REG - Merit Group PLC - Trading Update

MeritAnnouncement

21/10/2024 07:00

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RNS Number : 8589I  Merit Group PLC  21 October 2024

21 October 2024

Merit Group Plc

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

Trading Update

Merit Group Plc (AIM: MRIT), the AIM-listed data and intelligence business,
today issues an update on trading for the 6 months ended 30 September 2024
(H1:FY25) and the expected performance for the full financial year ended 31
March 2025 (FY25).

The Group expects to report revenues in H1:FY25 of approximately £9.3m, down
6.0% on the £9.9m reported for the comparative H1:FY24 period, and Adjusted
EBITDA(1) of around £1.2 million (H1:FY24 £1.8m).

The Group had net debt of £2.3m as at 30 September 2024 (30 September 2023:
£2.5m, 31 March 2024: £1.9m) with available facilities of £3.7m.

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 Software
& Technology Resourcing 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.

Based on current trading, Revenue for the full year to 31 March 2025 is now
expected to be around £18.5m (8% down year-on-year) and Adjusted EBITDA(1)
around £2.0 million, each approximately 10% and 40% below market
expectations(2), respectively.  The loss before tax and non-recurring items
for the year is expected to amount to £0.8m (FY24: Profit of £1.2m).

Despite recent challenges, 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 returning revenue to growth in the year to 31 March
2026 and, with the Company's strong operational gearing, expects to report a
strong return to profitability.

Commenting on the results, CEO & CFO Phil Machray said: "Clearly the
current dip in revenues combined with the additional cost of our  investment
in sales & marketing will have an impact on profitability in the
short-term.  Our focus remains on strong operational management, whilst
pursuing revenue and earnings growth, and the Board remains confident in the
longer term outlook of the business."

 

1 Adjusted EBITDA is calculated as earnings before tax, depreciation,
amortisation of intangible assets, share based payments and non-recurring
items.

2 Based on the £20.7 million revenue and £3.4m Adjusted EBITDA forecast
contained in the most recent broker's research note, published on 18 July
2024.

Further information on the Company can be found at www.meritgroupplc.com
(http://www.meritgroupplc.com) .

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.

 

 For further information, please contact:
 Merit Group plc
 Mark Smith - Chairman                         020 7593 5500

 Phil Machray - CEO and CFO                    020 7593 5518

 Canaccord Genuity Limited (Nomad and Broker)  020 7523 8150

 Bobbie Hilliam

 Harry Pardoe

 

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