TIDMMRIT
RNS Number : 1722I
Merit Group PLC
01 December 2022
1 December 2022
Merit Group plc
("Merit", the "Company" or "the Group")
UNAUDITED INTERIM RESULTS TO 30 SEPTEMBER 2022
Merit Group plc (AIM: MRIT), the data and intelligence business,
announces its unaudited interim results for the half year ended 30
September 2022. The Company is also pleased to announce completion
of the disposal of the Dods MET Operations.
Financial Highlights
-- Strong year on year growth in Revenue from Continuing
Operations to GBP9.2m (H1 2021/22: Revenue GBP8.7m);
-- Adjusted EBITDA of GBP1.1m (H1 2021/22: Adjusted EBITDA
GBP1.6m), reflecting increased costs primarily driven by wage
inflation and a GBP0.3m negative impact from GBP/INR exchange
rates;
-- Net cash generated from continuing operating activities of GBP0.4m (H1 2021/22: GBP0.4m);
-- Disposal of the MET Operations completed for a cash consideration of GBP4.5m(1) ;
-- Cash balance of GBP1.8m and Net Debt (2) of GBP3.2m as at 30
September 2022, with total debt facilities of GBP5.0m; and
-- Net Cash(2) at 30 November 2022, after disposal proceeds (1)
, of GBP0.3m. Reduction in debt facility post disposal to GBP3.0m
(GBP1.0m Term Loan and GBP2.0m RCF) retaining financial
flexibility.
Continuing Operations
H1 2022/23 H1 2021/22
30 Sep 22 30 Sep Change (6)
21
Revenue GBP9.2m GBP8.7m 6.1%
Gross profit GBP4.6m GBP4.6m (1.1%)
Gross margin(3) 50% 53%
Adjusted EBITDA(4) GBP1.1m GBP1.6m (31.0%)
Net margin(5) 11.7% 18.0%
Loss after tax (GBP0.4m) (GBP0.1m)
Basic Earnings per share (1.8p) (0.4p)
Discontinued Operations
H1 2022/23 H1 2021/22
30 Sep 22 30 Sep Change (6)
21
Revenue GBP4.8m GBP3.6m 31.0%
Adjusted EBITDA(4) loss (GBP0.3m) (GBP0.3m) (14.3%)
Loss after tax (GBP0.6m) (GBP0.6m) (1.0%)
1. GBP4.1m (90%) of net disposal proceeds received on
completion, with the remaining 10% due on settlement of completion
accounts, expected by 31 March 2023.
2. Net debt/net cash comprises the aggregate of gross debt,
excluding IFRS16 lease liabilities, and cash and cash
equivalents.
3. Gross margin is Gross profit as a percentage of Revenue.
4. Adjusted EBITDA is calculated as earnings before interest,
tax, depreciation, amortisation of intangible assets, share based
payments and non-recurring items.
5. Net margin is Adjusted EBITDA as a percentage of Revenue.
6. Year-on-year percentage change figures are calculated on
unrounded numbers.
Operational Highlights
-- New sales team for Merit Data & Technology brought on board;
-- Further recovery in Merit Data & Technology as marketing
events activity picked up following the pandemic; and
-- New clients for Dods PI including Energy UK, Smart Energy, Council of Europe, IDF Europe.
David Beck, CEO of Merit Group plc, said;
"The restructuring of the Group, which is focused on improving
the Group's prospects and shareholder value, continues at pace. In
line with our strategy to focus on the data and technology segment
of the business intelligence sector, we disposed of our media,
events and training operations in the half year.
"The Group is not immune from the impacts of a global recession
and remains cautious given the high inflation and interest rate
environment in which it operates. However, the ongoing business
benefits from high levels of subscription revenue in the Dods
segment and long standing customer relationships in Merit D&T,
contributing to around 85% of the Group's revenue now being
recurring (derived from contracts of 12 or more months in
duration). The sale of the MET Operations has significantly reduced
the seasonality of the Group's EBITDA and strengthened the
Company's financial position. "
For further information, please contact:
Merit Group plc
David Beck - CEO 020 7593 5500
Philip Machray - CFO
www.meritgroupplc.com
Canaccord Genuity Limited (Nomad and Broker)
Bobbie Hilliam 020 7523 8150
This announcement is released by Merit Group plc and contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) 596/2014 ("MAR"), and is disclosed in
accordance with the Group's obligations under Article 17 of MAR.
With the publication of this announcement, this information is now
considered to be in the public domain.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of the Group by David Beck, Chief Executive Officer.
BUSINESS AND OPERATIONAL REVIEW
The interim results are in line with expectations, despite some
residual impact from the COVID 19 Pandemic and challenging economic
conditions arising from the war in Ukraine. Adjusted EBITDA from
Continuing Operations of GBP1.1m in the first half compared to
GBP1.6m in the prior year, with revenue improvements partially
offset by increased cost pressures, the full year cost effect of
management changes made in the prior year, and the deterioration in
the GPB/INR exchange rate.
Merit Data & Technology
The Merit Data & Technology ('Merit D&T') business has
long-standing customers that provide the business with high levels
of recurring revenue. We provide a range of data and intelligence
products and services to largely UK based customers, using our
proprietary technology to enhance industry intelligence and
marketing data.
Merit Data & Technology reported Adjusted EBITDA of GBP0.7m
in the first half against GBP1.0m in the same period in the
previous year. The significant weakening of Sterling against the
Indian Rupee impacted margins in the first half; the exchange rate
movement alone had an adverse impact of GBP323k, more than
accounting for the year-on-year reduction of GBP287k in Adjusted
EBITDA. The Sterling exchange rate's recent recovery and a close
focus on costs, should allow for margin improvement in the second
half.
Joanna Edwards joined the business in June 2022 as the new CRO
of Merit D&T. Joanna comes with extensive sales management
experience at Incisive Media and Infopro Digital and will drive a
new and expanded sales team at Merit D&T.
Whilst onboarding the new sales team Merit D&T grew its
revenue by 10% year-on-year. Both our core sectors are doing well
in terms of revenue growth. Within the data segment, Marketing Data
put in a particularly strong performance as it benefited from
increased marketing events activity post the pandemic.
The business secured new clients in System1, Partnerize, Axco,
EDI, Lowry Systems and Wired (Conde Nast), and has also secured
additional work from existing clients Relx, CRU, PrisymID, BIP
amongst others.
The Merit D&T business has faced increasing cost challenges
post pandemic, high levels of wage inflation in India, especially
in the technology teams, together with an increasing general
inflation rate both in the UK and India. Other costs related to
home working that were saved during the pandemic have returned.
Our new sales team will drive additional revenue and secure new
clients in 2023 and the upgraded and expanded team also gives us an
opportunity to push further into eCommerce data services, where our
investment in the DataWorks Technology Platform will help us to
secure new clients at much higher levels of annual revenue.
Dods
The Dods business now comprises a leading political intelligence
offering that has over 800 subscribers and where we are the UK's
industry leader with an enviable reputation for the
comprehensiveness of our service and the quality of analysis that
we provide customers. In the half year we continued the roll out of
our new platform to UK customers, which helped reduce churn and
improve the quality of customers' experience.
In the first half the Continuing Operations of Dods made
Adjusted EBITDA of GBP0.9m against GBP1.0m in the same period last
year. New customers in the period include Energy UK, Smart Energy,
The Council of Europe and IDF Europe.
With the increased focus on this key service following the
disposal of the MET Operations, we are targeting growth through the
addition of new sector specialisms and a greater focus on European
markets where we see opportunities to grow our market share.
Board Change
Following the disposal of the Dods MET Operations, Munira
Ibrahim, the MD of the Dods business, has resigned and will be
leaving the Board with immediate effect. Munira has been with the
Company for three and a half years and helped to guide the business
through a most difficult period. She oversaw many significant
improvements, most notably in our media titles and events
portfolio. The Board recorded its thanks to her for her
contribution and dedication, especially through the pandemic, a
uniquely challenging time.
Outlook
The Group is not immune from the impacts of a global recession
and remains cautious given the high inflation and interest rate
environment in which it operates. However, the ongoing business
benefits from high levels of subscription revenue in the Dods
segment and long standing customer relationships in Merit D&T,
contributing to around 85% of the Group's revenue being recurring
(derived from contracts of 12 or more months in duration). The sale
of the MET Operations has also significantly reduced the
seasonality of the Group's EBITDA and strengthened the Company's
financial position.
David Beck
CEO
Merit Group plc
FINANCIAL REVIEW
On 27 October 2022, the Group announced that it had agreed to
sell the Media, Events and Training operations of its Dods segment
(together, the "MET Operations") for a cash consideration of GBP4.5
million. The Disposal completed on 30 November 2022.
As a consequence of the disposal, the assets of the MET
Operations have been reclassified as assets held for resale within
current assets; the transferring liabilities of the MET Operations
have been reclassified as liabilities directly associated with
assets classified as held for resale within current liabilities;
and the activities of the MET Operations have been classified as
Discontinued Operations within the Condensed Consolidated Income
Statement.
Income Statement - Continuing Operations
The Group's revenue from Continuing Operations increased by 6.1%
to GBP9.2m (H1 2021/22: GBP8.7m).
Revenues from Merit Data and Technology (MD&T) were GBP0.5m
higher than the equivalent prior half year (H1 2022/23: GBP5.6m; H1
2021/22: GBP5.1m), representing an increase of 10%. Dods revenues
for the period remained stable at GBP3.6m (H1 2021/22:
GBP3.6m).
Gross profit for the period was stable at GBP4.6m by comparison
to the prior period (H1 2021/22: GBP4.6m). Gross margin decreased
from 53.3% to 49.7%, driven by the Group's investment in sales
& marketing resource within MD&T.
Adjusted EBITDA decreased by GBP0.5m to GBP1.1m (H1 2021/22:
GBP1.6m Adjusted EBITDA) due to inflationary pressure on the UK and
Indian cost bases, the strengthening of the Executive management
team and the impact of adverse foreign exchange rate movements on
the Group's Indian cost base.
The increase in operating loss, from a profit of GBP0.1m to a
loss of GBP0.6m, reflects the reduction in EBITDA. The Group's
operating loss is stated after a right-of-use assets charge of
GBP0.7m (H1 2021/22: GBP0.6m), an amortisation on acquired
intangibles under business combinations of GBP0.3m (H1 2021/22:
GBP0.3m), a charge for intangible assets amortisation of GBP0.2m
(H1 2021/22: GBP0.1m), a charge for depreciation of tangible assets
of GBP0.3m (H1 2021/22: GBP0.3m), and non-recurring costs of
GBP0.2m (H1 2021/22: GBP0.2m).
The net finance credit for the year of GBP0.1m compared to a net
finance expense of GBP0.2m in H1 2021/22, reflecting the favourable
impact of foreign exchange hedging.
The loss for the year from Continuing Operations, after a tax
charge of GBP0.2m (H1 2021/22: GBPnil), amounted to GBP0.4m (H1
2021/22: GBP0.1m loss).
Income Statement - Discontinued Operations
The results of the Group's MET Operations, which have been
reclassified as Discontinued Operations, are disclosed within Note
5. These show revenue of GBP4.8m (H1 2021/22: GBP3.6m), an Adjusted
EBITDA loss of GBP0.3m (H1 2021/22: GBP0.3m Adjusted EBITDA loss)
and a loss for the period of GBP0.6m (H1 2021/22: GBP0.6m
loss).
Earnings and Dividends
Adjusted earnings per share (basic and diluted) from Continuing
Operations in the period were a loss of 0.68 pence (H1 2021/22:
earnings of 1.15 pence, basic and diluted) and were based on the
adjusted loss for the period of GBP0.2m (H1 2021/22: GBP0.2m
profit) with a weighted average number of shares in issue during
the period of 23,956,124.
Earnings per share, both basic and diluted, from Continuing
Operations in the period were a loss of 1.85 pence (H1 2021/22:
loss of 0.41 pence) and were based on the loss after tax for the
period of GBP0.4m (H1 2021/22: loss of GBP0.1m).
Total Earnings per share, both basic and diluted, in the period
were a loss of 4.17 pence (H1 2021/22: loss of 3.11 pence) and were
based on the loss after tax for the period of GBP1.0m (H1 2021/22:
GBP0.6m)
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 2021/22: GBPnil).
Going Concern
The Directors have considered the implications for Going Concern
and remain satisfied with the Company's funding and liquidity
position. See further comments below, under 'Statement of Financial
Position'.
Statement of Financial Position
Assets
Non-current assets of GBP43.9m (31 March 2022: GBP47.0m)
comprise goodwill of GBP27.6m (31 March 2022: GBP28.9m), intangible
assets of GBP8.7m (31 March 2022: GBP9.8m), property, plant and
equipment of GBP1.7m (31 March 2022: GBP1.8m), IFRS 16
rights-of-use assets of GBP4.9m (31 March 2022: GBP5.7m) and
investments of GBP1.0m (31 March 2022: GBP0.8m).
Investments include the Group 40% stake in the issued share
capital of Sans Frontières Associates (SFA) with a carrying value
of GBP0.5m (31 March 2022: GBP0.3m). The Group also loaned SFA
GBP0.1m (31 March 2022: GBP0.2m) at the period end. The loan was
unsecured, carried no interest charge, and was repaid in October
2022. Investments also include a 10.9% stake in DataWorks Ltd with
a carrying value of GBP0.5m (31 March 2022: GBP0.5m).
During the period, the group completed the sale of its 30% stake
in Social 360 Limited, previously carried as an asset held for
resale, for cash consideration of GBP420,000.
The Group had a cash balance of 1.8m (31 March 2022: GBP2.3m)
and gross bank borrowings of GBP5.0m at the period end (31 March
2022: GBP4.4m).
Total assets of the Group were GBP53.9m (31 March 2022:
GBP55.5m), of which GBP3.6m are held for resale in respect of the
MET operations which were disposed after the period end.
Equity and Liabilities
The Group has a bank term loan of GBP3.0m (31 March 2022:
GBP2.4m). The current amount due is GBP0.2m (31 March 2022:
GBP0.9m) and non-current is GBP2.8m (31 March 2022: GBP1.5m). The
loan has a repayment schedule through to September 2027. GBP2.0
million of the term loan will be repaid following the disposal of
the MET operations. The Group also has a RCF loan facility of
GBP2.0m available through to September 2027. This RCF facility was
fully drawn throughout the period and stood at GBP2.0m at the
period end (31 March 2022: GBP2.0m). Due to its revolving nature,
this loan is all shown as due within one year.
Current liabilities of GBP13.2m decreased by GBP1.1m during the
period (31 March 2022: GBP14.3m) and include GBP3.1m of liabilities
directly associated with the assets of the MET Operations, which
have been classified as held for resale.
Also within current liabilities, trade and other payables
decreased from GBP9.8m at 31 March 2022 to GBP6.2m at the period
end, including a reduction of GBP0.3m in VAT liabilities which were
deferred from FY21 under an arrangement made available as part of
the UK Government's support for businesses impacted by Covid-19.
Deferred VAT at the period end was GBP0.2m (31 March 2022:
GBP0.5m).
Total equity reduced by GBP0.9m to GBP33.5m (31 March 2022:
GBP34.4m), reflecting the loss for the period.
Liquidity and capital resources
Net cash generated by operations was neutral at GBP0.0m inflow
in the period by comparison to an GBP0.3m outflow in H1 2021/22.
Operating cashflow in respect of working capital movement were
significantly reduced year-on-year at GBP0.9m outflow in the period
compared to GBP1.4m in H1 2021/22 as the Group neared completion of
the repayment of operating liabilities deferred from prior periods
in response to Covid-19, with only GBP0.2m of deferred liabilities
outstanding at the period end (31 March 2022: GBP0.5m). The
movement in working capital of GBP0.9m also includes payment of the
final GBP0.3m of deferred cash consideration on the Meritgroup
Limited acquisition, and GBP0.3m of payments to HMRC as the Group
fell within the VAT 'payment on account' regime.
After tax, net cash used in operating activities amounted to
GBP0.2m (H1 2021/22: GBP0.4m) of which continuing operations
generated GBP0.4m (H1 2021/22: GBP0.4m) and discontinued operations
used GBP0.6m (H1 2021/22: GBP0.8m).
Investing activities produced a net cash inflow of GBP0.3m in
the period, including the GBP0.4m receipt of proceeds from the sale
of the Group's investment in Social 360 Limited in August 2022.
This compares to a net cash outflow of GBP1.0m in the H1 2021/22,
driven by the Group's investment in the Political Intelligence
platform and DataWorks.
Total financing outflow used in the servicing of bank debt and
interest and capital repayments on leases amounted to GBP1.1m in
the period (H1 2021/22; GBP1.3m) and the Group received a net
inflow on the bank refinancing in July 2022 of GBP0.6m.
The cash position at the period end was GBP1.8m (31 March 2022:
GBP2.3m). As at 30 September 2022, the Group had a net debt
position of GBP3.2m (31 March 2022: net debt of GBP2.1m).
Philip Machray
Chief Financial Officer
Condensed consolidated income statement
For the half year ended 30 September 2022
Unaudited Audited
Unaudited Half year Year ended
ended
Half year 30 Sept 31 Mar 2022
ended 2021
Continuing Operations Note 30 Sept (restated) (restated)
2022
GBP'000 GBP'000 GBP'000
-------------------------------------- ---------- ------------- ------------ -------------
Revenue 3 9,229 8,698 17,981
Cost of sales (4,641) (4,060) (8,986)
------------------------------------------- ----- ------------- ------------ -------------
Gross profit 4,588 4,638 8,995
Administrative expenses (5,142) (4,556) (10,489)
Operating loss from Continuing
Operations (554) 82 (1,494)
Memorandum:
Adjusted EBITDA(1) 1,080 1,566 2,302
Depreciation of property,
plant and equipment (301) (296) (596)
Depreciation of right-of-use
assets (661) (641) (1,277)
Amortisation of intangible
assets acquired through business
combinations (255) (255) (511)
Amortisation of software intangible
assets (163) (114) (255)
Share-based payments (31) - 48
Non-recurring items 4
Impairments and asset write
offs - - (843)
People-related costs (150) (158) (316)
Other non-recurring items (73) (20) (46)
Operating loss from Continuing
Operations (554) 82 (1,494)
Net finance credit/(expense) 41 (167) (411)
Share of profit of Associate 252 - 144
------------------------------------------- ----- ------------- ------------ -------------
Loss before tax from Continuing
Operations (261) (85) (1,761)
Income tax (charge)/credit (182) - 292
------------------------------------------- ----- ------------- ------------ -------------
Loss for the period from
Continuing Operations (443) (85) (1,469)
Loss for the period from Discontinued
Operations (556) (561) (103)
Loss for the period (999) (646) (1,572)
------------------------------------------- ----- ------------- ------------ -------------
(1) Adjusted EBITDA is defined as the operating loss after
adding back depreciation, amortisation, share-based payments, and
non-recurring items. 100% of the loss is attributable to owners of
the parent.
Earnings per share (pence)
p per share p per share p per share
(restated*) (restated*)
Basic from Continuing Operations 6 (1.85p ) (0.41p) (6.57p)
Basic from Discontinued Operations 6 (2.32p) (2.70p) (0.46p)
-------------------------------------- ------------ ------------- -------------
Basic total 6 (4.17p) (3.11p) (7.03p)
-------------------------------------- ------------ ------------- -------------
Prior period earnings per share have been restated in accordance
with IAS33 to reflect the share consolidation and subdivision
undertaken on 16 April 2021, as detailed in Note 12.
The notes on pages 13 to 25 form part of these unaudited interim
results.
Condensed consolidated statement of comprehensive income
For the half year ended 30 September 2022
Unaudited Unaudited Audited
Half year Half year Year ended
ended ended 31 Mar 2022
30 Sept 30 Sept GBP'000
2022 2021
GBP'000 GBP'000
------------------------------------- ----------- ----------- -------------
Loss for the period (999) (646) (1,572)
Items that may be subsequently
reclassified
to Profit and loss:
Exchange differences on translation
of foreign operations 21 28 31
Remeasurement of defined benefits
obligation 36 20 3
------------------------------------- ----------- ----------- -------------
Other comprehensive income for
the period 57 48 34
------------------------------------- ----------- ----------- -------------
Total comprehensive loss for
the period ( 942) (598) (1,538)
------------------------------------- ----------- ----------- -------------
The notes on pages 13 to 25 form part of these unaudited interim
results.
Condensed consolidated statement of financial position
As at 30 September 2022
Unaudited Unaudited Audited
30 Sept 2022 30 Sept 2021 31 Mar 2022
Note GBP'000 GBP'000 GBP'000
---------------------------------- ------- -------------- -------------- -------------
Non-current assets
Goodwill 8 27,642 28,911 28,911
Intangible assets 9 8,679 10,358 9,826
Property, plant and equipment 10 1,673 2,082 1,807
Right-of-use assets 4,869 6,541 5,660
Investment in associates 997 1,167 777
Total non-current assets 43,860 49,059 46,981
Current assets
Work in progress and inventories - 119 14
Trade and other receivables 4,448 5,786 5,569
Loan receivable 140 420 210
Cash and cash equivalents 1,834 2,804 2,321
6,422 9,129 8,114
Assets held for resale 3,591 - 410
---------------------------------- ------- -------------- -------------- -------------
Total current assets 10,013 9,129 8,524
---------------------------------- ------- -------------- -------------- -------------
Total assets 53 ,873 58,188 55,505
---------------------------------- ------- -------------- -------------- -------------
Current liabilities
Trade and other payables 6,168 10,966 9,718
Defined benefit pension
obligation 84 78 85
Deferred consideration - 1,046 -
Bank loan/RCF 11 2,200 2,541 2,860
Lease liability 11 1,640 1,680 1,679
Liabilities directly associated 3,101 - -
with assets classified as
held for resale
Total current liabilities 13,193 16,311 14,342
Non-current liabilities
Deferred tax liability - 222 -
Pension obligation 232 146 197
Bank loan/RCF 11 2,800 2,024 1,518
Lease liability 11 4,153 6,045 5,042
Total non-current liabilities 7,185 8,437 6,757
---------------------------------- ------- -------------- -------------- -------------
Capital and reserves
Issued capital 12 6,708 5,821 6,708
Share premium 1,067 - 1,067
Retained profit/(loss) 12,033 13,958 13,032
Redemption reserve 13,680 13,680 13,680
Translation reserve (28) (52) (49)
Other reserves (6) (25) (42)
Share option reserve 41 58 10
Total equity 33,495 33,440 34,406
Total equity and liabilities 53,873 58,188 55,505
---------------------------------- ------- -------------- -------------- -------------
The notes on pages 13 to 25 form part of these unaudited interim
results.
Condensed consolidated statement of changes in equity
For the half year ended 30 September 2022
Share Capital Share Total
Share premium Merger Retained redemption Translation Other option shareholders'
capital reserve(1) reserve(2) earnings reserve(3) reserve(4) reserves reserve(5) funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- ------------ ------------ ---------- ------------ ------------- ---------- ------------ ---------------
Unaudited
------------------- --------- ------------ ------------ ---------- ------------ ------------- ---------- ------------ ---------------
At 1 April 2021 19,501 20,866 409 (6,671) - (80) (45) 58 34,038
Total
comprehensive
income:
Loss for the
period - - - (646) - - - (646)
Currency
translation
differences - - - - - 28 - - 28
Remeasurement of
defined
benefits
obligations - - - - - - 20 - 20
Transactions with
owners:
Share
consolidation (13,680) (20,866) (409) 21,275 13,680 - - - -
At 30 September
2021 5,821 - - 13,958 13,680 (52) (25) 58 33,440
------------------- --------- ------------ ------------ ---------- ------------ ------------- ---------- ------------ ---------------
At 1 April 2022 6,708 1,067 - 13,032 13,680 (49) (42) 10 34,406
Total
comprehensive
income:
Loss for the
period - - - (999) - - - ( 999)
Currency
translation
differences - - - - - 21 - - 21
Remeasurement
of defined
benefits
obligations - - - - - - 36 - 36
Share-based
payments - - - - - - - 31 31
------------------- --------- ------------ ------------ ---------- ------------ ------------- ---------- ------------ ---------------
At 30 September
2022 6,708 1,067 - 12,033 13,680 (28) (6) 41 33,495
------------------- --------- ------------ ------------ ---------- ------------ ------------- ---------- ------------ ---------------
1 The share premium reserve represents the amount paid to the
Company by shareholders above the nominal value of shares
issued.
2 The merger reserve represents the accounting treatment in
relation to historical business combinations.
3 The capital redemption reserve is a non-distributable reserve
created on cancellation of deferred shares.
4 The translation reserve comprises foreign currency translation
differences arising from the translation of financial statements of
the Group's foreign entities into Sterling.
5 The share option reserve represents the cumulative expense
recognised in relation to equity-settled share-based payments.
The notes on pages 13 to 25 form part of these unaudited interim
results.
Condensed consolidated statement of cash flows
For the half year ended 30 September 2022
Unaudited Unaudited Audited
Half year Half year Year ended
Note ended ended 31 Mar 2022
30 Sept 30 Sept GBP'000
2022 2021
GBP'000 GBP'000
Cash generated by operations 7 6 (349) 696
Taxation paid (163) (85) (332)
-------------------------------------- ------- ----------- ----------- -------------
Net cash (used in)/generated
from operating activities (157) (434) 364
-------------------------------------- ------- ----------- ----------- -------------
Cash flows from investing
activities
Interest and similar income
received 40 7 28
Additions to property, plant
and equipment (132) (127) (314)
Additions to intangible assets (108) (568) (1,240)
Acquisition of investment (450) (450)
Proceeds from sale of Investment 410 - -
in Associates
Repayment of long-term loan
by Associate 70 140 350
-------------------------------------- ------- ----------- ----------- -------------
Net cash raised/(used) in
investing activities 280 (998) (1,626)
-------------------------------------- ------- ----------- ----------- -------------
Cash flows from financing
activities
Proceeds from issue of share
capital - - 908
Interest and similar expenses
paid (153) (87) (213)
Payment of lease liabilities (806) (913) (2,055)
Payment of lease interest (161) (280) (369)
Net drawings from bank facility 774 - -
Repayment of bank loan (152) (101) (253)
-------------------------------------- ------- ----------- ----------- -------------
Net cash used in financing
activities (498) (1,381) (1,982)
-------------------------------------- ------- ----------- ----------- -------------
Net decrease in cash and cash
equivalents (375) (2,813) (3,244)
Opening cash and cash equivalents 2,321 5,565 5,565
Effect of exchange rate fluctuations
on cash held (112) 52 -
-------------------------------------- ------- ----------- ----------- -------------
Closing cash at bank 1,834 2,804 2,321
-------------------------------------- ------- ----------- ----------- -------------
Comprised of:
Cash and cash equivalents 1,834 2,804 2,321
Closing cash at bank 1,834 2,804 2,321
-------------------------------------- ------- ----------- ----------- -------------
The notes on pages 13 to 25 form part of these unaudited interim
results.
Notes to the condensed consolidated financial statements
For the half year ended 30 September 2022
1. Basis of preparation
Merit Group plc is a Company incorporated in England and
Wales.
This condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by
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 2022.
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 2022 have been extracted from the Group's statutory
accounts for that financial period and, where applicable, have been
restated to remove Discontinued Operations as outlined in note 5.
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.
2. Critical accounting estimates and judgements
Accounting estimates and judgements
The Group makes estimates and judgements concerning the future
and the resulting estimates may, by definition, vary from the
actual results. The Directors considered the critical accounting
estimates and judgements used in the interim financial statements
and concluded that the main areas of judgement and estimates
are:
Significant Financial Judgements
-- Going concern
-- Recognition of deferred tax assets
-- Identification of cash generating units for goodwill
impairment testing
-- Non-recurring administrative expenses
Significant Financial Estimates
-- Carrying value of goodwill
-- Bad debt allowance
-- Pensions
-- Share based payments
The condensed set of interim financial statements have been
prepared on a going concern basis and were approved by the Board on
30 November 2022 .
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. In the half
year ended 30 September 2021, the Group reported activity against
the two operating business segments only, and therefore the prior
period segmental analysis has been restated to reflect a
like-for-like comparison with the 2022 disclosures.
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 business.
The following table provides an analysis of the Group's segment
revenue by business segment.
Unaudited Audited
Unaudited Half year Year ended
Half year ended 31 Mar 2022
Continuing Operations(1) ended 30 Sept (restated*)
30 Sept 2021 GBP'000
2022 (restated*)
GBP'000 GBP'000
---------------------------- ------------ ------------- -------------
Merit Data & Technology 5,626 5,111 10,696
Dods 3,603 3,587 7,285
9,229 8,698 17,981
---------------------------- ------------ ------------- -------------
No client accounted for more than 10 percent of total
revenue.
Unaudited Audited
Group Revenue by stream Unaudited Half year Year ended
ended
Half year 30 Sep 2021 31 Mar 2022
ended
Continuing Operations(1) 30 Sep 2022 (Restated) (Restated)
GBP'000 GBP'000 GBP'000
---------------------------------- --------------- ------------- -------------
Data 2,981 2,649 5,567
Software & Technology Resourcing 2,645 2,462 5,129
Political Intelligence 3,414 3,431 6,866
Political engagement 189 156 419
9,229 8,698 17,981
---------------------------------- --------------- ------------- -------------
(1) Prior periods have been restated to remove Discontinued
Operations as outlined in Note 5.
*Prior period segmental analysis has been restated to reflect a
like-for-like comparison with the 2022 disclosures, as outlined
above.
3. Segmental information (continued)
Unaudited half year ended MD&T Dods Central Total
30 Sep 2022 30 Sep 30 Sep 30 Sep 30 Sep
Business segment profit before 2022 2022 2022 2022
tax GBP'000 GBP'000 GBP'000 GBP'000
Continuing Operations
------------------------------------- ---------- ---------- ---------- ----------
Adjusted EBITDA 733 889 (542) 1,080
Depreciation of property,
plant and equipment (140) (161) - (301)
Depreciation of right-of-use
assets (281) (211) (169) (661)
Amortisation of intangible
assets acquired through business
combinations (255) - - (255)
Amortisation of software intangible
assets - (163) - (163)
Share based payments - - (31) (31)
Non-recurring items
People-related costs (34) (23) (93) (150)
Other non-recurring items - (48) (25) (73)
------------------------------------- ---------- ---------- ---------- ----------
Operating profit/(loss) 23 283 ( 860) (554)
Net finance income/(expense) 45 (16) 12 41
Share of profit of Associate - - 252 252
------------------------------------- ---------- ---------- ---------- ----------
Profit/(loss) before tax
from Continuing Operations 68 267 ( 596) (261)
------------------------------------- ---------- ---------- ---------- ----------
Unaudited half year ended MD&T Dods Central Total
30 Sep 2021
Business segment profit before 30 Sep 30 Sep 30 Sep 30 Sep
tax
2021 2021 2021 2021
Continuing Operations(1) (restated*) (restated*) (restated*) (restated*)
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- -------------- -------------- -------------- ---------------
Adjusted EBITDA 1,020 995 (449) 1,566
Depreciation of property,
plant and equipment (138) (158) - (296)
Depreciation of right-of-use
assets (264) (209) (168) (641)
Amortisation of intangible
assets acquired through business
combinations (255) - - (255)
Amortisation of software intangible
assets - (114) - (114)
Non-recurring items
People-related costs - - (158) (158)
Other non-recurring items - 10 (30) (20)
------------------------------------- -------------- -------------- -------------- ---------------
Operating profit/(loss) 363 524 (805) 82
Net finance expense (42) (124) (1) (167)
Share of profit of Associate - - - -
------------------------------------- -------------- -------------- -------------- ---------------
Profit/(loss) before tax
from Continuing Operations 321 400 (806) (85)
------------------------------------- -------------- -------------- -------------- ---------------
(1) Prior periods have been restated to remove Discontinued
Operations as outlined in Note 5.
*Prior period segmental analysis has been restated to reflect a
like-for-like comparison with the 2022 disclosures, as outlined
above
3. Segmental information (continued)
Audited year ended 31 Mar MD&T Dods Central Total
2022 31 Mar 31 Mar 31 Mar 31 Mar
Business segment profit before 2022 2022 2022 2022
tax GBP'000 GBP'000 GBP'000 GBP'000
Continuing Operations(1)
------------------------------------- ---------- ---------- ---------- ----------
Adjusted EBITDA 1,898 1,395 (991) 2,302
Depreciation of property,
plant and equipment (279) (317) - (596)
Depreciation of right-of-use
assets (531) (413) (333) (1,277)
Amortisation of intangible
assets acquired through business
combinations (511) - - (511)
Amortisation of software intangible
assets - (255) - (255)
Share based payments - - 48 48
Non-recurring items
Impairments and asset write
offs - (746) (97) (843)
People-related costs - - (316) (316)
Other non-recurring items - - (46) (46)
------------------------------------- ---------- ---------- ---------- ----------
Operating profit/(loss) 577 (336) (1,735) (1,494)
Net finance expense 74 (375) (110) (411)
Share of profit of Associate - - 144 144
------------------------------------- ---------- ---------- ---------- ----------
Profit/(loss) before tax
from Continuing Operations 651 (711) (1,701) (1,761)
------------------------------------- ---------- ---------- ---------- ----------
(1) Prior periods have been restated to remove Discontinued
Operations as outlined in Note 5.
4. Non-recurring items
Unaudited Audited
Continuing Operations(1) Unaudited Half year Year ended
ended
Half year 30 Sep 2021 31 Mar 2022
ended
30 Sep 2022 (restated) (restated)
GBP'000 GBP'000 GBP'000
------------------------------------------- --------------- ------------- -------------
Impairments and asset write offs - - 843
People-related costs 150 158 316
Other:
- Professional services and consultancy 73 20 46
223 178 1,205
------------------------------------------- --------------- ------------- -------------
(1) Prior periods have been restated to remove Discontinued
Operations as outlined in Note 5.
During the full year to 31 March 2022, the Group made an
impairment charge of GBP97k against the carrying value of
investments and wrote off GBP746k of intangible fixed assets under
construction.
People-related costs 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.
Other non-recurring costs relate to one-off consultancy and
professional fees associated with the rental review of the London
premises.
5. Disposal
On 27 October 2022, the Group announced that it had agreed to
sell the Media, Events and Training operations of its Dods segment
(together, the "MET Operations") for a cash consideration of GBP4.5
million. The Disposal remains subject to the satisfaction of
certain conditions, including satisfaction of financing by
Political Holdings Limited (the Purchaser), but is expected to
complete before the end of the 2022 calendar year.
As a consequence of the agreed disposal, the assets of the MET
Operations have been reclassified as assets held for resale within
current assets; the transferring liabilities of the MET Operations
have been reclassified as liabilities directly associated with
assets classified as held for resale within current liabilities;
and the activities of the MET Operations have been classified as
Discontinued Operations within the Condensed Consolidated Income
Statement.
The results of the Discontinued MET Operations for the period
are as follows.
Unaudited Unaudited Audited
Half year Half year Year ended
Discontinued Operations ended ended 31 Mar 2022
30 Sept 30 Sept 2021 GBP'000
2022 GBP'000
GBP'000
----------------------------------------- ----------- -------------- -------------
Revenue 4,770 3,640 9,418
Cost of sales (4,280) (3,491) (7,610)
----------------------------------------- ----------- -------------- -------------
Gross profit 490 149 1,808
Administrative expenses (1,044) (750) (1,945)
Other operating income - 44 42
Operating loss (554) (557) (95)
Memorandum:
Adjusted EBITDA (269) (314) 519
Depreciation of property, plant
and equipment (45) (48) (93)
Depreciation of right-of-use
assets (19) (19) (38)
Amortisation of intangible assets
acquired through business combinations (176) (176) (351)
Non-recurring items
People-related costs (45) - (132)
Operating loss (554) (557) (95)
Net finance expense (2) (4) (8)
Loss before tax (556) (561) (103)
- - -
Income tax
----------------------------------------- ----------- -------------- -------------
Loss for the period (556) (561) (103)
----------------------------------------- ----------- -------------- -------------
5. Disposal
Cashflows generated by the Discontinued Operation for the period
were as follows:
Unaudited Unaudited Audited
Half year Half year Year ended
Discontinued Operations ended ended 31 Mar 2022
30 Sept 30 Sept 2021 GBP'000
2022 GBP'000
GBP'000
------------------------------------------ ----------- -------------- -------------
Net cash outflow from operating
activities (576) (833) (330)
Net cash outflow from financing
activities (22) (22) (44)
------------------------------------------ ----------- -------------- -------------
Net decrease in cash, cash equivalents
and bank overdrafts from Discontinued
Operations (598) (855) (374)
------------------------------------------ ----------- -------------- -------------
6. Earnings per share
Unaudited Unaudited Audited
Half year Half year Year ended
ended ended
30 Sep 2022 30 Sep 2021 31 Mar 2022
Continuing Operations(1) GBP'000 (restated) (restated)
GBP'000 GBP'000
------------------------------------------- -------------- ------------- -------------
Loss attributable to shareholders (443) (85) (1,469)
Add: non-recurring items 223 178 1,205
Add: amortisation of intangible
assets acquired through business
combinations 255 255 511
Add: net exchange losses/(gains) (230) (109) (147)
Add: share-based payment (credit)/expense 31 - (48)
------------------------------------------- -------------- ------------- -------------
Adjusted post-tax (loss)/profit
from Continuing Operations
attributable to shareholders (164) 239 52
------------------------------------------- -------------- ------------- -------------
(1) Prior periods have been restated to remove Discontinued
Operations as outlined in Note 5.
Unaudited Unaudited Audited
Half year Half year Year ended
Discontinued Operations ended ended 31 Mar 2022
30 Sep 2022 30 Sep 2021 GBP'000
GBP'000 GBP'000
----------------------------------- ------------- ------------- -------------
Loss attributable to shareholders (556) (561) (103)
Add: non-recurring items 45 - 132
Add: amortisation of intangible
assets acquired through business
combinations 176 176 351
Adjusted post-tax (loss)/profit
from Discontinued Operations
attributable to shareholders (335) (385) 380
----------------------------------- ------------- ------------- -------------
6. Earnings per share (continued)
Unaudited
Unaudited Half year Audited
Half year ended ended Year ended
30 Sept 2022 30 Sept 2021 31 Mar 2022
Ordinary shares Ordinary Ordinary
shares shares
(restated*)
------------------------------ ------------------ -------------- --------------
Weighted average number
of shares
In issue during the period
- basic 23,956,124 20,805,685 22,367,910
Adjustment for share options - 55,786 -
In issue during the period
- diluted 23,956,124 20,861,471 22,367,910
------------------------------ ------------------ -------------- --------------
Performance Share Plan (PSP) options over 1,420,791 Ordinary
shares have not been included in the calculation of diluted EPS for
the period ended 30 September 2022, nor for the year ended 31 March
2022, because their exercise is contingent on the satisfaction of
certain criteria that had not been met at those dates.
Unaudited Audited
Unaudited Half year Year ended
Half year ended ended 31 Mar 2022
Continuing Operations(1) 30 Sep 2022 30 Sep 2021 Pence per
Pence per share Pence per share
share (restated*)
(restated*)
----------------------------- --------------------- ------------- -------------
Earnings per share - Continuing
Operations
Basic (1.85) (0.41) (6.57)
Diluted (1.85) (0.41) (6.57)
Adjusted earnings per share -
Continuing Operations
Basic ( 0.68) 1.15 0.23
Diluted ( 0.68) 1.15 0.23
--------------------------------------- ----------- ------------- -------------
(1) Prior periods have been restated to remove Discontinued
Operations as outlined in Note 5.
* Prior period figures for the number of shares and earnings per
share have been restated in accordance with IAS33 to reflect the
share consolidation and subdivision undertaken on 16 April 2021, as
detailed in Note 12.
Unaudited Unaudited Audited
Half year ended Half year Year ended
Discontinued Operations 30 Sep 2022 ended 31 Mar 2022
Pence per share 30 Sep 2021 Pence per
Pence per share
share
------------------------------------ ----------------------- ------------- -------------
Earnings per share - Discontinued
Operations
Basic (2.32) (2.70) (0.46)
Diluted (2.32) (2.70) (0.46)
Adjusted earnings per share - Discontinued
Operations
Basic (1.40) (1.85) 1.70
Diluted (1.40) (1.85) 1.70
---------------------------------------------------- ------- ------------- -------------
6. Earnings per share (continued)
Unaudited Audited
Unaudited Half year Year ended
Half year ended ended 31 Mar 2022
Total 30 Sep 2022 30 Sep 2021 Pence per
Pence per share Pence per share
share (restated
(restated *)
*)
----------------------------- ------------------ ------------- -------------
Earnings per share
Basic (4.17) (3.11) (7.03)
Diluted (4.17) (3.11) (7.03)
Adjusted earnings per share
Basic (2.08) (0.70) 1.93
Diluted (2.08) (0.70) 1.93
----------------------------- ------------------ ------------- -------------
* Prior period figures for the number of shares and earnings per
share have been restated in accordance with IAS33 to reflect the
share consolidation and subdivision undertaken on 16 April 2021, as
detailed in Note 12.
7. Cash generated by operations
Unaudited Unaudited Audited
Half year Half year Year ended
ended ended 31 Mar 2022
30 Sept 30 Sept GBP'000
2022 2021
GBP'000 GBP'000
-------------------------------------- ----------- ----------- -------------
Cash flows from operating
activities
Loss for the period (999) (646) (1,572)
Depreciation of property, plant
and equipment 346 273 689
Depreciation of right-of-use
assets 680 660 1,315
Amortisation of intangible
assets acquired through business
combinations 431 431 862
Amortisation of other intangible
assets 163 184 255
Share-based payments charge/(credit) 31 - (48)
Share of profit of Associate (252) - (144)
Lease interest expense 161 195 369
Loss on disposal of fixed assets - - 2
Write off of intangible assets - - 746
Impairment of investments in
associates - - 97
Interest income (40) (110) (28)
Interest expense 153 86 213
Foreign exchange on operating 24 - -
items
Income tax charge/(credit) 182 - (292)
--------------------------------------- ----------- ----------- -------------
Operating cash flows before
movement in working capital 880 1,073 2,464
(Increase)/decrease in inventories 14 (83) 22
(Increase)/decrease in trade
and other receivables (422) (202) 430
Decrease in trade and other
payables (466) (1,137) (2,220)
--------------------------------------- ----------- ----------- -------------
Cash generated by operations 6 (349) 696
--------------------------------------- ----------- ----------- -------------
8. Goodwill
Unaudited Unaudited Audited
Half year Half year Year ended
ended ended 31 Mar 2022
30 Sep 2022 30 Sep 2021 GBP'000
GBP'000 GBP'000
----------------------------- ------------- ------------- -------------
Cost and net book value
Opening balance 28,911 28,911 28,911
Reclassified as assets held (1,269) - -
for resale
----------------------------- ------------- ------------- -------------
Closing balance 27,642 28,911 28,911
----------------------------- ------------- ------------- -------------
9. Intangible assets
Assets acquired Under
through business Construction
combinations Software Capitalised Total
costs
GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------------ ----------- -------------- --------
Cost
At 1 April 2021 28,042 4,834 746 33,622
Additions - internally
generated - 1,240 - 1,240
Asset write off - - (746) (746)
At 31 March 2022 28,042 6,074 - 34,116
Additions - internally
generated - 108 - 108
Reclassified as assets
held for resale (1,294) - - (1,294)
At 30 September 2022 26,748 6,182 - 32,930
------------------------ ------------------ ----------- -------------- --------
Accumulated amortisation
At 1 April 2021 19,283 3,890 - 23,173
Charge for the year 862 255 - 1,117
-------------------------- ------- ------ -------
At 31 March 2022 20,145 4,145 - 24,290
Charge for the period 431 163 - 594
Reclassified as assets
held for resale (633) - - (633)
-------------------------- ------- ------ -------
At 30 September 2022 19,943 4,308 - 24,251
-------------------------- ------- ------ -------
Net book value
At 31 March 2021 - audited 8,759 944 746 10,449
At 31 March 2022 - audited 7,897 1,929 - 9,826
---------------------------- ------ ------ ---- -------
At 30 September 2022
- unaudited 6,805 1,874 - 8,679
---------------------------- ------ ------ ---- -------
10. Property, plant and equipment
IT Equipment
Leasehold and Fixtures
Improvements and Fittings Total
GBP'000 GBP'000 GBP'000
------------------------ --------------- -------------- --------
Cost
At 1 April 2021 2,037 2,255 4,292
Additions - 314 314
Disposals - (48) (48)
At 31 March 2022 2,037 2,521 4,558
Additions - 132 132
Foreign exchange - 88 88
Reclassified as assets
held for resale (52) (17) (69)
At 30 September 2022 1,985 2,724 4,709
------------------------- --------------- -------------- --------
Accumulated depreciation
At 1 April 2021 918 1,190 2,108
Charge for the year 210 479 689
Disposals - (46) (46)
At 31 March 2022 1,128 1,623 2,751
Charge for the period 105 241 346
Reclassified as assets
held for resale (44) (17) (61)
At 30 September 2022 1,189 1,847 3,036
--------------------------- ------ ------ ------
Net book value
At 31 March 2021 - audited 1,119 1,065 2,184
At 31 March 2022 - audited 909 898 1,807
At 30 September 2022 -
unaudited 796 877 1,673
----------------------------- ------ ------ ------
11. Interest-bearing loans and borrowings
Unaudited Unaudited Audited
Half year Half year Year ended
ended ended 31 Mar 2022
30 Sep 2022 30 Sep 2021 GBP'000
GBP'000 GBP'000
---------------------------- ------------- ------------- -------------
Current liabilities:
Bank loan/RCF 2,200 2,541 2,860
Leases 1,640 1,680 1,679
---------------------------- ------------- ------------- -------------
3,840 4,221 4,539
Non-current liabilities:
Bank loan/RCF 2,800 2,024 1,518
Leases 4,153 6,045 5,042
---------------------------- ------------- ------------- -------------
6,953 8,069 6,560
Total loans and borrowings
Bank loan/RCF 5,000 4,565 4,378
Leases 5,793 7,725 6,721
---------------------------- ------------- ------------- -------------
10,793 12,290 11,099
---------------------------- ------------- ------------- -------------
On 22 July 2022, the Group agreed new secured loan facilities
with Barclays which included:
-- Term Loan: a GBP3 million, five-year term loan, amortising on
a straight-line basis at GBP150,000 per quarter;
-- RCF: a GBP2 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;
-- Covenants: leverage covenants measured quarterly from
September 2022, Cash cover measured quarterly from June 2023, and
Interest cover measured quarterly from December 2023, each for the
duration of the facilities. Debt service covenants measured
quarterly from June 2022 to March 2023.
Following disposal of the Dods MET Operations, the Group has
agreed to a GBP2m repayment of the Term Loan, reducing overall
post-disposal debt facilities to GBP3m (GBP1m Term Loan, amortising
on a straight-line basis at GBP50,000 per quarter and a GBP2m RCF),
retaining financial flexibility.
12. Issued Share Capital
9p deferred 1p ordinary 28p ordinary
shares shares shares Total
Number Number Number GBP'000
------------------------- -------------- -------------- ------------- ----------
Issued share capital
as at
1 April 2021 151,998,453 582,071,380 - 19,501
Shares cancelled during
the year (151,998,453) 20,788,375 (13,680)
Share consolidation
during the year - (582,071,380) 3,167,749 -
Shares issued during
the year - - - 887
Issued share capital
as at
31 March 2022 - - 23,956,124 6,708
------------------------- -------------- -------------- ------------- ----------
Issued share capital
as at
30 September 2022 - - 23,956,124 6,708
------------------------- -------------- -------------- ------------- ----------
On 16 April 2021, shareholders approved a reorganisation of the
parent company's share capital. This reorganisation included
cancellation of 151,998,453 Deferred Shares and the consolidation
and sub-division of the parent company's Ordinary Shares (including
the purchase of certain of the parent company's shares), having the
impact of reducing the total number of Ordinary Shares by a factor
of 28 and increasing the nominal value by a factor of 28 (from 1
pence to 28 pence nominal).
On 1 October 2021, the parent company issued 1,675,749 ordinary
shares due as contingent consideration on the acquisition of
Meritgroup Limited in 2019.
On 1 October 2021, the parent company issued 1,492,000 ordinary
shares in a fundraising subscription at 62.4 pence per share,
raising GBP908,000, net of costs.
13. Related party transactions
During the period, the Group received a repayment of GBP70,000
(H1 2021/22: GBP140,000) on its interest free loan to its Associate
Sans Frontières Associates (SFA). At 30 September 2022, the balance
outstanding was GBP140,000 (31 March 2022: GBP210,000).
During the period, an amount of GBP17,493 (2021: GBP55,166) was
payable to an Associate, Social 360 Limited, in relation to
profit-share for monitoring services provided. At 30 September
2022, GBP34,466 (31 March 2022: GBP16,973) of this balance was
outstanding. On 8 August 2022, the Company completed the sale of
its 30% stake in Social 360 Limited for cash consideration of
GBP420,000.
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 period, payments of GBP400,900 (H1 2021/22:
GBP416,900) were made to Merit Software Services Private Limited in
relation to the lease and other property-related costs.
Cornelius Conlon, a Director of the Group, was entitled to
shares and cash consideration on the first three anniversaries of
the Meritgroup Limited acquisition in 2019. During the period,
Cornelius Conlon was paid cash consideration of GBP220,000.
During the period, an amount of GBPnil (H1 2021/22: GBPnil) was
recognised in the profit and loss account in relation to licence
fees to software charged by Web Data Works Limited, a company in
which the Group has a 9.2% investment, and of which Cornelius
Conlon is a Director. At 30 September 2022, there was a balance of
GBP105,000 (31 March 2022: GBP105,000) outstanding.
During the year, an amount of GBP18,000 (H1 2021/22: GBP28,000)
was billed in relation to recruitment services charged by Acolyte
Resource Group Limited, a company in which the Group had a 13.3%
investment at the start of the period, and of which Cornelius
Conlon is a Director and shareholder. At 30 September 2022, there
was a balance of GBPnil (31 March 2022: GBPnil) outstanding.
Acolyte Resource Group Limited is also a customer of MD&T
and was billed GBP131,033 (H1 2021/22: GBP155,908) for Software and
Technology Resourcing services. At 30 September 2022, there was a
balance of GBP61,125 (31 March 2022: GBP104,000) due.
On 23 September 2022, the Group paid GBP50,364 in consideration
for further shares in Acolyte Resource Group Limited as part of a
GBP336,000 funding round by the company. As a consequence of this
share subscription, the Group's stake in Acolyte Resource Group
Limited increased from 13.3% to 13.5%.
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 GBP15,000
(2021: GBP12,500) to the Company for the services of Angela
Entwistle as a Non-Executive Director. At 30 September 2022 the
balance outstanding was GBP2,500 (31 March: GBP2,500).
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 GBP55,857 (H1 2021/22: GBPnil)
for Technology Resourcing Services. At 30 September 2022 the
balance outstanding was GBP40,028 (31 March 2022: GBPnil).
14. Subsequent events
On 27 October 2022, the Group announced that it had agreed to
sell the Media, Events and Training operations of its Dods segment
(together, the "MET Operations") for a cash consideration of GBP4.5
million. This transaction completed on 30 November 2022.
Following the above disposal, the Group has agreed to a GBP2m
reduction in debt facilities to GBP3m (GBP1m Term Loan, amortising
on a straight-line basis at GBP50,000 per quarter and a GBP2m RCF).
For more details on the disposal, see Note 5. For more details on
the debt facilities see Note 11.
Further to the above disposal, the Group has concluded that a
considerable proportion of the available floorspace within its
leased London premises is surplus to its ongoing requirements. It
is considering potential options of assigning or sub-letting the
space and in the event it is unable to achieve this, management
expect to impair the portion of the Right-of Use assets no longer
utilised and make a provision for the running costs of the vacant
space for the remainder of the lease which runs to July 2026.
Between the 3(rd) and 10(th) of October 2022 the Company
received loan repayments totalling GBP140,000 from its Associate,
Sans Frontières Associates (SFA).
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END
IR BMBMTMTTJTAT
(END) Dow Jones Newswires
December 01, 2022 02:00 ET (07:00 GMT)
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