group's estimated weighted average cost of capital
and the cost of debt financing for the Group, which it considered reflected
the market assessments of the time value of money and the risks specific to
each separate business.
The Directors have changed the basis for assessment as they consider the value
in use method to be more applicable to the Group's circumstances and strategy.
Based on the above assessments, the Directors concluded at each year-end that
the recoverable amount for each CGU was in excess of their carrying value,
including the value of goodwill, for both the MD&T and Dods CGUs.
Therefore no impairment charge was recognised in the year (2023: £nil).
15. Intangible assets
Under construction capitalised costs
Assets acquired
through business
combinations(1) Software Total
£'000 £'000 £'000 £'000
Cost
28,042 6,074 - 34,116
At 1 April 2022
Transferred from tangible fixed assets - - 70 70
Additions - internally generated - 101 74 175
Disposals (16,833) (3,999) - (20,832)
11,209 2,176 144 13,529
At 31 March 2023
Additions - internally generated - 22 302 324
Software brought into use - 144 (144) -
At 31 March 2024 11,209 2,342 302 13,853
Accumulated amortisation
20,145 4,145 - 24,290
At 1 April 2022
Charge for the year 770 322 - 1,092
Disposals (15,825) (3,936) - (19,761)
5,090 531 - 5,621
At 31 March 2023
Charge for the year 587 345 - 932
At 31 March 2024 5,677 876 - 6,553
Net book value
6,119 1,645 144 7,908
At 31 March 2023
At 31 March 2024 5,532 1,466 302 7,300
( )
( )
(1) Assets acquired through business combinations, summarised in the table
below, comprise:
15. Intangible assets continued
Publishing Customer
Assets acquired through business combinations: rights and Brand relationships Other
brands names and lists assets Total
£'000 £'000 £'000 £'000 £'000
Cost
18,934 1,277 7,677 154 28,042
At 1 April 2022
(13,451) (1,277) (2,051) (54) (16,833)
Disposals
5,483 - 5,626 100 11,209
At 31 March 2023
At 31 March 2024 5,483 - 5,626 100 11,209
Accumulated amortisation
13,742 1,277 4,972 154 20,145
At 1 April 2022
260 - 510 - 770
Charge for the year
(12,443) (1,277) (2,051) (54) (15,825)
Disposals
1,559 - 3,431 100 5,090
At 31 March 2023
76 - 511 - 587
Charge for the year
At 31 March 2024 1,635 - 3,942 100 5,677
Net book value
3,924 - 2,195 - 6,119
At 31 March 2023
At 31 March 2024 3,848 - 1,684 - 5,532
The carrying value of publishing rights with a useful economic life of 75
years is £3.8 million (2023: £3.9 million).
Included within intangible assets are internally generated assets with a net
book value of £1.9 million (2023: £1.8 million).
During the period there was an expense of £0.4 million to the Consolidated
income statement for Research & Development (2023: £nil).
16. Property, plant and equipment
Leasehold Improvements IT Equipment and Fixtures and Fittings
Total
£'000 £'000 £'000
Cost
2,037 2,521 4,558
At 1 April 2022
Transferred to intangible fixed assets - (70) (70)
Additions - 69 69
Foreign exchange differences - (1) (1)
Disposals (2,037) (1,070) (3,107)
- 1,449 1,449
At 31 March 2023
Additions 93 325 418
Disposals - (4) (4)
At 31 March 2024 93 1,770 1,863
Accumulated depreciation
1,128 1,623 2,751
At 1 April 2022
Charge for the year 209 469 678
Disposals (1,337) (984) (2,321)
- 1,108 1,108
At 31 March 2023
Charge for the year 23 150 173
Disposals - (2) (2)
At 31 March 2024 23 1,256 1,279
Net book value
- 341 341
At 31 March 2023
At 31 March 2024 70 514 584
17. Subsidiaries
Company Activity % holding Country of registration
Dods Group Limited(1) Political monitoring 100 England and Wales
Le Trombinoscope SAS(2) Political monitoring 100 France
Merit Data & Technology Limited(1) Data and technology 100 England and Wales
Merit Data and Technology Private Limited(3) Data and technology 99.99 India
European Parliamentary Communications Services SPRL(4) Dormant 100 Belgium
1 Registered address: 9th Floor, The Shard, 32 London Bridge Street,
London, SE1 9SG.
2 Registered address: Tour Voltaire, 1 place des Degrés - La Défense,
92800 Puteaux, Paris, France.
3 Registered address: SP 52, 3(rd) Street, Ambattur Industrial Estate,
Chennai 600 058.
4 Registered address: Boulevard Charlemagne 1, 1041 Bruxelles, Belgium.
18. Investments
Investments are presented on the balance sheet as follows:
2024 2023
£'000 £'000
Non-current asset investments
Investments in Associates - -
Other Unlisted Investments 350 450
350 450
The above balances are represented by:
2024 2023
£'000 £'000
Investments in Associates - -
Other unlisted investments 350 450
350 450
18. Investments continued
Investments in Associates
During the prior year, the Group disposed of its shareholdings in both of its
former Associates, Sans Frontières Associates Ltd (SFA) and Social 360
Limited. The entities each had share capital consisting solely of ordinary
shares, which were held directly by the Group prior to disposal. The Group
accounted for both entities as equity-accounted Associates up to the date of
disposal.
The total share of profit recognised from Associates during the prior year,
which was based on the unaudited management accounts as 31 March 2023, was
£220k. The Group recognised a loss on disposal of Associates of £303k during
the prior year.
Other unlisted Investments
Fair value 2024 2023
£'000 £'000
At 01 April 450 450
Additions 75 51
Disposals (50) -
Unrealised losses recognised though profit and loss (125) (51)
At 31 March 350 450
In 2019, The Group acquired a 13.3% stake in Acolyte Resource Group Limited as
part of the acquisition of Meritgroup Limited. Acolyte Resource Group Limited
is an unlisted business registered in and operated from England & Wales
and is engaged in the development and operation of an online recruitment
platform. The Group's investment was written down to £nil on acquisition.
During the prior year, the Group participated in a fundraising round by
Acolyte Resource Group Limited via a debt-for-equity swap and increased its
shareholding to 13.5%. The £51k book cost of this investment was written off
during the year.
During the current financial year, the Group consented to the conversion of
£50,000 of trade debts owed to it from Acolyte Resources Group Limited into
Convertible Loan Notes in that company. This was treated as an acquisition of
investment with a cost equivalent to the fair value of those trade debts.
The Group subsequently sold its entire equity holding in Acolyte Resources
Group Limited for deferred, contingent consideration, including the repayment
of the Convertible Loan Note. The directors consider the fair value of this
consideration at the date of disposal and at the balance sheet date to be
£50,000. The consideration remains outstanding at the balance sheet date.
18. Investments continued
In 2022, the Group acquired a 9.2% stake in Web Data Works Limited
("DataWorks") for £450k. DataWorks is an unlisted business registered in and
operated from the Republic of Ireland, engaged in the development of
e-commerce data management software and applications.
After taking into account the Group's voting rights, exposure and rights to
variable returns from its involvement with the investee, and its ability to
use the power over the investee to affect the amount of investor's return, the
Directors have concluded that the Group does not have a significant influence
over DataWorks. The investment is therefore carried as a fixed asset
investment at fair value through profit and loss.
The Directors' assessment of the fair value of other unlisted investments
falls within Level 3 of the fair value hierarchy of IFRS 13. This assessment
has been based on management's experience of investing in unlisted investments
and the financial information, including financial projections, received from
the investee companies. As such, the fair value can be subject to material
change as the investee business develops and performs over time.
The Directors have determined that the fair value (FVTPL) of each investment
is as follows:
Investee entity 2024 2023
£'000 £'000
Acolyte Resource Group Limited - -
Web Data Works Limited 350 450
A loss of £125,000 in respect of these investments has been recognised in the
year (2023: loss of £51,000).
19. Financial instruments
The carrying amount of financial assets and liabilities recognised at the
balance sheet date of the reporting periods under review may also be
categorised as follows:
2024 2023
£'000 £'000
Financial assets
Trade and other receivables (amortised cost) 3,627 4,342
Deferred consideration receivable (amortised cost) 50 450
Cash and cash equivalents (amortised cost) 782 2,144
4,459 6,936
Financial liabilities
Trade and other payables (amortised cost) (2,416) (3,501)
Derivative Contracts (FVTPL*) (203) (5)
Lease liabilities (amortised cost) (1,870) (1,880)
Bank loan & RCF (amortised cost) (2,643) (4,715)
(7,132) (10,101)
Net financial liabilities (2,673) (3,165)
*FVTPL stands for "Fair value through profit and loss".
The deferred consideration receivable at 31 March 2024 was due within the next
12 months and accrued no interest (2023: same). Its fair value was therefore
the same as the booked value with no discounting of the outstanding amount.
Between 9 June 2023 and 5 March 2024, the Group signed forward contracts for a
total value of approximately £7.2 million with maturity dates ranging from 25
April 2024 to 25 March 2025. The forward contracts are for currency pairing of
GBP to INR.
The Group has exposure to several forms of risk through its use of financial
instruments. Details of these risks and the Group's policies for managing
these risks are included below.
19. Financial instruments continued
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations. The Group's principal financial assets are trade and other
receivables, and cash.
The Group's credit risk is primarily attributable to its trade receivables.
The amounts presented in the Consolidated statement of financial position are
net of allowances for doubtful receivables. The Group has no significant
concentration of credit risk, with exposure spread over a large number of
counterparties and customers.
At 31 March 2024, £485,000 of the Group's trade receivables were exposed to
risk in countries other than the United Kingdom (2023: £422,000).
The ageing of trade receivables at the reporting date was:
Provided Loss Allowance Provided Loss Allowance
Gross Gross
2024 2024 2023 2023
£'000 £'000 £'000 £'000
Trade Receivables 3,034 (82) 3,682 (82)
3,034 (82) 3,682 (82)
The maximum credit risk exposure for which the Group has made provision is
£82,000 (2023: £82,000).
Gross Default rate Lifetime expected
carrying amount credit losses*
£'000 £'000
Current 1,817 2.8% 50
1-30 days past due 1,024 0.8% 8
31-60 days past due 92 5.4% 5
61-90 days past due 36 9.9% 4
More than 90 days past due 65 22.7% 15
3,034 82
* Expected credit losses = Gross carrying amount x Default rate.
The movement in allowance for doubtful accounts in respect of trade
receivables during the year was as follows:
2024 2023
£'000 £'000
Balance at the beginning of the year 82 103
Charged in the year - -
Released in the year - (21)
Balance at the end of the year 82 82
19. Financial instruments continued
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The contractual cash flows of each
financial liability are materially the same as their carrying amount.
A reconciliation of the Group's liabilities arising from financing activities
is disclosed below.
Total
Bank Loan Lease Financing
and RCF Liabilities Liabilities
£'000 £'000 £'000
At 31 March 2022 4,378 6,721 11,099
Cash movements:
Repayment of 2019 Loan and RCF (4,378) - (4,378)
Drawdown of 2022 Term Loan and RCF 5,000 - 5,000
Repayment and cancellation of 2022 Term Loan (2,000) - (2,000)
Repayments of Term Loan principal (85) - (85)
Drawdown of 2023 Property Term Loan 1,800 - 1,800
Lease payments - (1,897) (1,897)
Non-cash movements:
Lease disposals - (3,242) (3,242)
Lease interest - 298 298
At 31 March 2023 4,715 1,880 6,595
Cash movements:
Repayment of Term Loan principal (172) - (172)
Repayment of 2023 Property Term Loan (1,200) - (1,200)
Repayment of RCF (700) - (700)
Lease payments - (1,007) (1,007)
Non-cash movements:
New leases - 873 873
Lease interest - 124 124
At 31 March 2024 2,643 1,870 4,513
19. Financial instruments continued
Banking covenants
Under the Group's bank facilities (see Note 22), the Group is subject to
selected covenant compliance tests on a rolling 12 month basis and at each
quarter end date. These covenant compliance tests are as follows:
Covenant Compliance test
Leverage ratio Gross debt shall not be more than x Adjusted EBITDA
Profit Cover Ratio Gross financing costs (capital & interest) shall not be less than x
Adjusted EBITDA
Cashflow Cover Ratio Gross financing costs (capital & interest) shall not be less than x
cashflow before financing
Adjusted EBITDA: earnings before interest, tax, depreciation &
amortisation adjusted for share based payments and non-recurring items.
Rolling 12 month basis, ending on: Leverage Profit Cashflow
Ratio Cover Ratio Cover Ratio
30 June 2024 1.5x 1.5x n/a
30 September 2024 1.5x 1.5x n/a
31 December 2024 1.5x 1.5x n/a
31 March 2025 1.5x 3.0x 1.5x
30 June 2025 1.0x 3.0x 1.5x
30 September 2025 1.0x 3.0x 1.5x
31 December 2025 and thereafter 1.0x 3.0x 1.5x
The Directors have prepared and approved monthly-phased projections for the 21
months from the balance sheet date. The Directors consider the projections to
be reasonable.
In agreeing to the above covenants, the projections were sensitised to ensure
suitable headroom to enable compliance with the covenant tests.
Based on this work the Directors are satisfied that the Group is unlikely to
breach any of the above covenants.
19. Financial instruments continued
Maturity of financial liabilities:
The table below analyses the Group's financial liabilities into relevant
maturity groupings based on their contractual maturities as at 31 March 2024.
The amounts disclosed in the table are the contractual undiscounted cash
flows.
Due within Due Due after
1 year 2-5 years 5 years Total
£'000 £'000 £'000 £'000
Trade and other payables 2,619 - - 2,619
Derivative contracts 203 - - 203
Bank loan/RCF 2,091 552 - 2,643
Lease liabilities 1,069 1,123 - 2,192
The Group has a long standing and supportive relationship with Barclays,
having agreed secured loan facilities for a five-year period to 2027 in July
2022 and an additional 18-month facility to part fund the disposal of the
Group's lease of premises in The Shard, London in March 2023. The Group has a
five-year plan that has been shared with Barclays and formed the basis of the
banking arrangements that have been put in place.
The Group has a strong track record on cash and working capital management and
carefully monitors its aged debtors to ensure its cash receipts are as
expected. The Group does not anticipate paying dividends to shareholders at
this time.
Currency risk
The Group is exposed to currency risk on transactions denominated in Euros, US
Dollars and Indian Rupees; see Notes 20 and 21.
Share capital
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. For further details of share capital, see Note 24.
Sensitivity analysis
In managing interest rate and currency risks, the Group aims to reduce the
impact of short-term fluctuations on the Group's earnings. Over the longer
term, however, changes in foreign exchange and interest rates would have an
impact on consolidated earnings. The balances of the financial assets and
liabilities exposed to these sensitivities are £478,000 Trade receivables,
£448,000 Cash and cash equivalents and £193,000 Trade payables for the year.
At 31 March 2024, it is estimated that a general increase of one percentage
point in interest rates would have decreased the Group's profit before tax by
approximately £26,000 (2023: £47,000).
It is estimated that a general increase of one percentage point in the value
of the Euro and Dollar against Sterling would have increased the Group's
profit before tax by approximately £24,000 (2023: £23,000).
It is estimated that a general increase of one percentage point in the value
of the Rupee against Sterling would have decreased the Group's profit before
tax by approximately £90,000 (2023: £84,000).
19. Financial instruments continued
Fair values
The Directors consider that the fair value of financial instruments is
materially the same as their carrying amounts.
Capital management
The Group manages its capital to ensure that all entities will be able to
continue as a going concern while maximising return to stakeholders, as well
as sustaining the future development of the business. The capital structure of
the Group consists of cash and cash equivalents and equity attributable to the
owners of the parent, comprising issued share capital, other reserves and
retained earnings.
2024 2023
Capital Management £'000 £'000
Cash & cash equivalents 782 2,144
Share Capital 6,708 6,708
Other reserves 14,610 14,699
Retained Earnings 10,586 10,976
32,686 34,527
20. Other financial assets
2024 2023
Trade and other receivables £'000 £'000
Trade receivables 2,952 3,600
Other receivables 675 742
Deferred consideration receivable 50 450
Prepayments and accrued income 622 710
4,299 5,502
Trade and other receivables denominated in currencies other than Sterling
comprise £386,000 (2023: £137,000) denominated in Euros, £92,000 (2023:
£24,000) denominated in USD and £nil (2023: £23,000) denominated in Indian
Rupees.
The Group had a balance of £141,000 of accrued income relating to contract
assets (2023: £56,000).
2024 2023
Cash related £'000 £'000
Cash and cash equivalents 782 2,144
782 2,144
Cash includes £101,000 (2023: £251,000) denominated in Euros, £20,000
(2023: £29,000) denominated in USD and £327,000 (2023: £541,000)
denominated in Indian Rupees.
21. Trade and other payables
2024 2023
Current £'000 £'000
Trade creditors 679 490
Other creditors including tax and social security 873 1,058
Accruals and deferred income 4,140 5,100
5,692 6,648
Current liabilities denominated in currencies other than Sterling compromise
£55,000 (2023: £21,000) denominated in Euros, £nil (2023: £7,000)
denominated in USD and £138,000 (2023: £235,000) denominated in Indian
Rupees.
The Group had a balance of £3,073,000 of deferred revenue relating to
contract liabilities (2023: £3,142,000).
22. Net debt
2024 2023
£'000 £'000
Bank loan / RCF due within one year 2,091 3,373
Bank loan due after more than one year 552 1,342
2,643 4,715
Cash and cash equivalents (782) (2,144)
Net debt 1,861 2,571
Interest-bearing loans and borrowings
On 22 July 2022, the Company agreed new secured loan facilities with Barclays
which include:
§ Term Loan: a £3 million, five-year term loan, amortising on a
straight-line basis at £150,000 per quarter;
§ RCF: a £2 million non-amortising, revolving credit facility for the
five-year duration of the Term Loan;
§ Both the Term Loan and RCF accruing interest at 4.75% above Bank of England
base rate.
On 1 December 2022, the Company repaid and cancelled £2 million of the Term
Loan following receipt of the proceeds of disposals.
On 22 March 2023, the Company secured a further £1.8 million 18-month Term
Loan, amortising on a straight-line basis at £300,000 per quarter, in order
to fund the disposal of the Company's Shard lease.
22. Net debt continued
At 31 March 2024, the balances outstanding on the Company's loan and RCF
facilities were as follows:
Facility Outstanding Outstanding
at 31 March 2024 at 31 March 2023
£'000 £'000
£1 million Term Loan: 743 915
£1.8 million Term Loan: 600 1,800
RCF 1,300 2,000
Total Term Loans and RCF 2,643 4,715
See Note 19 for the maturity analysis of the bank loan.
23. Deferred taxation
The following are the major deferred tax liabilities and assets recognised by
the Group, and movements thereon during the current year and prior year:
Liabilities Assets
Accelerated capital allowances
Intangible assets arising on consolidation Other timing differences £'000
£'000 £'000 Tax losses Total
£'000 £'000
At 31 March 2022 (1,058) 86 62 1,325 415
(Charge)/credit in the year 165 (83) 119 352 553
Derecognised on disposal 252 - - (1,036) (784)
At 31 March 2023 (641) 3 181 641 184
(Charge)/credit in the year 144 1 74 (126) 93
At 31 March 2024 (497) 4 255 515 277
Deferred tax assets and liabilities have been offset in both the current year
and preceding year as the current tax assets and liabilities can be legally
offset against each other, and they relate to taxes levied by the same
taxation authority or the Group intends to settle its current tax assets and
liabilities on a net basis.
At the balance sheet date, the Group has total carried forward tax losses of
£9.3 million (2023: £9.6 million) available to offset against future taxable
profits. Of these, the Group has recognised deferred tax assets of £515,000
(2023: £641,000) in respect of carried forward tax losses of £2.1 million
(2023: £2.2 million) as it is probable that these assets shall be recovered
against the taxable profits over the foreseeable period. On the remaining
£7.2 million (2023: £7.4 million) carried forward taxable losses, the Group
has not recognised a deferred tax asset as it is less probable that the
potential asset would be utilised.
24. Issued capital
28p ordinary
shares Total
Number £'000
Issued share capital as at 31 March 2023 23,956,124 6,708
Issued share capital as at 31 March 2024 23,956,124 6,708
25. Leases
The Group held leased assets accounted for under IFRS16 with the following net
book value and associated lease liabilities:
Right-of-use Lease
assets liabilities
£'000 £'000
As at 1 April 2022 5,660 (6,721)
Depreciation (1,338) -
Lease Interest - (298)
Lease payments - 1,897
Disposals (2,448) 3,242
As at 31 March 2023 1,874 (1,880)
Additions 873 (873)
Depreciation (833) -
Lease Interest - (124)
Lease payments - 1,007
As at 31 March 2024 1,914 (1,870)
Current (977)
Non-current (893)
The right-of-use assets relate to office space in four locations and at the
balance sheet date have remaining terms ranging up to 5 years.
Lease liabilities includes liabilities in respect of IT equipment with a cost
of £77,000 (2023: £77,000). These assets are capitalised within IT equipment
(see Note 16).
The Consolidated income statement includes the following amounts relating to
leases:
2024 2023
£'000 £'000
Depreciation charge of right-of-use assets 833 1,338
Interest expense (included in finance cost) 124 298
25. Leases continued
Lease payments not recognised as a liability
The group has elected not to recognise a lease liability for short term leases
(leases of expected term of 12 months or less) or for leases of low value
assets. Payments made under such leases are expensed on a straight-line basis.
In addition, certain variable lease payments are not permitted to be
recognised as lease liabilities and are expensed as incurred.
The expense relating to payments not included in the measurement of the lease
liability for the year was £41,000 (2023: £40,000) and the minimum
commitments under such leases at 31 March 2024 were:
2024 2023
Land and Buildings £'000 £'000
Within one year 31 31
Between two and five years 15 40
46 71
26. Share-based payments
Performance Share Plan (PSP)
In January 2022, the Company granted a conditional award to two executive
Directors under a performance share plan as below. No awards were made in the
current year.
Date of grant Director Outstanding Granted Lapsed Outstanding options at
Options at during During 31 March 2024
1 April 2023 the year the year
28 January 2022 David Beck 762,376 - - 762,376
(former CEO)
28 January 2022 Philip Machray 658,415 - - 658,415
(CEO and CFO)
1,420,791 - - 1,420,791
On 30 April 2024, following the appointment of Philip Machray as Chief
Executive Officer, the Company amended the terms of the above awards as
follows:
Director Outstanding Options at 31 March 2024 Original Amended
Performance Period Performance Period
David Beck 762,376 From 17 Nov 2021 From 17 Nov 2021
(former CEO) to 17 Nov 2024 to 31 Jan 2025
Philip Machray 658,415 From 17 Nov 2021 From 17 Nov 2021
(CEO and CFO) to 17 Nov 2024 to 17 Nov 2027
1,420,791
26. Share-based payments continued
A Monte Carlo Arithmetic Brownian Motion simulation model has been used to
determine the fair value of the share options on the date of grant. The fair
value is expensed to the income statement on a straight-line basis over the
vesting period. The model assesses a number of factors in calculating the fair
value. These include the market price on the day of grant, the exercise price
of the share options, the expected share price volatility of the Company's
share price, the expected life of the options, the risk-free rate of interest
and the expected level of dividends in future periods. The inputs into the
model were as follows:
Date of grant Risk free Share price Share price
rate volatility at date of grant
28 January 2022 2.3% 40.0% 50.5p
Expected volatility was determined by calculating the historical volatility of
the Company's share price for three years prior to the date of grant. The
expected life used in the model is the term of the options. The PSP share
options outstanding during the year were as follows:
Number of Weighted average exercise price (pence)
Ordinary shares
As at 31 March 2023 1,420,791 n/a
Granted during the year - n/a
As at 31 March 2024 1,420,791 n/a
The following options were outstanding under the Company's PSP scheme as at 31
March 2024:
Date of grant Number of Exercise price per share (pence) Exercise
Ordinary shares period
28 January 2022 1,420,791 nil Nov 2024
1,420,791
The income statement charge in respect of the PSP for the year was £63,000
(2023: £63,000).
27. Pensions
Defined benefit pension
The Group operates a defined benefit pension scheme for qualifying employees
based in India known as Gratuity Benefits which is classified as
Post-Retirement Benefits under IAS19 (revised). Under the scheme, the eligible
employees are entitled to a retirement benefit in cash based on final salary
on attainment of retirement age (or earlier withdrawal/resignment or death)
after 5 years of continual service. The assets of the scheme are held
separately to the assets of the Group in a trustee administered fund.
The Group employed an independent actuary to update the Gratuity Benefits
valuation to measure the scheme's liabilities.
The present value of the defined benefit obligation, the related current
service cost and past service cost were measured using the projected unit
credit method. The projected unit credit method is based on the plan's accrual
formula and upon services as of the beginning or end of the year, but using a
member's final compensation, projected to the age at which the employee is
assumed to leave active service. The plan liability is the actuarial present
value of the "projected accrued benefits" as of the beginning of the year for
active members.
The scheme's costs are borne by the Group. Any surplus or deficits in the
scheme may affect the Group through periodic adjustments to the Group's
contribution rate as determined by the actuary.
The plan exposes the Group to actuarial risks such as interest rate risk,
investment risk, longevity risk and inflation risk.
§ Interest rate risk - The present value of the defined benefit liability is
calculated using a discount rate determined by reference to market yields of
high quality corporate bonds.
§ Investment risk - The entire plan assets at 31 March 2024 comprise an
insurance policy. The value of assets certified by the insurer may not be the
fair value of instruments backing the liability. In such cases the present
value of the asset is independent of the future discount rate. This can result
in wide fluctuations in the net liability or the funded status if there are
significant changes in the discount rate during the valuation period.
§ Longevity risk - The Group is required to provide benefits for the members
in the gratuity scheme. Increases in the continual tenure of employment will
increase the defined benefit liability.
§ Inflation risk - A significant proportion of the defined benefit liability
is linked to inflation. An increase in the inflation rate will increase the
Group's liability. High salary growths will lead to higher level of benefits
to be paid by the Group.
The significant actuarial assumptions for the determination of the defined
benefit obligation are the discount rate, the salary growth rate, and the
withdrawal rates. The assumptions used for the valuation of the defined
benefits obligation are as follows in the table "Principal actuarial
assumptions" on page 104.
27. Pensions continued
Funded status of the plan
2024 2023
£'000 £'000
Present value of defined benefit obligations (419) (374)
Fair value of plan assets 57 49
Present value of unfunded defined benefit obligations (362) (325)
Current (79) (76)
Non-current (283) (249)
Net Deficit (362) (325)
Net Liability (362) (325)
Movement in present value of obligation 2024 2023
£'000 £'000
At 1 April (374) (392)
Current service cost (75) (83)
Interest cost (25) (24)
Remeasurement (gains)/losses (OCI)
Due to changes in financial assumptions (4) 41
Due to experience adjustments (11) 28
Benefits paid from fund 57 50
Foreign exchange revaluation 13 6
At 31 March (419) (374)
Movement in fair value of plan assets 2024 2023
£'000 £'000
At 1 April 49 110
Net interest Income 3 8
Return on plan assets - (24)
Contribution by employer 65 6
Benefits paid (57) (50)
Foreign exchange revaluation (3) (1)
At 31 March 57 49
The plan asset relates 100% to an insurance policy. The plan assets are all
based geographically in India.
27. Pensions continued
The amounts included in the Consolidated income statement, Consolidated
statement of other comprehensive income and Consolidated statement of
financial position arising from the Group's obligations in respect of its
defined benefit pension scheme are as follows:
Amounts recognised in Consolidated income statement 2024 2023
£'000 £'000
Service cost 75 83
Interest cost 25 24
Interest income (3) (8)
Foreign exchange revaluation (10) (5)
Total expense recognised in Consolidated income statement 87 94
Amounts recognised in Consolidated statement of OCI 2024 2023
£'000 £'000
Actuarial changes in financial assumptions 4 (41)
Actuarial experience adjustments 11 (28)
Return on plan assets - 24
Total credit recognised in Consolidated statement of OCI 15 (45)
Movement in pension scheme net deficit 2024 2023
£'000 £'000
Opening pension scheme net deficit (325) (282)
Contributions by employer 65 6
Consolidated income statement (87) (94)
Consolidated statement of OCI (15) 45
Closing pension scheme net deficit (362) (325)
Principal actuarial assumptions (expressed as weighted averages) are as
follows:
Principal Actuarial assumptions 2024 2023
p.a. p.a.
Discount rate 7.20% 7.35%
Salary growth rate 7.00% 7.00%
Withdrawal rates by age
Below 35 25.00% 25.00%
35 to 45 15.00% 15.00%
Above 45 10.00% 10.00%
Rate of return on plan assets 7.20% 7.35%
27. Pensions continued
In valuing the liabilities of the pension fund, mortality assumptions have
been made as indicated below.
Mortality rates
Age (in years) 2024 2023
20 0.09% 0.09%
30 0.10% 0.10%
40 0.17% 0.17%
50 0.44% 0.44%
60 1.12% 1.12%
At 31 March 2024 the mortality rates were derived from the Indian Assured
Lives Mortality (2012-2014) report.
The Group expects to contribute approximately £79,000 in the next financial
year.
The weighted average duration of the defined benefit plan obligation at the
end of the reporting period is 6.22 years (2023: 6.15 years).
The calculation of the defined benefit obligation (DBO) is sensitive to the
assumptions set out above. The following table summarises how the define
benefit obligation at the end of the reporting period would have been because
of a change in the respective assumptions.
Sensitivity to key assumptions 2024 2023
£'000 £'000
p.a. p.a.
Discount rate
Increase by 0.5% 408 364
Decrease by 0.5% 431 385
Salary growth rate
Increase by 0.5% 429 383
Decrease by 0.5% 410 366
Withdrawal rate (W.R)
W.R x 110% 417 373
W.R x 90% 421 375
28. Related party transactions
MET operations
On 30 November 2022, the Group completed the disposal of 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, a substantial shareholder in the Company as defined by
the AIM Rules, and of which Angela Entwistle, a non-executive director of the
Company, is a director. During the year, the remaining deferred consideration
for the disposal of £450,000 was settled, £350,000 in cash and £100,000
offset against funds held on trust for Political Holdings Limited (see below).
As part of the disposal of the MET Operations, the Group agreed to provide
transitional services to the Political Holdings Limited group of companies
covering areas such as occupancy, IT systems and support and finance and
accounting services. In total, the Group charged £346,000 (2023: £416,000)
for these services during the year, which has been recognised as Other
Operating Income within the Income Statement. At 31 March 2024, a balance of
£72,799 (at 31 March 2023: £145,991) was outstanding in respect of invoicing
for these services.
Since its acquisition of the MET operations, the Political Holdings Limited
group has been a customer of MD&T and was billed £109,594 during the year
(2023: £35,336) for marketing and data services. At 31 March 2024, there was
a balance of £62,302 due (at 31 March 2023: £16,094).
Further, as part of the disposal, the Group has continued to act as agent for
the political Holdings Limited group, invoicing customers, collecting book
debts and paying for services under contracts which were pending legal
novation to Political Holdings Limited group companies. During the year,
revenue of £1,409,154 was invoiced (2023: £7,722,749), cash of £2,618,217
was collected (2023: £5,010,321), and payments for purchases and payroll
amounting to £1,450,914 were made by the Group on behalf of Political
Holdings Limited group companies (2023: £3,776,250). None of these revenues
or costs, all of which arose post disposal, are recognised within the Income
Statement of the Group. At 31 March 2024, £12,946 of funds were held on trust
for Political Holdings Limited group companies (at 31 March 2023: £233,053).
Investments and Associates
During the prior year, the Group received a repayment of £210,000 of its
interest free loan to its then Associate, Sans Frontières Associates (SFA),
reducing the balance outstanding to £nil.
On 3 March 2023, the Company disposed of its 40% equity stake in SFA for cash
consideration of £250,000 via a share repurchase by SFA.
28. Related party transactions continued
Investments and Associates continued
During the year, an amount of £nil (2023: £18,000) was billed in relation to
recruitment services charged by Acolyte Resource Group Limited, a company in
which the Group has a 13.5% investment, and of which Cornelius Conlon was a
Director until the Group disposed of its investment on 5 March 2024. At 5
March 2024 and at 31 March 2024, there was a balance of £nil (2023: £nil)
outstanding.
Acolyte Resource Group Limited is also a customer of MD&T and was billed
£164,395 (2023: £237,201) for Software and Technology Resourcing services.
During the year, £50,000 of this trading debt was exchanged for convertible
loan notes in Acolyte Resource Group Limited. In addition to the loan notes,
at 31 March 2024 there was a balance of £52,514 (2023: £63,989) due.
Meritgroup Limited acquisition
Cornelius Conlon, a Director of the Company was entitled to shares and a cash
consideration on the first 3 anniversaries of the Meritgroup Limited
acquisition in 2019. During the year, Cornelius Conlon received cash
consideration of £nil (2023: £220,000).
On acquisition of Meritgroup Limited, an arm's length non-repairing 7-year
lease was entered into between a Merit subsidiary (Letrim Intelligence
Services Private Limited) and Merit Software Services Private Limited.
Cornelius Conlon, a Director of the Group, is the beneficial owner of Merit
Software Services Private Limited. The lease relates to the Chennai office of
MD&T. During the year, payments of £833,560 (2023: £726,000) were made
to Merit Software Services Private Limited in relation to the lease and other
property-related costs.
Other related party transactions
During the year, an amount of £136,374 (2023: £141,181) was billed for
Software and Technology Resourcing services to System1 Group plc, a company of
which Philip Machray is a Non-Executive Director and shareholder. At 31 March
2024, there was a balance of £16,800 (2023: £44,423) outstanding.
During the current and previous years, Deacon Street Partners Limited, a
company related by virtue of Angela Entwistle, a Director of the Company also
being a Director, invoiced £30,000 (2023: £30,000) to the Company for the
services of Angela Entwistle as a Non-Executive Director. At 31 March 2024,
the balance outstanding was £2,500 (2023: £2,500).
The Spouse of Cornelius Conlon, a Director of the Company, is employed by a
subsidiary of the Company and received £51,273 remuneration in the year
(2023: £44,873).
The Son of Cornelius Conlon, a Director of the Company, was temporarily
engaged by a subsidiary of the Company and received £500 in fees in the year
(2023: £nil).
The Executive Directors of the Group are considered key management personnel.
See Note 8 for details of Directors' remuneration.
ENDS
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR GPUGWMUPCPGMRecent news on Merit
See all newsREG - Merit Group PLC - Result of General Meeting
AnnouncementREG - Merit Group PLC - Holding(s) in Company
AnnouncementREG - Merit Group PLC - Recommended cancellation of listing & Notice of GM
AnnouncementREG - Merit Group PLC - Notice of Requisition of General Meeting
AnnouncementREG - Merit Group PLC - Interim Results
Announcement