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 £9.2m (H1 2021/22: Revenue £8.7m);

·    Adjusted EBITDA of £1.1m (H1 2021/22: Adjusted EBITDA £1.6m), reflecting increased costs primarily driven by wage inflation and a £0.3m negative impact from GBP/INR exchange rates;

·    Net cash generated from continuing operating activities of £0.4m (H1 2021/22: £0.4m);

·    Disposal of the MET Operations completed for a cash consideration of £4.5m1;

·    Cash balance of £1.8m and Net Debt 2 of £3.2m as at 30 September 2022, with total debt facilities of £5.0m; and

·    Net Cash2 at 30 November 2022, after disposal proceeds1, of £0.3m. Reduction in debt facility post disposal to £3.0m (£1.0m Term Loan and £2.0m RCF) retaining financial flexibility.

Continuing Operations

 




H1 2022/23

H1 2021/22



30 Sep 22

30 Sep 21

Change6


 

 

 

Revenue

£9.2m

£8.7m

6.1%

Gross profit

£4.6m

£4.6m

(1.1%)

Gross margin3

50%

53%

 

Adjusted EBITDA4

£1.1m

£1.6m

(31.0%)

Net margin5

11.7%

18.0%

 

Loss after tax

(£0.4m)

(£0.1m)


Basic Earnings per share

(1.8p)

(0.4p)


 

Discontinued Operations

 




H1 2022/23

H1 2021/22



30 Sep 22

30 Sep 21

Change6


 

 

 

Revenue

£4.8m

£3.6m

31.0%

Adjusted EBITDA4 loss

(£0.3m)

(£0.3m)

(14.3%)

Loss after tax

(£0.6m)

(£0.6m)

(1.0%)

 

 

1. £4.1m (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 £1.1m in the first half compared to £1.6m 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 £0.7m in the first half against £1.0m 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 £323k, more than accounting for the year-on-year reduction of £287k 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 £0.9m against £1.0m 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 £4.5 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 £9.2m (H1 2021/22: £8.7m).

 

Revenues from Merit Data and Technology (MD&T) were £0.5m higher than the equivalent prior half year (H1 2022/23: £5.6m; H1 2021/22: £5.1m), representing an increase of 10%. Dods revenues for the period remained stable at £3.6m (H1 2021/22: £3.6m). 

 

Gross profit for the period was stable at £4.6m by comparison to the prior period (H1 2021/22: £4.6m). 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 £0.5m to £1.1m (H1 2021/22: £1.6m 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 £0.1m to a loss of £0.6m, reflects the reduction in EBITDA. The Group's operating loss is stated after a right-of-use assets charge of £0.7m (H1 2021/22: £0.6m), an amortisation on acquired intangibles under business combinations of £0.3m (H1 2021/22: £0.3m), a charge for intangible assets amortisation of £0.2m (H1 2021/22: £0.1m), a charge for depreciation of tangible assets of £0.3m (H1 2021/22: £0.3m), and non-recurring costs of £0.2m (H1 2021/22: £0.2m).

 

The net finance credit for the year of £0.1m compared to a net finance expense of £0.2m 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 £0.2m (H1 2021/22: £nil), amounted to £0.4m (H1 2021/22: £0.1m 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 £4.8m (H1 2021/22: £3.6m), an Adjusted EBITDA loss of £0.3m (H1 2021/22: £0.3m Adjusted EBITDA loss) and a loss for the period of £0.6m (H1 2021/22: £0.6m 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 £0.2m (H1 2021/22: £0.2m 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 £0.4m (H1 2021/22: loss of £0.1m).

 

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 £1.0m (H1 2021/22: £0.6m)

 

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: £nil).

 

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 £43.9m (31 March 2022: £47.0m) comprise goodwill of £27.6m (31 March 2022: £28.9m), intangible assets of £8.7m (31 March 2022: £9.8m), property, plant and equipment of £1.7m (31 March 2022: £1.8m), IFRS 16 rights-of-use assets of £4.9m (31 March 2022: £5.7m) and investments of £1.0m (31 March 2022: £0.8m).

 

Investments include the Group 40% stake in the issued share capital of Sans Frontières Associates (SFA) with a carrying value of £0.5m (31 March 2022: £0.3m). The Group also loaned SFA £0.1m (31 March 2022: £0.2m) 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 £0.5m (31 March 2022: £0.5m).

 

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 £420,000.

 

The Group had a cash balance of 1.8m (31 March 2022: £2.3m) and gross bank borrowings of £5.0m at the period end (31 March 2022: £4.4m).

 

Total assets of the Group were £53.9m (31 March 2022: £55.5m), of which £3.6m 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 £3.0m (31 March 2022: £2.4m). The current amount due is £0.2m (31 March 2022: £0.9m) and non-current is £2.8m (31 March 2022: £1.5m). The loan has a repayment schedule through to September 2027. £2.0 million of the term loan will be repaid following the disposal of the MET operations. The Group also has a RCF loan facility of £2.0m available through to September 2027. This RCF facility was fully drawn throughout the period and stood at £2.0m at the period end (31 March 2022: £2.0m). Due to its revolving nature, this loan is all shown as due within one year.

 

Current liabilities of £13.2m decreased by £1.1m during the period (31 March 2022: £14.3m) and include £3.1m 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 £9.8m at 31 March 2022 to £6.2m at the period end, including a reduction of £0.3m 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 £0.2m (31 March 2022: £0.5m).

 

Total equity reduced by £0.9m to £33.5m (31 March 2022: £34.4m), reflecting the loss for the period.

 

Liquidity and capital resources

 

Net cash generated by operations was neutral at £0.0m inflow in the period by comparison to an £0.3m outflow in H1 2021/22. Operating cashflow in respect of working capital movement were significantly reduced year-on-year at £0.9m outflow in the period compared to £1.4m 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 £0.2m of deferred liabilities outstanding at the period end (31 March 2022: £0.5m). The movement in working capital of £0.9m also includes payment of the final £0.3m of deferred cash consideration on the Meritgroup Limited acquisition, and £0.3m 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 £0.2m (H1 2021/22: £0.4m) of which continuing operations generated £0.4m (H1 2021/22: £0.4m) and discontinued operations used £0.6m (H1 2021/22: £0.8m).

 

Investing activities produced a net cash inflow of £0.3m in the period, including the £0.4m 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 £1.0m 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 £1.1m in the period (H1 2021/22; £1.3m) and the Group received a net inflow on the bank refinancing in July 2022 of £0.6m.

 

The cash position at the period end was £1.8m (31 March 2022: £2.3m). As at 30 September 2022, the Group had a net debt position of £3.2m (31 March 2022: net debt of £2.1m).

 

 

 

Philip Machray

Chief Financial Officer

Condensed consolidated income statement

For the half year ended 30 September 2022

 

 

 

Continuing Operations

 

 

 

 

Note

 

Unaudited

Half year ended

30 Sept 2022

£'000

Unaudited

Half year ended

30 Sept 2021

(restated)

£'000

Audited

Year ended

31 Mar 2022

(restated)

£'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 EBITDA1


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

(restated*)

p per share (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

Half year ended

30 Sept 2022

£'000

Unaudited

Half year ended

 30 Sept 2021

£'000

Audited

Year ended

31 Mar 2022

£'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

 

 

 

 

Note

Unaudited

30 Sept 2022

£'000

Unaudited

30 Sept 2021

£'000

Audited

31 Mar 2022

£'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 with assets classified as held for resale


3,101

-

-

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

£'000

 

Share

premium

reserve1

£'000

 

 

Merger

reserve2

£'000

 

 

Retained

earnings

£'000

 

Capital

redemption

reserve3

£'000

 

 

Translation

reserve4

£'000

 

 

Other

reserves

£'000

 

Share

option

reserve5

£'000

 

Total

shareholders'

funds

£'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

 

 

 

 

 

 

 

Note

Unaudited

Half year ended

30 Sept 2022

£'000

Unaudited

Half year ended

30 Sept 2021

£'000

Audited

Year ended

31 Mar 2022

£'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 in Associates


410

-

-

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.

 

 

 

Continuing Operations(1)

 

Unaudited

 Half year ended

30 Sept 2022

 £'000

Unaudited

Half year ended

30 Sept 2021

(restated*)

£'000

Audited

Year ended

31 Mar 2022

(restated*)

£'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.

 

 

Group Revenue by stream

 

Continuing Operations(1)

 

 

Unaudited

 Half year ended

30 Sep 2022

£'000

Unaudited

Half year ended

30 Sep 2021

(Restated)

£'000

Audited

Year ended

31 Mar 2022

(Restated)

£'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 30 Sep 2022

Business segment profit before tax

 

Continuing Operations

 

MD&T

30 Sep

2022

£'000

 

 

Dods

30 Sep

2022

£'000

 

Central

30 Sep

2022

£'000

 

Total

30 Sep

2022

£'000

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 30 Sep 2021

Business segment profit before tax

 

Continuing Operations(1)

 

 

MD&T

30 Sep

2021

(restated*)

£'000

 

 

Dods

30 Sep

2021

(restated*)

£'000

 

Central

30 Sep

2021

(restated*)

£'000

 

Total

30 Sep

2021

(restated*)

£'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 2022

Business segment profit before tax

 

Continuing Operations(1)

 

 

MD&T

31 Mar

2022

£'000

 

 

Dods

31 Mar

2022

£'000

 

Central

31 Mar

2022

£'000

 

Total

31 Mar

2022

£'000

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

 

Continuing Operations(1)

 

Unaudited

 Half year ended

30 Sep 2022

£'000

 

Audited

Year ended

31 Mar 2022

(restated)

£'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 £97k against the carrying value of investments and wrote off £746k 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 £4.5 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.

 

 

 

Discontinued Operations

 

Unaudited

Half year ended

30 Sept 2022

£'000

Unaudited

Half year ended

30 Sept 2021

£'000

Audited

Year ended

31 Mar 2022

£'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:

 

 

 

Discontinued Operations

 

Unaudited

Half year ended

30 Sept 2022

£'000

Unaudited

Half year ended

30 Sept 2021

£'000

Audited

Year ended

31 Mar 2022

£'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

 

 

 

Continuing Operations(1)

Unaudited

 Half year ended

30 Sep 2022

£'000

 

Unaudited

Half year ended

30 Sep 2021

(restated)

£'000

Audited

Year ended

31 Mar 2022

(restated)

£'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.

 

 

 

 

 

Discontinued Operations

Unaudited

 Half year ended

30 Sep 2022

£'000

 

Unaudited

Half year ended

30 Sep 2021

£'000

Audited

Year ended

31 Mar 2022

£'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

 Half year ended

30 Sept 2022

Ordinary shares

 

Unaudited

Half year ended

30 Sept 2021

Ordinary shares

(restated*)

 

Audited

Year ended

31 Mar 2022

Ordinary shares


 



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.

 

 

 

 

Continuing Operations(1)

 

Unaudited

 Half year ended

30 Sep 2022

Pence per share

 

Unaudited

Half year ended

30 Sep 2021

Pence per share

(restated*)

Audited

Year ended

31 Mar 2022

Pence per share

(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.

 

 

 

Discontinued Operations

Unaudited

 Half year ended

30 Sep 2022

Pence per share

 

Unaudited

Half year ended

30 Sep 2021

Pence per share

Audited

Year ended

31 Mar 2022

Pence per 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)

 

 

 

 

Total

 

Unaudited

 Half year ended

30 Sep 2022

Pence per share

 

Unaudited

Half year ended

30 Sep 2021

Pence per share

(restated *)

Audited

Year ended

31 Mar 2022

Pence per share

(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

Half year ended

30 Sept 2022

£'000

Unaudited

Half year ended

30 Sept 2021

£'000

Audited

Year ended

31 Mar 2022

£'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 items


24

-

-

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

Half year ended

30 Sep 2022

£'000

 

Unaudited

Half year ended

30 Sep 2021

£'000

Audited

Year ended

31 Mar 2022

£'000


 



Cost and net book value

 

 



Opening balance

28,911

28,911

28,911

Reclassified as assets held for resale

(1,269)

-

-

Closing balance

27,642

28,911

28,911

 

 

 

9.    Intangible assets

 

 

Assets acquired

through business

combinations

 

 

Software

Under

Construction

Capitalised costs

 

 

Total

 

£'000

 

£'000

£'000

£'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

 

 

 

Leasehold

Improvements

IT Equipment

and Fixtures

and Fittings

 

 

 

Total

 

 

£'000

 

£'000

£'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

 Half year ended

30 Sep 2022

£'000

 

Unaudited

Half year ended

30 Sep 2021

£'000

Audited

Year ended

31 Mar 2022

£'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 £3 million, five-year term loan, amortising on a straight-line basis at £150,000 per quarter;

§ RCF: a £2 million non-amortising, revolving credit facility for the five-year duration of the Term Loan;

§ Both the Term loan and RCF accruing interest at 4.75% above Bank of England base rate;

§ 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 £2m repayment of the Term Loan, reducing overall post-disposal debt facilities to £3m (£1m Term Loan, amortising on a straight-line basis at £50,000 per quarter and a £2m RCF), retaining financial flexibility.

 

 

 

 

12.  Issued Share Capital

 

9p deferred

shares

Number

1p ordinary

shares

Number

28p ordinary

shares

Number

 

Total

£'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 £908,000, net of costs.

 

13. Related party transactions

 

During the period, the Group received a repayment of £70,000 (H1 2021/22: £140,000) on its interest free loan to its Associate Sans Frontières Associates (SFA). At 30 September 2022, the balance outstanding was £140,000 (31 March 2022: £210,000).

 

During the period, an amount of £17,493 (2021: £55,166) was payable to an Associate, Social 360 Limited, in relation to profit-share for monitoring services provided. At 30 September 2022, £34,466 (31 March 2022: £16,973) 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 £420,000.

 

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 £400,900 (H1 2021/22: £416,900) 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 £220,000.

 

During the period, an amount of £nil (H1 2021/22: £nil) 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 £105,000 (31 March 2022: £105,000) outstanding.

 

 

 

 

 

During the year, an amount of £18,000 (H1 2021/22: £28,000) 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 £nil (31 March 2022: £nil) outstanding.

 

Acolyte Resource Group Limited is also a customer of MD&T and was billed £131,033 (H1 2021/22: £155,908) for Software and Technology Resourcing services. At 30 September 2022, there was a balance of £61,125 (31 March 2022: £104,000) due.

 

On 23 September 2022, the Group paid £50,364 in consideration for further shares in Acolyte Resource Group Limited as part of a £336,000 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 £15,000 (2021: £12,500) to the Company for the services of Angela Entwistle as a Non-Executive Director. At 30 September 2022 the balance outstanding was £2,500 (31 March: £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 £55,857 (H1 2021/22: £nil) for Technology Resourcing Services. At 30 September 2022 the balance outstanding was £40,028 (31 March 2022: £nil).

 

 

 

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 £4.5 million. This transaction completed on 30 November 2022.

 

Following the above disposal, the Group has agreed to a £2m reduction in debt facilities to £3m (£1m Term Loan, amortising on a straight-line basis at £50,000 per quarter and a £2m 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 3rd and 10th of October 2022 the Company received loan repayments totalling £140,000 from its Associate, Sans Frontières Associates (SFA).

 

 

 

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