REG - Merit Group PLC - Interim Results
13/11/2024 07:00
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RNS Number : 9671L Merit Group PLC 13 November 2024
13 November 2024
Merit Group plc
("Merit", the "Company" or "the Group")
UNAUDITED INTERIM RESULTS TO 30 SEPTEMBER 2024
Merit Group plc (AIM: MRIT), the data and intelligence business, announces its
unaudited interim results for the half year ended 30 September 2024 which are
in line with the Trading Update announced on 21 October 2024.
Financial Highlights
§ Revenue of £9.3m down 6.1% (H1 FY24: £9.9m)
§ Adjusted EBITDA decreased by 32% to £1.2m (H1 FY24: £1.8m)
§ Adjusted EBITDA margin decreased by 5.1 percentage points from 18.5% to
13.4%
§ Net cash generated from operating activities of £0.7m (H1 FY24: £0.7m)
§ Loss before tax of £0.2m (H1 FY24: profit of £0.5m)
§ Net Debt (1) of £2.3m as at 30 September 2024 (30 September 2023: £2.5m)
with total available debt facilities of £3.7m
H1 FY25 H1 FY24
30 Sep 24 30 Sep 23 Change (5)
Revenue £9.3m £9.9m -6.1%
Gross profit £4.1m £4.7m -13.8%
Gross margin (2) 44.0% 47.9%
Adjusted EBITDA (3) £1.2m £1.8m -32.0%
Adjusted EBITDA margin (4) 13.4% 18.5%
(Loss)/profit before tax -£0.2m £0.5m
Basic (Loss)/earnings per share -1.27p 1.47p
1. Net debt comprises the aggregate of gross debt, excluding IFRS16 lease
liabilities, and cash and cash equivalents as outlined in Note 9.
2. Gross margin is Gross profit as a percentage of Revenue.
3. Adjusted EBITDA is calculated as earnings before interest, tax,
depreciation, amortisation of intangible assets, share-based payments and
non-recurring items.
4. Adjusted EBITDA margin is Adjusted EBITDA as a percentage of Revenue.
5. Year-on-year percentage change figures and margins are calculated on
unrounded numbers.
Operational Highlights
We have invested in the products which are core to our client offerings and
the tools & technology which enable our colleagues to deliver first class
services, including having:
§ Developed and launched an AI-led, marketing data collection platform;
enabling MD&T to profitably serve clients faster, with more accurate data
and at a competitive price point;
§ Developed and integrated a new Dods People platform, providing extensive
and unrivalled coverage of the Westminster and Brussels political and public
affairs communities;
§ Within MD&T, developed a Knowledge Agent platform using multiple AI
models to enable users to extract data points form reports, diagrams,
correspondence, web sites and PDFs.
§ Delivered election specific content packages for the UK and European Union
elections undertaken in H1;
§ Renewed user IT equipment for 70% of our global workforce and commenced the
renewal of our IT infrastructure to ensure we have the capabilities, security
and resilience expected in our marketplaces;
We have continued to invest in expanding our sales & marketing
capabilities, in order to drive long-term growth, including having:
§ Further added to MD&Ts sales capabilities with the recruitment of a
dedicated technology sales team who have proven experience in technology
solutions;
§ increased the size of our MD&T outbound tele-sales teams who are now
delivering 40-50 new business appointments each month;
§ completed the recruitment of our expanded Dods Political Intelligence sales
& marketing team with a Brussels-based Marketing manager and additional
new business sales resource;
Whilst making these investments, we continue to tightly manage our costs and
cashflows, evidenced as follows:
§ Dods Political Intelligence EBITDA margin maintained at 30%+, and on an
underlying basis (excluding contribution from Other Operating Income) at 25%+
§ MD&T EBITDA margin held at double-digit levels (10% v 19% in H1 FY24),
despite the fall in revenue and additional investment in sales & marketing
§ Net cash generated from operating activities maintained at £0.7m (H1 FY24:
£0.7m)
Phil Machray, CEO and CFO of Merit Group plc, said;
"The underlying market demand for data and data-related technology is forecast
to continue to grow in the coming years and MD&T is well positioned to
benefit from this structural market growth. We have taken steps to strengthen
sales and marketing capabilities across the Group and expect to see growth in
the sales pipeline and an improvement in prospect conversion over the next 18
months. Clearly the current dip in revenues combined with the additional costs
of investment in product, sales & marketing is having and will have an
impact on profitability in the short-term. We are confident of returning
revenue to growth in the year to 31 March 2026; and, given the Company's
strong operational gearing, expect to report a strong return to profitability.
We remain confident in delivering FY25 performance in line with the guidance
provided in our October 2024 Trading Update.
Our focus remains on strong operational management, whilst pursuing revenue
and earnings growth, and we remain confident in the longer term outlook of the
business."
Mark Smith, Chairman, commented;
"Whilst our focus remains on operational management and investing in organic
growth, we will continue to explore opportunities to generate growth beyond
what we can expect organically within the context of maximising value for
shareholders."
For further information, please contact:
Merit Group plc
Philip Machray - CEO/CFO
020 7593 5500
www.meritgroupplc.com (http://www.meritgroupplc.com)
Canaccord Genuity Limited (Nomad and Broker)
Bobbie Hilliam
020 7523 8150
Harry Pardoe
BUSINESS AND OPERATIONAL REVIEW
Whilst trading of the Dods Political Intelligence business continues to
perform in line with management's expectations, the revenues of MD&T in
the period have fallen by 8.5% year-on-year, as projects within the Data
Technology division have reached their conclusion and conversion of the sales
pipeline for new work has fallen short of expectations with both macro and
local factors impacting prospects' willingness to commit to scale IT projects.
Group Revenue therefore decreased by 6.1% compared to H1 FY24, with Dods
Political Intelligence revenues of £3.5m in line with the £3.5m reported in
H1 FY24 and MD&T revenues of £5.8m falling 8.5% compared to the £6.4m
reported in H1 FY24.
The reduction in revenue is mirrored by a £0.7m reduction in Gross profit, as
the investments in product, sales and marketing have offset the natural
reduction in costs to serve. Gross profit margin has therefore reduced by
four percentage points from 48% in H1 FY24 to 44% in the current period.
Administration costs have been tightly controlled in the period and are down
7.7% compared to H1 FY24, despite inflationary cost pressures in both the UK
and India. £0.1m of Other Operating Income was recognised in the period,
primarily relating to R&D tax credits, which helped to offset the £0.3m
reduction in Other Operating Income derived from transitional services
provided to the previously disposed MET operations during the comparative
period.
The lower group revenue performance, combined with the above mentioned
investments and cost movements has driven a reduction in Adjusted EBITDA -
down 32.1% from £1.8m in H1 FY24 to £1.2m in the current period.
Merit Data & Technology
The Merit Data & Technology (Merit D&T) business provides a range of
data and intelligence products and services, as well as data technology
solutions.
For data & intelligence, the business has a long-standing customer base
that provide the business with high levels of recurring revenue. Revenues of
£3.3m in the period from these activities were relatively stable (down 4% on
the £3.4m reported in H1 FY24). Within Data Technology, projects are
shorter in nature and typically have a scheduled project-end or reduced level
of activity after the core technology-build phase. As a consequence,
revenues are less recurring in nature. Having achieved significant growth in
these revenues last year, adding some £1.2 million of Data Technology
revenues in FY24, it is disappointing to report a 13.6% decline to £2.6m in
the period (H1 F24: £3.0m) as a consequence of not winning and onboarding
sufficient opportunities to replace the completed projects.
Revenue and gross profit shortfalls, have resulted in an Adjusted EBIDTA for
MD&T of £0.6m
in the period, down 51% compared to H1 FY24.
Despite the pressure on revenues, we have retained our focus on pursuing
long-term growth and continue to operate with an increased level of sales
& marketing resources compared to prior periods. We have recruited a
dedicated technology sales team who have proven experience in technology
solutions. We have secured new clients in the period including Diversified
Communications, With Intelligence, Hyve, Honch and TMT Finance.
In addition, we continued to invest in our capabilities, including having
developed and launched a new AI-led, marketing data collection platform which
allows us to serve our marketing data clients faster, with more accurate data
and at a competitive price point. We continue to make similar developments in
our data-scraping and data-collecting technologies including the development
of a Knowledge Agent platform, which uses multiple AI models to enable users
to extract data points form reports, diagrams, correspondence, web sites and
PDFs.
Dods Political Intelligence
Dods Political Intelligence (Dods) is a provider of mission critical UK and
European policy and political data and intelligence to over 700 subscribers.
Dods is the UK's industry leader with an enviable reputation for the
comprehensiveness of its service and the quality of its analysis and
consultancy. The business benefits from subscription revenues from a large,
diverse and loyal subscriber base of blue-chip customers in the public,
private and not-for-profit sectors.
In the first half of the year, Dods revenue declined by 1.8% to £3.5m.
Whilst the period included some short-term revenues from Election Package
products, the elections in both Westminster and Brussels provide a degree of
disruption to the renewal of clients' subscriptions as a result of their being
a moratorium on new policy statements by both parliaments during this time.
With new Parliaments now elected in Europe and the UK, we expect a busier
period in the rest of the year.
Dods reported Adjusted EBITDA of £1.1m, in line with the £1.1m in the same
period last year, despite a reduction in Other Operating Income derived from
the provision of transitional services to the businesses that were disposed of
in November 2022. Those transitional services arrangements (reported as Other
Operating Income, not Revenue) largely came to an end in FY24. On an
underlying basis, excluding the other operating income and associated costs,
the first half margin was 27% compared to 25% in H1 FY24.
In April, we launched a three year growth plan for Dods, the 'Strategy for
Growth', underpinned by new customer research and investment in further
product and service improvements, with the first significant success being the
launch of a new integrated Dods People platform, providing extensive and
unrivalled coverage of the Westminster and Brussels political and public
affairs communities within our core Political Intelligence Platform. We also
completed the recruitment of our expanded Dods sales & marketing team with
a Brussels-based marketing manager and additional new business sales resource.
Central
Central costs continue to be closely managed and were reduced by 14%
year-on-year to £0.4m in the first half, driven in part by the restructuring
of the Board roles in January 2024.
In contrast to prior years, the Group reports no non-recurring items in the
period, reflecting the substantial completion of the Group's restructuring.
Outlook
Despite challenging economic conditions and the recent fall in revenue, the
underlying market demand for data and data-related technology is forecast to
continue to grow in the coming years and the Board believes that MD&T is
well positioned to benefit from this structural market growth. The Board has
taken steps to strengthen sales and marketing capabilities across the Group
and expects to see growth in the sales pipeline and an improvement in prospect
conversion over the next 18 months. The Board is confident of delivering
performance in line with the guidance provided in our October 2024 Trading
Update; returning revenue to growth in the year to 31 March 2026; and, given
the Company's strong operational gearing, expects to then report a strong
return to profitability.
FINANCIAL REVIEW
Income Statement
The Group's revenue decreased by 6.1% to £9.3m (H1 FY24: £9.9m).
Revenues from Merit Data and Technology (MD&T) were £0.5m lower than the
equivalent prior half year (H1 FY25: £5.8m compared to H1 FY24: £6.4m),
representing a decrease of 8%. Dods revenues for the period decreased by 2% to
£3.5m (H1 FY24: £3.5m).
Gross profit for the period decreased to £4.1m compared to the prior period
(H1 FY24: £4.7m). Gross margin decreased from 48% to 44%, driven by the
Group's reduced revenue and the impact of its operational gearing.
Adjusted EBITDA decreased by £0.6m to £1.2m (H1 FY24: £1.8m) due to the
fall in revenue, operational gearing, and a reduction of £0.2m in the
contribution form transitional services provided to the disposed MET business
during the period.
The reduction in operating profit, from £0.9m in H1 FY24 to an operating
profit of £0.2m in the current period, reflects the £0.7m period-on-period
reduction in Gross Profit, together with the reduction in other operating
income relating mainly to the transitional services (see Note 12), offset by a
£0.2m saving in Administrative expenses. The Group's operating profit is
stated after non-cash depreciation and amortisation charges of £1.0m (H1
FY24: £0.9m).
The net finance expense for the year of £0.5m compares to £0.3m in H1 FY24,
reflecting a £0.3m adverse movement in the mark-to-market valuation of
forward currency swaps, with the INR/GBP rate increasing to 112 Indian Rupees
to the pound at 30 September 2024.
The loss for the year from Continuing Operations, after a tax charge of £0.1m
(H1 FY24: £0.2m), amounted to £0.3m (H1 FY24: profit of £0.4m).
Earnings and Dividends
Earnings per share (basic and diluted) from Continuing Operations in the
period were a loss of 1.27 pence (H1 FY24: earnings of 1.47 pence, basic and
diluted) and were based on the loss for the period of £0.3m (H1 FY24: profit
of £0.4m) with a weighted average number of shares in issue during the period
of 23,956,124.
Adjusted earnings per share, both basic and diluted, from Continuing
Operations in the period were 1.08 pence (H1 FY24: 3.16 pence) and were based
on the adjusted profit after tax for the period of £0.3m (H1 FY24: £0.8m).
Whilst the Company's focus remains on maintaining financial flexibility and
repositioning the business for future growth, the Board is not proposing a
dividend (H1 FY24: £nil).
Going Concern
The Directors have considered the position and projections of the Group for
the purpose of assessing Going Concern and remain satisfied with the Group's
funding and liquidity position.
Statement of Financial Position
Assets
Non-current assets of £36.9m (31 March 2024: £37.3m) comprise goodwill of
£26.9m (31 March 2024: £26.9m), intangible assets of £7.2m (31 March 2024:
£7.3m), property, plant and equipment of £0.6m (31 March 2024: £0.6m),
IFRS16 rights-of-use assets of £1.5m (31 March 2024: £1.9m), investments of
£0.4m (31 March 2024: £0.4m) and deferred tax assets amounting to £0.3m (31
March 2024: £0.3m). Movements in the year reflect amortisation and
depreciation charges in the period.
Current assets comprise Trade and other receivables of £3.8m (31 March 2024:
£4.3m) and cash balances of £0.5m at the period end (31 March 2024: £0.8m).
Total assets of the Group were £41.2m (31 March 2024: £42.4m).
Liabilities
Current liabilities of £8.5m (31 March 2024: £8.8m) comprise Trade and other
payables of £5.2m (31 March 2024: £5.7m), bank loans and borrowings of
£2.4m (31 March 2024: £2.1m), IFRS16 lease liabilities of £0.8m (31 March
2024: £1.0m) and defined benefit pension liabilities of £0.1m (31 March
2024: £0.1m).
Non-current liabilities of £1.4m (31 March 2024: £1.7m) comprise bank loans
and borrowings of £0.5m (31 March 2024: £0.6m), IFRS16 lease liabilities of
£0.6m (31 March 2024: £0.9m) and defined benefit pension liabilities of
£0.3m (31 March 2024: £0.3m).
Movements in the year primarily reflect the repayment of £0.5m of IFRS16
lease liabilities and the drawdown of £0.2m of bank loans and borrowings.
Capital and reserves
Total equity decreased by £0.6m to £31.3m (31 March 2024: £31.9m),
reflecting the retained loss for the period of £0.3m and £0.3m of exchange
differences on translation of foreign operations
Cash flows, liquidity and capital resources
Net cash generated by operations was an £0.7m inflow in the period by
comparison to £0.8m in H1 FY24. After tax, net cash generated from operating
activities amounted to £0.7m (H1 FY24: inflow of £0.7m).
Investing activities, primarily related to the addition of IT equipment and
the internal development of software amounted to £0.5m in the period,
compared to £0.2m in H1 FY24.
Total financing outflows were £0.4m in the period (H1 FY24; £1.4m)
comprising capital repayments on leases (£0.5m) and repayment of scheduled
term-loan payments (£0.7m), offset by a further £0.9m draw down on the RCF
facilities.
Net debt amounted to £2.3m at the period end (31 March 2024: £1.9m).
At 30 September 2024, the Group had bank debt of £2.9m (31 March 2024:
£2.6m) comprising amounts owed on term loans and amounts drawn on a revolving
credit facility (RCF).
The Group had a term loan with £0.6m outstanding (31 March 2024: £0.7m)
taken out in July 2022 over a five-year period, with interest at 3.5% over
Bank of England interest rate. The £1.8m term loan taken out in March 2023 to
part-fund disposal of the Shard lease, of which £0.6m was outstanding at 31
March 2024, had been fully repaid at the period end.
In addition, the Group had a £3.0m RCF facility available through to
September 2027, of which £2.2m was drawn at the period end (31 March:
£1.3m). Due to its revolving nature, this loan is all shown as due within one
year.
Phil Machray
Chief Executive Officer & Chief Financial Officer
Merit Group plc
Condensed consolidated income statement
For the half year ended 30 September 2024
Unaudited Unaudited Audited
Half year ended Half year ended Year ended
Note 30 Sept 2024 30 Sept 2023 31 Mar 2024
£'000 £'000 £'000
Revenue 3 9,293 9,899 19,895
Cost of sales (5,201) (5,154) (10,730)
4,092
Gross profit 4,745 9,165
Administrative expenses (3,965) (4,170) (7,850)
Other operating income 114 293 346
241 868 1,661
Operating profit
Memorandum:
3 1,243 1,829 3,989
Adjusted EBITDA((1))
(129) (88) (173)
Depreciation of property, plant and equipment
Depreciation of right-of-use assets (421) (406) (833)
Amortisation of intangible assets acquired through business combinations (293) (294) (587)
Amortisation of software intangible assets (187) (142) (345)
Adjusted EBIT((2)) 213 899 (2,051)
Share-based payments credit/(charge) 28 (31) (63)
Non-recurring items 4
People-related costs - - (202)
Fair value movement on investments - - (125)
241 868 1,661
Operating profit
Net finance credit/(expense) (465) (339) (777)
(Loss)/profit before tax from Continuing Operations (224) 529 884
(80) (176) (336)
Income tax charge
(304) 353 548
(Loss)/profit for the period from Continuing Operations
Loss from Discontinued Operations - - (354)
(304) 353 194
(Loss)/profit for the period
( )
((1)) Adjusted EBITDA is defined as the operating profit after adding back
depreciation, amortisation, share-based payments, and non-recurring items.
((2)) Adjusted EBIT is defined as the operating profit after adding back
share-based payments and non-recurring items.
Earnings per share (pence)
Basic and Diluted p per share p per share p per share
Continuing Operations 5 (1.27p) 1.47p 2.29p
Discontinued Operations 5 - - (1.48p)
5 (1.27p) 1.47p 0.81p
Basic total
The notes on pages 14 to 24 form part of these unaudited interim results.
Condensed consolidated statement of comprehensive income
For the half year ended 30 September 2024
Unaudited Unaudited Audited
Half year ended Half year ended Year ended
30 Sept 2024 30 Sept 2023 31 Mar 2024
£'000 £'000 £'000
(Loss)/profit for the period (304) 353 194
Items that may be subsequently reclassified
to Profit and loss:
Foreign currency translation:
Exchange differences on translation of foreign operations (254) 2 (138)
(254) 2 (138)
Remeasurement of defined benefits obligation 7 (31) (15)
Other comprehensive income for the period (247) (29) (153)
Total comprehensive (loss)/profit for the period (551) 324 41
The notes on pages 14 to 24 form part of these unaudited interim results.
Condensed consolidated statement of financial position
As at 30 September 2024
Unaudited Unaudited Audited
Note 30 Sept 2024 30 Sept 2023 31 Mar 2024
£'000 £'000 £'000
Non-current assets
Goodwill 26,919 26,919 26,919
Intangible assets 7 7,174 7,566 7,300
Property, plant and equipment 8 604 381 584
Right-of-use assets 10 1,493 2,198 1,914
Investments 350 474 350
Deferred tax assets 334 184 277
Total non-current assets 36,874 37,722 37,344
Current assets
Trade and other receivables 3,750 5,503 4,299
Cash and cash equivalents 545 1,069 782
Total current assets 4,295 6,572 5,081
Total assets 41,169 44,294 42,425
Current liabilities
Trade and other payables 5,267 6,085 5,692
Defined benefit pension obligation 70 77 79
Bank loan/RCF 9 2,391 2,910 2,091
Lease liability 10 790 597 977
Total current liabilities 8,518 9,669 8,839
Non-current liabilities
Pension obligation 261 312 283
Bank loan/RCF 9 462 621 552
Lease liability 10 649 1,583 893
Total non-current liabilities 1,372 2,516 1,728
Capital and reserves
Issued capital 11 6,708 6,708 6,708
Share premium 1,067 1,067 1,067
Retained profit 10,237 10,700 10,541
Redemption reserve 13,680 13,680 13,680
Translation reserve (516) (122) (262)
Other reserves (5) (28) (12)
Share option reserve 108 104 136
Total equity 31,279 32,109 31,858
Total equity and liabilities 41,169 44,294 42,425
The notes on pages 14 to 24 form part of these unaudited interim results.
Condensed consolidated statement of changes in equity
For the half year ended 30 September 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
Unaudited £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2023 6,708 1,067 10,347 13,680 (124) 3 73 31,754
Total comprehensive income:
Profit for the six-month period to 30 September 2023 - - 353 - - - - 353
Currency translation differences - - - - 2 - - 2
Remeasurement of defined benefits obligations - - - - - (31) - (31)
Share-based payments - - - - - - 31 31
At 30 September 2023 6,708 1,067 10,700 13,680 (122) (28) 104 32,109
Total comprehensive income:
Loss for the six-month period to 31 March 2024 - - (159) - - - - (159)
Currency translation differences - - - - (140) - - (140)
Remeasurement of defined benefits obligations - - - - - 16 - 16
Share-based payments - - - - - - 32 32
At 31 March 2024 6,708 1,067 10,541 13,680 (262) (12) 136 31,858
Total comprehensive income:
Loss for the six-month period to 30 September 2024 - - (304) - - - - (304)
Currency translation differences - - - - (254) - - (254)
Remeasurement of defined benefits obligations - - - - - 7 - 7
Share-based payments - - - - - - (28) (28)
At 30 September 2024 6,708 1,067 10,237 13,680 (516) (5) 108 31,279
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 on pages 14 to 24 form part of these unaudited interim results.
Condensed consolidated statement of cash flows
For the half year ended 30 September 2024
Unaudited Unaudited Audited
Half year ended Half year ended Year ended
Note 30 Sept 2024 30 Sept 2023 31 Mar 2024
£'000 £'000 £'000
Cash generated by operations 6 673 836 2,287
Taxation paid - (181) (426)
Net cash generated from operating activities 673 655 1,861
Cash flows from investing activities
Interest and similar income received 7 18 26
Additions to intangible assets (354) (94) (324)
Additions to property, plant and equipment (149) (128) (418)
Acquisition of investments - (24) (25)
Proceeds on disposal of operations - - 450
Net cash used in investing activities (496) (228) (291)
Cash flows from financing activities
Interest and similar expenses paid (120) (215) (407)
Payment of lease liabilities (480) (494) (1,003)
Receipt on disposal of lease liabilities - 462 577
Net drawdowns/(repayments) of bank facility 210 (1,184) (2,072)
Net cash used in financing activities (390) (1,431) (2,905)
Net decrease in cash and cash equivalents (213) (1,004) (1,335)
Opening cash and cash equivalents 782 2,144 2,144
Effect of exchange rate fluctuations on cash held (24) (71) (27)
Closing cash at bank 545 1,069 782
Comprised of:
Cash and cash equivalents 545 1,069 782
Closing cash at bank 545 1,069 782
The notes on pages 14 to 24 form part of these unaudited interim results.
1. General information
Nature of operations
The principal activities of Merit Group plc and its subsidiaries (the "Group")
is the creation and aggregation of high-quality data and intelligence
information and the provision of data technology services.
The Group operates primarily in the UK, Europe and India.
Merit Group plc is a Company incorporated in England and Wales and listed on
the Alternative Investment Market (AIM) in London. The registered office of
the Company and head office of the Group is 9(th) Floor, The Shard, 32 London
Bridge Street, London SE1 9SG.
Basis of preparation
This condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted in the UK. The annual
financial statements of the Group are prepared in accordance with
International Financial Reporting Standards (IFRSs) in conformity with the
requirements of the Companies Act 2006. As required by AIM Rules, the
condensed set of financial statements has been prepared applying accounting
policies and presentation that were applied in the preparation of the Group's
published consolidated financial statements for the year ended 31 March 2024.
The condensed consolidated financial statements are neither audited in
accordance with International Standards on Auditing (UK) nor subject to review
as per International Standard on Review Engagements (ISRE) 2410. The
comparative figures for the year ended 31 March 2024 have been extracted from
the Group's statutory accounts for that financial period. Those accounts have
been reported on by the Company's auditor and delivered to the registrar of
companies. The report of the auditor was (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their report, and (iii) did not contain a
statement under section 498(2) or (3) of the Companies Act 2006.
Going concern
The Directors have considered the financial projections of the Group,
including cash flow forecasts and the availability of committed bank
facilities for the coming 12 months. They are satisfied that the Group has
adequate resources for the foreseeable future and that it is appropriate to
continue to adopt the going concern basis in preparing these interim financial
statements.
Approval date
The condensed set of interim financial statements have been prepared on a
going concern basis and were approved by the Board on 13 November 2024.
2. Critical accounting estimates and judgements
When preparing financial statements, the Group makes estimates and judgements
concerning the future. These estimates and judgements are typically based on
historical experience and expectations of future events that are believed to
be reasonable at the time. In the future, by definition, actual events and
experience may deviate from these estimates and judgements.
The Directors considered the critical accounting judgements and estimates
applied in the condensed consolidated financial statements were the same as
those applied in the Group's last statutory accounts for the year ended 31
March 2024.
3. Segmental information
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 and intelligence, including marketing data, and the provision of
data-related technology, including data engineering, machine learning,
software development, 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 and PLC listing.
The following table provides an analysis of the Group's segment revenue by
business segment.
Unaudited Unaudited Audited
Half year ended Half year ended Year ended
30 Sept 2024 30 Sept 2023 31 Mar 2024
£'000 £'000 £'000
Merit Data & Technology 5,835 6,376 12,869
Dods 3,458 3,523 7,026
9,293 9,899 19,895
No client accounted for more than 10 percent of total revenue.
Group Revenue by stream Unaudited Unaudited Audited
Half year ended Half year ended Year ended
30 Sept 2024 30 Sept 2023 31 Mar 2024
£'000 £'000 £'000
Data and Intelligence 3,276 3,414 6,760
Data Technology 2,559 2,962 6,109
Political Intelligence 3,458 3,523 7,026
9,293 9,899 19,895
Unaudited half year ended 30 Sep 2024 MD&T Dods Central Total
Business segment profit before tax 30 Sep 30 Sep 30 Sep 30 Sep
2024 2024 2024 2024
£'000 £'000 £'000 £'000
Adjusted EBITDA 615 1,056 (428) 1,243
Depreciation of property, plant and equipment (86) (43) - (129)
Depreciation of right-of-use assets (250) (171) - (421)
Amortisation of intangible assets acquired through business combinations (255) (38) - (293)
Amortisation of software intangible assets (42) (145) - (187)
Share based payments - - 28 28
Operating profit/(loss) (18) 659 (400) 241
Net finance expense (298) (39) (128) (465)
Profit/(loss) before tax (316) 620 (528) (224)
Unaudited half year ended 30 Sep 2023 MD&T Dods Central Total
Business segment profit before tax 30 Sep 30 Sep 30 Sep 30 Sep
2023 2023 2023 2023
£'000 £'000 £'000 £'000
Adjusted EBITDA 1,241 1,087 (499) 1,829
Depreciation of property, plant and equipment (55) (33) - (88)
Depreciation of right-of-use assets (260) (146) - (406)
Amortisation of intangible assets acquired through business combinations (255) (39) - (294)
Amortisation of software intangible assets - (142) - (142)
Share based payments - - (31) (31)
Operating profit/(loss) 671 727 (530) 868
Net finance expense (80) (45) (214) (339)
Profit/(loss) before tax 591 682 (744) 529
Audited year ended 31 Mar 2024 MD&T Dods Central Total
Business segment profit before tax 31 Mar 31 Mar 31 Mar 31 Mar
2024 2024 2024 2024
£'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
People-related costs - (27) (175) (202)
Fair value movement on investments - - (125) (125)
Operating profit/(loss) 1,575 1,470 (1,384) 1,661
Net finance expense (297) (98) (382) (777)
Profit/(loss) before tax from Continuing Operations 1,278 1,372 (1,766) 884
4. Non-recurring items
Unaudited Unaudited Audited
Half year ended Half year ended Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Fair value movement on investments - - (125)
People-related costs - - (202)
- - (327)
People-related costs incurred in the year ended 31 March 2024 include deferred
cash consideration on the acquisition of Meritgroup Limited. Also included are
redundancy costs reflecting the effect of Group initiatives to appropriately
restructure the business.
5. Earnings per share
Unaudited Unaudited Audited
Half year ended Half year ended Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
Continuing Operations £'000 £'000 £'000
(Loss)/profit attributable to shareholders (304) 353 548
Add: non-recurring items - - 327
Add: amortisation of intangible assets acquired through business combinations 293 294 587
Add: net exchange (gains)/losses 297 79 250
Add: share-based payment (credit)/expense (28) 31 63
Adjusted post-tax profit from Continuing Operations attributable to 258 757 1,775
shareholders
Unaudited Unaudited Audited
Half year ended Half year ended Year ended
30 Sept 2024 30 Sept 2023 31 Mar 2024
Ordinary shares Ordinary shares Ordinary shares
Weighted average number of shares
In issue during the period - basic 23,956,124 23,956,124 23,956,124
Adjustment for share options - - -
In issue during the period - diluted 23,956,124 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 any of the above dates
because their exercise is contingent on the satisfaction of certain criteria
that had not been met at those dates.
Unaudited Unaudited Audited
Half year ended Half year ended Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
Continuing Operations Pence per share Pence per share Pence per share
Earnings per share
Basic (1.27) 1.47 2.29
Diluted (1.27) 1.47 2.29
Adjusted earnings per share
Basic 1.08 3.16 7.41
Diluted 1.08 3.16 7.41
6. Cash generated by operations
Unaudited Unaudited Audited
Half year ended Half year ended Year ended
30 Sept 2024 30 Sept 2023 31 Mar 2024
£'000 £'000 £'000
Cash flows from operating activities
(Loss)/profit for the period (304) 353 194
Depreciation of property, plant and equipment 129 88 173
Depreciation of right-of-use assets 421 406 833
Amortisation of intangible assets acquired through business combinations 293 294 587
Amortisation of other intangible assets 187 142 345
Share-based payments charge (28) 31 63
Loss on disposal of fixed asset - - 2
Fair value movement on investments - - 125
Lease interest expense 49 64 124
Profit on disposal of operations (before tax) - - 354
Interest income (7) (18) (26)
Interest expense 120 215 407
Foreign exchange on operating items (12) 4 6
Income tax charge 80 176 336
Operating cash flows before movement in working capital 928 1,755 3,523
Decrease/(increase) in trade and other receivables 549 (463) 176
Decrease in trade and other payables (804) (456) (1,412)
673 836 2,287
Cash generated by operations
7. Intangible assets
Assets acquired Under
through business Construction
combinations Software Capitalised costs Total
£'000 £'000 £'000 £'000
Cost
At 1 April 2023 11,209 2,176 144 13,529
Additions - internally generated - 22 302 324
Software brought into use - 144 (144) -
11,209 2,342 302 13,853
At 31 March 2024
Additions - internally generated - 53 301 354
At 30 September 2024 11,209 2,395 603 14,207
Accumulated amortisation
At 1 April 2023 5,090 531 - 5,621
Charge for the year 587 345 - 932
5,677 876 - 6,553
At 31 March 2024
Charge for the period 293 187 - 480
At 30 September 2024 5,970 1,063 - 7,033
Net book value
At 31 March 2023 - audited 6,119 1,645 144 7,908
At 31 March 2024 - audited 5,532 1,466 302 7,300
At 30 September 2024 - unaudited 5,239 1,332 603 7,174
8. Property, plant and equipment
IT Equipment
Leasehold and Fixtures
Improvements and Fittings Total
£'000 £'000 £'000
Cost
At 1 April 2023 - 1,449 1,449
Additions 93 325 418
Disposals - (4) (4)
93 1,770 1,863
At 31 March 2024
Additions - 149 149
Disposals - (6) (6)
At 30 September 2024 93 1,913 2,006
Accumulated depreciation
At 1 April 2023 - 1,108 1,108
Charge for the year 23 150 173
Disposals - (2) (2)
23 1,256 1,279
At 31 March 2024
Charge for the period 24 105 129
Disposals - (6) (6)
At 30 September 2024 47 1,355 1,402
Net book value
At 31 March 2023 - audited - 341 341
At 31 March 2024 - audited 70 514 584
At 30 September 2024 - unaudited 46 558 604
9. Net debt
Net debt comprises the aggregate of loans and borrowings, excluding IFRS16
lease liabilities, and cash and cash equivalents, as follows:
Unaudited Unaudited Audited
Half year ended Half year ended Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Bank loan / RCF due within one year 2,391 2,910 2,091
Bank loan due after more than one year 462 621 552
2,853 3,531 2,643
Cash and cash equivalents (545) (1,069) (782)
Net Debt 2,308 2,462 1,861
Interest-bearing loans and borrowings
At 30 September 2024, the Company's secured loan facilities provided by
Barclays comprised:
§ Term Loan: a £1 million, five-year term loan, amortising on a
straight-line basis at c.£50,000 per quarter from July 2022;
§ RCF: a £3 million non-amortising, revolving credit facility for the
five-year duration of the Term Loan;
§ Both the Term Loan and RCF accrues interest at 3.5% above Bank of England
base rate.
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. This loan had been fully
settled in accordance with its repayment schedule by 30 September 2024.
10. Leases
Right-of-use Lease
assets liabilities
£'000 £'000
As at 1 April 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)
Depreciation (421) -
Lease Interest - (49)
Lease payments - 480
As at 30 September 2024 1,493 (1,439)
Current (790)
Non-current (649)
The Consolidated income statement includes the following amounts relating to
leases:
Unaudited Unaudited Audited
Half year ended Half year ended Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
£'000 £'000 £'000
Depreciation charge of right-of-use assets 421 406 833
Interest expense (included in finance cost) 48 64 124
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.
There were £20,000 of expenses relating to diminutive payments not included
in the measurement of lease liabilities (H1 FY24: £20,000).
Lease liabilities includes liabilities in respect of IT equipment with a cost
of £77,000 (31 March 2024: £77,000). These assets are capitalised within IT
Equipment and Fixtures and Fittings(see Note 8).
11. Issued Share Capital
28p ordinary
shares Total
Number £'000
Issued share capital as at 30 September 2023 23,956,124 6,708
Issued share capital as at 31 March 2024 23,956,124 6,708
Issued share capital as at 30 September 2024 23,956,124 6,708
12. Related party transactions
MET operations
As part of the disposal of the MET Operations in November 2022, 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. Political Holdings Limited is considered
a related party as it is controlled by Lord Ashcroft KCMG PC, a substantial
shareholder in the Company and Angela Entwistle, a non-executive director of
the Company, is a director of Political Holdings Limited. In total, the
group charged £13,407 for these services during the period (H1 FY24:
£293,364), which has been recognised as Other Operating Income within the
Income Statement. At 30 September 2024, a balance of £86,206 (31 March 2024:
£72,799) 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 £41,130 (H1 FY24:
£56,476) during the period for marketing and data services. At 30 September
2024, there was a balance of £102,485 (31 March 2024: £62,302) due.
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 period,
revenue of £nil (H1 FY24: £887,393) was invoiced, cash of £83,807 (H1 FY24:
£1,968,961) was collected and payments for purchases and payroll amounting to
£105,025 (H1 FY24: £769,009) were made by the Group on behalf of Political
Holdings Limited group companies. None of these revenues or costs are
recognised within the Income Statement of the Group. At 30 September 2024,
£nil (31 March 2024: £12,946) of funds were held on trust for Political
Holdings Limited group companies.
Meritgroup Limited acquisition
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 period, £303,339 (H1 FY24: £366,800) was payable to
Merit Software Services Private Limited in relation to the lease and other
property-related costs. At 30 September 2024, a balance of £3,670 (31 March
2024: £nil) was outstanding in respect of these services.
Other related party transactions
During the current and previous period, Deacon Street Partners Limited, a
company related by virtue of Angela Entwistle, a Director of the Company also
being a Director, invoiced £15,000 (H1 FY24: £15,000) to the Company for the
services of Angela Entwistle as a Non-Executive Director. At 30 September 2024
the balance outstanding was £2,500 (31 March 2024: £2,500).
System1 Group plc, a company related by virtue of Philip Machray, a Director
of the Company also being a Director, is a customer of MD&T and was billed
£38,705 (H1 FY23: £76,700) for Technology Resourcing Services. At 30
September 2024 the balance outstanding was £8,200 (31 March 2024: £12,100).
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