TIDMMRIT
RNS Number : 5440L
Merit Group PLC
06 September 2023
Merit Group plc
("Merit", the "Company" or the "Group")
AUDITED RESULTS FOR THE YEARED 31 MARCH 2023
Restructured Group making significant progress
6 September 2023
Merit Group plc (AIM: MRIT), the data and intelligence business
today publishes its audited results for the year ended 31 March
2023.
The FY23 year saw significant changes to the Group with the
disposal of its media, events and training operations and its
shareholdings in two associate businesses. The businesses that were
sold during the year are reported on within the statutory results
as Discontinued Operations.
Financial Highlights of the Continuing Operations of the
Group
-- Group revenues grew to GBP18.6m, up 5.6% on FY22
-- Merit Data & Technology (MD&T) business unit
contributed GBP11.6m of revenue, an increase of 8.9% on FY22
-- Net margin improvement to 14.3%
-- Adjusted EBITDA of GBP2.7m, (FY22 GBP2.5m) and similar to the
prior year's GBP2.8m including the disposed of businesses
-- Loss before tax of GBP3.7m impacted by non recurring profits
and losses on disposals, and disposal of lease right of use
assets
-- GBP4.8m of proceeds from disposals received during the year,
with a further GBP0.5m due in the current year
-- The Group's Continuing Operations generated operating cash of GBP2.9 million
-- Net debt of GBP2.6m having paid GBP3.5m (inc GBP0.5m in
recoverable VAT) to exit the Group's excess office space prior to
the year end
Continuing Operations FY 2023 FY 2022 Change (5)
GBPm GBPm
------------ ------------ ---------------
Revenue 18.6 17.6 +5.6%
------------ ------------ ---------------
Gross profit 8.6 8.9 -3.5%
------------ ------------ ---------------
Gross margin % (1) 46.0% 50.4% -8.7%
------------ ------------ ---------------
Adjusted EBITDA (2) 2.7 2.5 +7.7%
------------ ------------ ---------------
Net margin % (3) 14.3% 14.0% +2.1%
------------ ------------ ---------------
Loss before tax (3.7) (1.7) +118.1%
------------ ------------ ---------------
Adjusted earnings per share
(pence) (4) 0.8p (0.9p) +1.7p
------------ ------------ ---------------
Net debt(6) (2.6) (2.1) +25.0%
------------ ------------ ---------------
(1) Gross margin is Gross profit as a percentage of Revenue
(2) Adjusted EBITDA is calculated as earnings before tax,
depreciation, amortisation of intangible assets, share-based
payments and non-recurring items
(3) Net margin is Adjusted EBITDA as a percentage of Revenue
(4) Adjusted EPS is calculated based on the profit/(loss) for
the year before amortisation of intangible assets, share-based
payments and non-recurring items (see note 13)
(5) Year-on-year percentage change figures are calculated on
unrounded numbers
(6) Net (debt)/cash comprises the aggregate of gross debt,
excluding IFRS16 lease liabilities, and cash and cash equivalents
(see note 23)
Mark Smith, Chairman, commented;
"Having successfully completed its restructuring, the Group is
in a much stronger position. It benefits from less complexity,
greater focus, and a clear strategy for growth, supported by
investment in its core businesses.
"The significant cost reduction from the disposal of our London
office lease and other operational savings already made, will have
a beneficial impact on the Group's FY24 performance."
David Beck, Chief Executive, said;
"The Group is now fully focussed on data and intelligence in
three distinct market segments; global industry data; political
data and intelligence; and marketing data. Data is the building
block on which Artificial Intelligence applications are built as it
serves as the foundation for training and improving machine
learning models. The Group's more than five year experience in the
field of Artificial Intelligence and Machine Learning and its
expertise in data capture and analysis present the Group with
exciting opportunities."
Operational Highlights
Key operational highlights in the year include:
-- the disposal of assets / businesses and associates that were
not core to the Group's strategy of building a data and
intelligence business focused on subscription or recurring
revenue
-- the settlement of all deferred liabilities, namely the
deferred consideration on the Meritgroup Limited acquisition and
deferred VAT and rent payments built up during the COVID
pandemic
-- the disposal of the Group's excess office space in London,
which will deliver a significant reduction in the Group's
non-operating overheads for FY24 and beyond
-- investment in Sales & Marketing to drive growth in both new geographies and market sectors
-- the strengthening of the Group's balance sheet through the
removal of significant property liabilities and the receipt of
GBP4.8m of proceeds from the disposal of non-core assets
rent trading and outlook
Having successfully completed its restructuring, the Group is in
a much stronger position. It benefits from less complexity, greater
focus, and a clear strategy for growth, supported by investment in
its core businesses.
Despite a challenging macro-economic environment and the impacts
of both higher inflation and interest rates, the Group has made a
positive start to the FY24 year. The significant cost reduction
from the disposal of our London office lease and other operational
savings already made will have a beneficial impact on the Group's
FY24 performance. This, along with the investments made in growing
its two operating businesses, gives the Board confidence in
anticipating further growth in both revenue and profitability in
FY24 and beyond.
For further information 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
Harry Pardoe
Forward looking statements
This announcement has been prepared in relation to the financial
results for the year ended 31 March 2023. Certain information
contained in this announcement may constitute 'forward-looking
statements', which can be identified by the use of terms such as
'may', 'will', 'would', 'could', 'should', 'expect', 'seek,
'anticipate', 'project', 'estimate', 'intend', 'continue',
'target', 'plan', 'goal', 'aim', 'achieve' or 'believe' (or the
negatives thereof) or words of similar meaning. Forward-looking
statements can be made in writing but also may be made verbally by
members of management of the Company (including, without
limitation, during management presentations to financial analysts)
in connection with this announcement. These forward-looking
statements include all matters that are not historical facts and
include statements regarding the Company's intentions, beliefs or
current expectations concerning, among other things, the Company's
results of operations, financial condition, changes in global or
regional trade conditions, changes in tax rates, liquidity,
prospects, growth and strategies. By their nature, forward-looking
statements involve risks, assumptions and uncertainties that could
cause actual events or results or actual performance or other
financial condition or performance measures of the Company to
differ materially from those reflected or contemplated in such
forward-looking statements. No representation or warranty is made
as to the achievement or reasonableness of and no reliance should
be placed on such forward-looking statements. The forward-looking
statements reflect knowledge and information available at the date
of this announcement and the Company does not undertake any
obligation to update or revise any forward-looking statement,
whether as a result of new information or to reflect any change in
circumstances or in the Company's expectations or otherwise.
Chairman's statement
A year of significant progress
The year under review was remarkable for the significant changes
that were made to the Group. A programme of disposals of non-core
assets has concentrated the Group on two operating units both
focused on data and intelligence. We have invested in sales and
marketing resource to drive the future growth of these two units
and have afforded that investment through a restructuring of the
Group's cost base. Whilst the full effects of the cost
restructuring measures taken will not be felt until the FY24 year,
the Group is already leaner and stronger and its future financial
projections are much enhanced. The Board's restructuring plan is
now largely complete, leaving management free to pursue a growth
agenda and to focus on generating significant value for
shareholders.
The Board is grateful to all employees for the contributions
they have made to a successful year and to the management team that
have delivered the transformation of the Group.
Results for the financial year
The continuing operations of the Group comprise its two
operating businesses, Merit Data & Technology (MD&T) and
Dods Political Intelligence (Dods PI). These are supported by a
small Central team which is reported on separately in our financial
statements. The businesses that were disposed of during the year
are reported on within the statutory results as Discontinued
Operations; my statement will cover the Continuing Operations of
the Group.
The Group grew revenue from Continuing Operations by 5.6% to
GBP18.6 million in the year (FY22 GBP17.6 million), with the growth
being driven by stronger markets, especially in those areas of the
business that were hardest hit during the pandemic. The Group has
maintained strong cost control with gross profit of GBP8.6 million
(FY22 GBP8.9 million), being only GBP0.3 million behind FY22
despite an unfavourable year-on-year exchange rate movement on the
Group's Indian cost base.
Net margins increased by 0.3 percentage points and the Adjusted
EBITDA of GBP2.7 million is 7.7% ahead of the previous year (FY22
GBP2.5 million).
Continuing Operations FY 2023 FY 2022 Change (5)
GBPm GBPm
------------ ------------ ---------------
Revenue 18.6 17.6 +5.6%
------------ ------------ ---------------
Gross profit 8.6 8.9 -3.5%
------------ ------------ ---------------
Gross margin % (1) 46.0% 50.4% -8.7%
------------ ------------ ---------------
Adjusted EBITDA (2) 2.7 2.5 +7.7%
------------ ------------ ---------------
Net margin % (3) 14.3% 14.0% +2.1%
------------ ------------ ---------------
Loss before tax (3.7) (1.7) +118.1%
------------ ------------ ---------------
Adjusted earnings per share
(pence) (4) 0.8p (0.9p) +1.7p
------------ ------------ ---------------
Net debt(6) (2.6) (2.1) +25.0%
------------ ------------ ---------------
(1) Gross margin is Gross profit as a percentage of Revenue
(2) Adjusted EBITDA is calculated as earnings before tax,
depreciation, amortisation of intangible assets, share-based
payments and non-recurring items
(3) Net margin is Adjusted EBITDA as a percentage of Revenue
(4) Adjusted EPS is calculated based on the profit/(loss) for
the year before amortisation of intangible assets, share-based
payments and non-recurring items (see note 13)
(5) Year-on-year percentage change figures are calculated on
unrounded numbers
(6) Net (debt)/cash comprises the aggregate of gross debt,
excluding IFRS16 lease liabilities, and cash and cash equivalents
(see note 23)
Disposals
During the year, the Group disposed of the Media, Events and
Training operations ("the MET operations") of its Dods segment for
GBP4.5 million. The Group also disposed of both of its investments
in Associates during the year, selling its 30% shareholding in
Social 360 and its 40% shareholding in Sans Frontières
Associates.
Cash
The year-on-year change to the Group's net debt(6) position,
from GBP2.1 million to GBP2.6 million, masks some significant
movements during the year.
The Group received proceeds from the sale of non-core assets of
GBP4.8 million during FY23. The Group fully settled its deferred
liabilities from prior periods, namely GBP0.5 million of deferred
VAT and rent built up during the COVID pandemic, and GBP0.3 million
of deferred consideration on the 2019 acquisition of Meritgroup
Limited.
As reported in more detail below, before the end of FY23 the
Group paid GBP3.5 million (including recoverable VAT) as a reverse
premium to dispose of its lease of 16,893 sq ft of prime office
space in The Shard, thereby extinguishing GBP7.4 million from
future cash outflows in respect of this property.
The Group's Continuing Operations generated operating cash of
GBP2.9 million.
Board Changes
Following the disposal of the Dods MET operations late in 2022,
Munira Ibrahim, the MD of the Dods business, resigned and left the
Board in December 2022. Given the consequent reduced complexity of
the Group, and in support of the Board's decision to reduce the
size of the Board, Richard Boon and Vijay Vaghela also resigned in
January 2023.
The Company was extremely well-served by Richard and Vijay as
non-executive Directors, and I am very grateful for their
contribution and wise counsel during their time on the Board.
Lord Ashcroft KCMG PC, the Company's largest shareholder, joined
the Board in December 2022.
Strategy
Data and Intelligence is, and will remain, at the core of
everything that we do. We use technology, human expertise and
Artificial Intelligence to collate, transform and add the greatest
value to the data we provide our customers.
We will grow through the expansion of the sectors and markets we
address and by constantly improving the proprietary technology
platforms our customers use to access our data and business
intelligence. This growth will be driven by our excellent
reputation for the provision of valuable data and intelligence at a
competitive price point.
Our business benefits from very high levels of recurring revenue
from long standing customers; we will maintain our focus on these
subscription and recurring revenue customers. We will continue to
improve our profit margins with technology-led efficiencies and a
tightly controlled cost base.
Current trading and outlook
Having successfully completed its restructuring, the Group is in
a much stronger position. It benefits from less complexity, greater
focus, and a clear strategy for growth, supported by investment in
its core businesses.
Despite a challenging macro-economic environment and the impacts
of both higher inflation and interest rates, the Group has made a
positive start to the FY24 year. The significant cost reduction
from the disposal of our London office lease and other operational
savings already made will have a beneficial impact on the Group's
FY24 performance. This, along with the investments made in growing
its two operating businesses, gives the Board confidence in
anticipating further growth in both revenue and profitability in
FY24 and beyond.
Mark Smith
Chairman
6 September 2023
Chief Executive's Review
Overview
The year to 31 March 2023 was the Group's first full year under
a new management team. Having agreed the strategy with the Board at
the beginning of the year, the executive team has been fully
focused on delivering the first phase of the strategic plan, the
tidying up of the Group's operations, the disposal of non-core
assets, and the resolution of the remaining legacy issues facing
the Group. I am delighted to be able to report significant progress
on all fronts.
Disposal of operations
The disposal of the Dods Media, Events and Training ("MET
operations"), announced in October and completed in November 2022,
was the most significant change as it represented approximately one
third of the Group's revenue and involved the carving out from the
Dods business of nearly one hundred employees. The GBP4.5 million
consideration represented a 9x multiple on the FY22 EBITDA of
cGBP0.5 million.
As well as the MET disposal, during the year the Group also
disposed of:
-- its 30% shareholding in Social 360 for a cash consideration
of GBP420,000;
-- its 40% shareholding in Sans Frontières Associates for a cash
consideration of GBP250,000;
-- the trade and assets of its Paris-based media and directory
business, Le Trombinoscope, for a cash consideration of
EUR60,000.
In aggregate, the Group raised GBP5.2 million from disposals in
the year, of which GBP4.8 million of cash proceeds was received
during the year and GBP450,000 is due for payment in October
2023.
Exit from lease in The Shard
The other significant disposal that took place during the
financial year was the exit from the Group's unnecessarily large
lease of 16,893 sq ft on the 11(th) floor of The Shard, which ran
until July 2026 at an annualised total cost of GBP2.1 million,
giving a total outstanding cashflow over the remaining term of the
lease of GBP7.4 million, including dilapidations and a GBP3.1
million IFRS 16 lease liability. In March 2023, we announced the
disposal of this lease through an assignment at a cost of GBP2.9
million. We anticipate that the disposal will reduce recognised
profit & loss costs (including operating costs and IFRS 16
charges) by approximately GBP1.4 million per annum, after taking
into account alternative accommodation costs. The Group has reduced
its UK office footprint by 80% and now operates from four offices
globally: Chennai, Mumbai, London and Brussels.
Settlement of remaining legacy deferred liabilities
At the beginning of the year the Group had outstanding legacy
deferred liabilities comprising GBP0.5 million of deferred VAT and
rent built up during the COVID pandemic, and GBP0.3 million of
deferred consideration on the 2019 acquisition of Meritgroup
Limited. All deferred liabilities have now been settled which, when
combined with the removal of the significant lease liability, has
strengthened the Group's balance sheet.
Funding
The lease disposal was funded in part with the provision of a
new GBP1.8 million short term loan from Barclays Bank which
amortises on a straight-line basis over the next eighteen months.
The effective swapping of rent and service charge costs for bank
debt repayments further strengthens the Group's financial outlook
and should allow the Group to eliminate its net debt position over
time.
Operating results
The Group's statutory revenue having been reduced by GBP9.8
million as a result of the disposal of non-core operations, it is
pleasing to be able to report an Adjusted EBITDA from our
Continuing Operations of GBP2.7 million very similar to the prior
year figure of GBP2.8 million for the larger Group pre disposals.
On a like-for-like Continuing Operations basis, the Group increased
Adjusted EBITDA by 8% from GBP2.5 million in the prior year.
The restructured Group benefits from very good visibility of its
revenues, with Dods PI's income being almost entirely subscription
based and Merit D&T having a very stable long term customer
base with 85% of revenue recurring.
Merit Data & Technology ("MD&T") revenue was up by 9% to
GBP11.6 million; this business unit now represents nearly two
thirds of the Group's revenues. MD&T's Adjusted EBITDA of
GBP1.8 million (FY22: GBP1.9m) was impacted by sterling currency
weakness particularly in the first half of the year. Without the
year-on-year currency impact, Merit D&T's full year Adjusted
EBITDA would have been GBP390k higher and shown growth of 20% year
on year. In the second half of the year the GBP/INR rate recovered,
and the stability of that exchange rate has continued since.
Dods Political Intelligence revenues were flat at GBP6.9 million
(FY22: GBP6.9m); however Adjusted EBITDA rose 18% to GBP1.8 million
as it benefitted from a lower cost base and some non-operating
income from the provision of transitional services to the disposed
of MET Operations. The business will be the primary beneficiary of
the further cost savings to come in FY24 from the downsizing of the
Group's London office costs.
Focus on growth
The newly restructured Group is now able to focus on its future
growth plan. The Group's more than five years of experience in the
field of Artificial Intelligence and Machine Learning and its
expertise in data capture and analysis present the Group with
exciting opportunities.
Merit Data & Technology is already benefiting from
investments made in FY23 that will help accelerate the growth of
the business. We have an expanded and reinvigorated sales and
marketing team that is focused on the eight key verticals where we
have experience and a track record. We are also seeing
opportunities, and have already won business, from geographies that
we were not previously addressing.
MD&T is also benefitting from a clearer technology
proposition and is winning new business by offering data
engineering solutions to both existing and new customers.
Dods will benefit from having a simpler business entirely
focused on its core political intelligence service. Whilst the
economic challenges facing companies are having an impact on its
customer base, Dods PI is an essential service to many of its
customers. The unit has been able to partly mitigate the impacts of
higher inflation with higher price increases on renewing contracts
than has been possible in the past.
Dods PI is looking to recruit specialist consultants in specific
service areas where it sees opportunity to grow market share. We
are looking to appoint a new leader for our Dods PI Sales and
Marketing team to help us capitalise on the strong operational
gearing that this business enjoys.
Merit Data & Technology ("MD&T")
MD&T is a leading data solutions provider, specialising in
harvesting, aggregating & transforming large sets of data for
many of the world's leading information businesses. We provide a
highly bespoke service for each client, combining tech solutions,
AI and manual analysis. We help clients to source and manage data
in multiple industries, including retail, shipping, construction,
automotive, energy, healthcare and pharma.
The business has very long-standing client relationships, and
many of our most significant clients have been working with us for
over ten years. We are very focused on developing technology tools
to manage and transform data in a scalable way, in addition to
operational excellence and a level of customer service which helps
us enjoy very high levels of customer satisfaction and recurring
revenue.
Our model of servicing global clients with a highly skilled
staff base located in India continues to be successful. With the
advent of higher inflation, we continue to offer customers a
technology-led and cost effective solution to their data
intelligence needs.
With many years' experience of applying machine learning
techniques to data transformation, we have a proven capability to
enable AI innovation amongst our clients, where data will be
critical to the development of new models and AI-led solutions.
Alongside our data business, we provide a strong technology
solutions service to multiple customers. Merit has been a trusted
partner in digital transformation for some of the world's largest
B2B information businesses for over 15 years. Our agile solutions
are industry agnostic, client centric and cover a wide range of
project sizes and scope: from large scale digital upgrades and Data
Management Solutions to simpler systems for Data Operations, Data
Migration and AI-driven data products. Leveraging years of data and
digital expertise, MD&T's solutions help customers shape their
products, build robust systems, uncover deep insights, power
automation and accelerate growth.
We have built a very distinct and attractive corporate culture
with a progressive mix of Western and Indian best practices at our
offices in India, where we employ over 900 people, 97% of whom are
graduates. 30% of our employees have been with us for over 5
years.
Our employee value proposition is very strong with the right mix
of learning & development and career growth opportunities. Our
values and policies nurture, develop and engage employees to the
highest level of their potential.
Dods Political Intelligence
Dods Political Intelligence (Dods PI) is a leading provider of a
comprehensive subscription-based monitoring and analysis service
covering political and policy developments across the UK and EU. We
help our clients make informed decisions and develop effective
strategies to deal with a fast changing and complex political and
policy environment. We also offer the leading database of people
that matter in the world of politics and policy, including
Parliamentarians and civil servants in both the UK and EU.
Dods Political Intelligence delivers objective, relevant and
contextual insights through a unique combination of expert
consultants and innovative technologies. The political landscape in
the EU and UK generates lots of complex information; Dods PI acts
as an expert guide. We draw on human connection, real-time analysis
and our deep understanding of people, parliaments and policy to
bring our customers impartial insights that matter.
Our monitoring service is delivered through a market leading
platform allowing customers greater control of the content and
sectors that they wish to be informed about. Our technology allows
us to monitor over 13,000 sources of information from 35 different
sectors and provide customers with real time updates. Our premium
offering gives customers access to advice from our specialist
consultants and their dedicated research. In addition, Dods PI's
stakeholder management tools enable our customers to identify and
engage with key decision makers and influencers in their
sector.
We provide political intelligence to eight hundred customers
from a wide range of sectors: corporates, charities, NGOs and even
government departments. The main service covers both the EU and
Westminster parliaments, and we also offer both French and German
language monitoring. During the year we have won new mandates from,
amongst others, KPMG, Rio Tinto and Bayer.
David Beck
Chief Executive Officer
6 September 2023
Financial Review
FY 2023 FY2022
GBPm GBPm
------------ -----------
Revenue from Continuing Operations 18.6 17.6
------------ -----------
Gross profit from Continuing Operations 8.6 8.9
------------ -----------
Gross margin % (1) from Continuing
Operations 46.0% 50.4%
------------ -----------
Adjusted EBITDA (2) from Continuing
Operations 2.7 2.5
------------ -----------
Statutory operating loss from Continuing
Operations (3.7) (1.4)
------------ -----------
Statutory loss before tax from Continuing
Operations (3.7) (1.7)
------------ -----------
Income tax credit/(charge) from Continuing
Operations 0.1 (0.1)
------------ -----------
Loss for the year from Continuing
Operations (3.6) (1.8)
------------ -----------
Loss for the year (2.7) (1.6)
------------ -----------
Statutory EPS (pence per share) (11.2p) (7.0p)
------------ -----------
Adjusted EPS (pence per share) (3) (3.1p) 1.9p
------------ -----------
Net (debt)/cash (4) (2.6) (2.1)
------------ -----------
(1) Gross margin is Gross profit as a percentage of Revenue
(2) Adjusted EBITDA is calculated as earnings before tax,
depreciation, amortisation of intangible assets, share-based
payments and non-recurring items
(3) Adjusted EPS is calculated based on the profit/(loss) for
the year before amortisation of intangible assets, share-based
payments and non-recurring items
(4) Net (debt)/cash comprises the aggregate of gross debt,
excluding IFRS16 lease liabilities, and cash and cash equivalents
(see Note 23)
Adjusted results are prepared to provide a more comparable
indication of the Group's core business performance by removing the
impact of certain items including non-recurring items, depreciation
and amortisation relating to investment activities, share-based
payments and other separately reported items.
In addition, the Group also measures and presents performance in
relation to various other non-GAAP measures including Adjusted
EBITDA. Adjusted results are not intended to replace statutory
results. These have been presented to provide users with additional
information and analysis of the Group's performance, consistent
with how the Board monitors results.
Revenue and operating results
The Group's revenue from Continuing Operations increased by 5.6%
to GBP18.6 million (2022: GBP17.6 million) and gross profit
decreased by 3.5% to GBP8.6 million (2022: GBP8.9 million). Gross
margin decreased from 50.4% to 46.0%, reflecting an investment in
additional sales and marketing resources, together with
inflationary cost pressure.
Adjusted EBITDA from Continuing Operations increased to GBP2.7
million (2022: GBP2.5 million), exceeding pre-pandemic and
pre-disposal levels. The Group's operating loss from Continuing
Operations was GBP3.7 million (2022: GBP1.4 million), after
non-cash items including an amortisation charge of GBP0.6 million
(2022: GBP0.6 million) for business combinations and an
amortisation charge of GBP0.3 million (2022: GBP0.3 million) for
intangible software assets. The depreciation charge for property,
plant and equipment in the year increased slightly at GBP0.6
million (2022: GBP0.6 million) and a right-of-use depreciation
charge was GBP1.3 million (2022: GBP1.3 million). Non-recurring
costs, including profits and losses on disposals, people-related
costs and other costs, were GBP3.4 million (2022: GBP1.2
million).
The loss before tax from Continuing Operations for the year was
GBP3.7 million, up from GBP1.7 million in 2022 primarily as a
result of non-recurring items, and the loss for the year from
Continuing Operations was GBP3.6 million, up from GBP1.8 million in
2022.
Taxation
The Group has a tax credit on Continuing Operations of GBP0.1
million for the year resulting from the current year loss (2022:
tax charge of GBP0.1 million).
Earnings per share
Earnings per share, both basic and diluted, in the year were a
loss of 11.21 pence (2022: loss of 7.03 pence) and were based on
the loss for the year of GBP2.7 million (2022: loss of GBP1.6
million) with a basic weighted average number of shares in issue
during the year of 23,956,124 (2022: 22,367,910 shares ).
Adjusted earnings per share, both basic and diluted, in the year
were a loss of 3.14 pence (2022: 1.93 pence) and were based on the
Adjusted loss after tax for the year of GBP0.8 million (2022:
profit of GBP0.4 million).
Dividend
The Board is not proposing a dividend (2022: GBPnil).
Assets
Non-current assets of GBP37.7 million (2022 restated*: GBP47.4
million) comprise goodwill of GBP26.9 million (2022: GBP28.9
million), intangible assets of GBP7.9 million (2022: GBP9.8
million), property, plant and equipment of GBP0.3 million (2022:
GBP1.8 million), IFRS 16 right-of-use assets of GBP1.9 million
(2022: GBP5.7 million), Investments of GBP0.5 million (2022: GBP0.8
million) and deferred tax assets of GBP0.2 million (2022: GBP0.4
million). Significant year-on-year decreases reflect the disposal
of MET operations and disposal of the Shard lease.
Non-current asset Investments have decreased by GBP0.3 million
during the year, reflecting the disposal of the Group's
shareholdings in its former Associates, Sans Frontières Associates
Ltd and Social 360 Limited. Trade and other receivables, excluding
deferred consideration receivable and deferred tax, have decreased
by GBP0.1 million to GBP5.1 million (2022: GBP5.2 million).
Liabilities
Current liabilities fell by GBP3.5 million to GBP10.8 million
(2022: GBP14.3 million) due to a significant reduction in Trade and
other payables. Of this reduction, GBP0.5 million related to the
payment of HMRC liabilities that had been deferred at 31 March 2021
due to Covid-19. A further GBP1.0 million reduction in current
liabilities related to lease payments due under the Shard lease
which has now been disposed of. Amounts payable under the bank
facility increased by GBP0.5 million to GBP3.4 million (2022:
GBP2.9 million) in line with the bank loan repayment schedule at
the year-end date, which requires GBP1.2 million of the term loan
taken out to part-fund the disposal of the Shard lease to be repaid
within the next 12 months.
Non-current liabilities fell by GBP4.0 million to GBP2.8 million
(2022: GBP6.8 million). Key changes in the year were a reduction in
bank debt of GBP0.2 million and a reduction in lease liabilities of
GBP3.8 million, in part due to the lease disposal.
*see Note 30
Capital and Reserves
Total equity decreased by GBP2.7 million to GBP31.8 million
(2022: GBP34.4 million), reflecting the loss for the year.
Liquidity and capital resources
At 31 March 2023, the Group had bank debt of GBP4.7 million
(2022: GBP4.4 million), comprising amounts owed on term loans and
amounts drawn down on a revolving credit facility (RCF).
The Group had a term loan with GBP0.9 million outstanding (2022:
GBP2.4 million) taken out in July 2022 over a five-year period,
with interest at 4.75% over Bank of England interest rate. A
further GBP1.8 million term loan was taken out in March 2023 over
an 18-month period, to part-fund disposal of the Shard lease. This
loan has the same interest rates and covenants as the Group's
existing term loan.
In addition, the Group had a drawn RCF of GBP2.0 million and the
full balance was outstanding at end of year (2022: GBP2.0
million).
The Group had a cash and cash equivalents balance of GBP2.1
million (2022: GBP2.3 million) and a net debt position of GBP2.6
million (2022: net debt of GBP2.1 million).
Statement of Directors' Responsibilities
The directors are responsible for preparing the Audited Results
Announcement in accordance with applicable laws and regulations.
The responsibility statement below has been prepared in connection
with the Company's full Annual Report for the year ended 31 March
2023. Certain points thereof are not included within this Audited
Results Announcement.
The directors confirm to the best of their knowledge:
-- the consolidated financial statements, which have been
prepared in accordance with both international accounting standards
in conformity with the requirements of the Companies Act 2006 and
international financial reporting standards adopted in the UK, give
a true and fair view of the assets, liabilities, financial position
and profit and loss of the Group; and
-- the Audited Results Announcement includes a fair review of
the development and performance of the business and the position of
the Group together with a description of the principal risks and
uncertainties that it faces.
Financial Statements
Consolidated income statement
For the year ended 31 March 2023
2022
Continuing Operations (1) Note 2023 (restated)
GBP'000 GBP'000
-------------------------------------------------- ------- ----------- ------------
Revenue 3 18,585 17,598
Cost of sales (10,033) (8,732)
-------------------------------------------------- ------- ----------- ------------
Gross profit 8,552 8,866
Administrative expenses (12,628) (10,276)
Other operating income 4 416 -
-------------------------------------------------- ------- ----------- ------------
Operating loss from Continuing Operations (3,660) (1,410)
Memorandum:
Adjusted EBITDA(2) 2,652 2,463
Depreciation of property, plant and equipment 16 (620) (596)
Depreciation of right-of-use assets 26 (1,313) (1,277)
Amortisation of intangible assets acquired
through business combinations 15 (587) (588)
Amortisation of software intangible assets 15 (314) (255)
----------- ------------
Adjusted EBIT(3) (182) (253)
Share-based payments 27 (63) 48
Non-recurring items
Loss on disposal of Investments in Associates 5 (303) -
Profits and losses on disposal of Shard
lease 5 (2,927) -
Impairments and asset write offs 5 - (843)
People-related costs 5 (123) (316)
Other non-recurring items 5 (62) (46)
Operating loss from Continuing Operations (3,660) (1,410)
Net finance expense 10,11 (249) (411)
Share of profit of Associate 18 252 144
-------------------------------------------------- ------- ----------- ------------
Loss before tax from Continuing Operations 7 (3,657) (1,677)
Income tax credit/(charge) 12 88 (129)
-------------------------------------------------- ------- ----------- ------------
Loss for the year from Continuing Operations 7 (3,569) (1,806)
Profit for the year from Discontinued Operations 6 884 234
-------------------------------------------------- ------- ----------- ------------
Loss for the year (2,685) (1,572)
-------------------------------------------------- ------- ----------- ------------
(1) Comparative figures for the year ended 31 March 2022 have
been restated to remove Discontinued Operations as outlined in Note
6.
(2) Adjusted EBITDA is defined as the operating loss after
adding back depreciation, amortisation, share-based payments, and
non-recurring items.
(3) Adjusted EBIT is defined as the operating loss after adding
back share-based payments and non-recurring items.
100% of the loss is attributable to owners of the parent.
2022
Note 2023 (restated)
Earnings per share (pence) p per p per share
share
---------------------------------------- ------- --------- -------------
Basic from Continuing Operations 13 (14.90p) (8.07p)
Diluted from Continuing Operations 13 (14.90p) (8.07p)
---------------------------------------- ------- --------- -------------
Basic from Discontinued Operations 13 3.69p 1.05p
Diluted from Discontinued Operations 13 3.69p 1.05p
---------------------------------------- ------- --------- -------------
The Notes to the consolidated financial statements form part of
these financial statements.
Consolidated statement of comprehensive income
For the year ended 31 March 2023
Note 2023 2022
GBP'000 GBP'000
----------------------------------------------- ----- --------- ---------
Loss for the year (2,685) (1,572)
Items that may be subsequently reclassified
to Profit and loss:
Foreign currency translation:
Exchange differences on translation of
foreign operations (27) 31
Loss reclassified to profit and loss on (48) -
disposal of foreign operations
----------------------------------------------- ----- --------- ---------
(75) 31
Remeasurement of defined benefits obligations 28 45 3
----------------------------------------------- ----- --------- ---------
Other comprehensive income for the year (30) 34
----------------------------------------------- ----- --------- ---------
Total comprehensive loss for the year (2,715) (1,538)
----------------------------------------------- ----- --------- ---------
The Notes to the consolidated financial statements form part of
these financial statements.
Consolidated statement of financial position
As at 31 March 2023
2022
Note 2023 (restated+)
GBP'000 GBP'000
------------------------------------ ------- ----------- -------------
Non-current assets
Goodwill 14 26,919 28,911
Intangible assets 15 7,908 9,826
Property, plant and equipment 16 341 1,807
Right-of-use assets 26 1,874 5,660
Investments 18 450 777
Deferred tax assets 24 184 415
Total non-current assets 37,676 47,396
Current assets
Work in progress and inventories 19 - 14
Trade and other receivables 21 5,502 5,154
Loan receivable 20 - 210
Cash and cash equivalents 20,21 2,144 2,321
7,646 7,699
Assets held for resale 18 - 410
------------------------------------ ------- ----------- -------------
Total current assets 7,646 8,109
Total assets 45,322 55,505
------------------------------------ ------- ----------- -------------
Current liabilities
Trade and other payables 22 6,648 9,718
Defined benefit pension obligation 28 76 85
20,
Bank loan / RCF 23 3,373 2,860
Lease liability 26 678 1,679
Total current liabilities 10,775 14,342
Non-current liabilities
Defined benefit pension obligation 28 249 197
20,
Bank Loan 23 1,342 1,518
Lease liability 26 1,202 5,042
------------------------------------ ------- ----------- -------------
Total non-current liabilities 2,793 6,757
Capital and reserves
Issued capital 25 6,708 6,708
Share premium 1,067 1,067
Merger reserves - -
Retained profit/(loss) 10,347 13,032
Capital redemption reserve 13,680 13,680
Translation reserve (124) (49)
Other reserves 3 (42)
Share option reserve 73 10
Total equity 31,754 34,406
Total equity and liabilities 45,322 55,505
------------------------------------ ------- ----------- -------------
+ Comparative figures for the year ended 31 March 2022 have been
restated to present deferred tax assets within Non-current assets
as outlined in Note 30.
The Notes to the consolidated financial statements form part of
these financial statements.
Consolidated statement of changes in equity
For the year ended 31 March 2023
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
-------------------- --------- ------------ ------------ ---------- ------------ ------------- ---------- ------------ ---------------
At 1 April 2021 19,501 20,866 409 (6,671) - (80) (45) 58 34,038
Total comprehensive
income
Loss for the
year - - - (1,572) - - - - (1,572)
Currency
translation
differences - - - - - 31 - - 31
Remeasurement of
defined
benefit pension
obligation - - - - - - 3 - 3
Share-based payment - - - - - - - (48) (48)
Transactions with
owners
Share
consolidation
(Note 25) (13,680) (20,866) (409) 21,275 13,680 - - - -
Issue of
ordinary
shares 887 1,067 - - - - - - 1,954
At 31 March 2022 6,708 1,067 - 13,032 13,680 (49) (42) 10 34,406
-------------------- --------- ------------ ------------ ---------- ------------ ------------- ---------- ------------ ---------------
At 1 April 2022 6,708 1,067 - 13,032 13,680 (49) (42) 10 34,406
-------------------- --------- ------------ ------------ ---------- ------------ ------------- ---------- ------------ ---------------
Total comprehensive
income
Loss for the
year - - - (2,685) - - - - (2,685)
Currency
translation
differences - - - - - (75) - - (75)
Remeasurement of
defined
benefit pension
obligation - - - - - - 45 - 45
Share based
payments - - - - - - - 63 63
At 31 March 2023 6,708 1,067 - 10,347 13,680 (124) 3 73 31,754
-------------------- --------- ------------ ------------ ---------- ------------ ------------- ---------- ------------ ---------------
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 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 to the consolidated financial statements form part of
these financial statements.
Consolidated statement of cash flows
For the year ended 31 March 2023
Note 2023 2022
GBP'000 GBP'000
------------------------------------------------ ------- ---------- ----------
Cash flows from operating activities
Loss for the year (2,685) (1,572)
Depreciation of property, plant and equipment 16 678 689
Depreciation of right-of-use assets 26 1,338 1,315
Amortisation of intangible assets acquired
through business combinations 15 770 862
Amortisation of other intangible assets 15 322 255
Share-based payments charge/(credit) 27 63 (48)
Share of profit of Associate 18 (252) (144)
Lease interest expense 26 298 369
Loss on disposal of fixed assets 7 - 2
Write off of intangible assets 5,15 - 746
Profit on disposal of operations (before
tax) 6 (2,074) -
Loss on disposal of IFRS16 finance lease 5 2,927 -
Loss on disposal and impairment of investments
in associates 5,17 303 97
Interest income 10 (77) (28)
Interest expense 378 213
Foreign exchange charge on operating items 1 -
Income tax charge/(credit) 638 (292)
Operating cash flows before movement
in working capital 2,628 2,464
(Increase)/Decrease in inventories 19 (16) 22
(Increase)/Decrease in trade and other
receivables (1,520) 430
Increase/(Decrease) in trade and other
payables 233 (2,220)
Cash generated by operations 1,325 696
Taxation paid (429) (332)
------------------------------------------------ ------- ---------- ----------
Net cash generated from operating activities 896 364
------------------------------------------------ ------- ---------- ----------
Cash flows from investing activities
Interest and similar income received 10 77 28
Additions to intangible assets 15 (175) (1,240)
Additions to property, plant and equipment 16 (69) (314)
Acquisition of investment 17 - (450)
Proceeds from disposal of Associate 18 654 -
Proceeds from disposal of operations 6 3,846 -
Repayment of long-term loan by Associate 18,29 210 350
------------------------------------------------ ------- ---------- ----------
Net cash generated from/(used in) investing
activities 4,543 (1,626)
------------------------------------------------ ------- ---------- ----------
Consolidated statement of cash flows
continued
Note 2023 2022
GBP'000 GBP'000
--------------------------------------------------- ---------- ----------
Cash flows from financing activities
Proceeds from issue of share capital - 908
Interest and similar expenses paid (378) (213)
Payment of lease liabilities 26 (1,901) (2,424)
Payment on disposal of lease liabilities 26 (3,683) -
Net drawdowns/(repayments) on bank loans 20,23 337 (253)
Net cash used in financing activities (5,625) (1,982)
-------------------------------------------- ------ ---------- ----------
Net decrease in cash and cash equivalents (186) (3,244)
Opening cash and cash equivalents 2,321 5,565
Effect of exchange rate fluctuations on 9 -
cash held
-------------------------------------------- ------ ---------- ----------
Closing cash at bank 2,144 2,321
-------------------------------------------- ------ ---------- ----------
Comprised of:
Cash and cash equivalents 2,144 2,321
Closing cash at bank 21 2,144 2,321
-------------------------------------------- ------ ---------- ----------
The Notes to the consolidated financial statements form part of
these financial statements.
Notes to the consolidated financial statements
1. Statement of significant accounting policies and judgements
Merit Group plc is a Company incorporated in England and
Wales.
Basis of preparation of the Audited Results Announcement
The financial information of the Group set out above does not
constitute "statutory accounts" for the purposes of Section 435 of
the Companies Act 2006.
Statutory accounts for the year ended 31 March 2022 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 March 2023 will be delivered to the Registrar in
due course. Those accounts have been reported on by the Independent
Auditors; their report for the accounts for both financial years
was (i) unqualified; (ii) did not include a reference of any
matters to which the auditor drew attention by way of emphasis
without qualifying their report; and (iii) did not contain a
statement under 498 (2) or 498 (3) of the Companies act 2006.
The Group financial statements are properly prepared in
accordance with UK adopted international accounting standards. The
accounting policies adopted are consistent with those followed in
the preparation of the consolidated financial statements for the
year ended 31 March 2022.
At the time of approving the Audited Results Announcement, and
based on a review of the Group's forecasts and business plan, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for the foreseeable future. Thus, they continue to adopt the going
concern basis of accounting in preparing the preliminary
statement.
Accounting developments
This report has been prepared based on the accounting policies
detailed in the Group's financial statements for the year ended 31
March 2023 and is consistent with the policies applied in the
previous financial year.
The following IFRS standards, amendments or interpretations
became applicable during the year ended 31 March 2023 but have not
had a material effect on the consolidated financial statements:
Effective
Standard Date*
Amendments to Reference to the Conceptual Framework 1 Jan 2022
IFRS 3
Amendments to Property, Plant and Equipment (Proceeds 1 Jan 2022
IAS 16 before intended use)
Amendments to Onerous Contracts (Cost of fulfilling 1 Jan 2022
IAS 37 a contract)
Amendments to Annual improvements to IFRS Standards 1 Jan 2022
IFRS 1, 9, 16 2018 - 2020
and IAS 41
--------------- ---------------------------------------- -----------
*Effective for accounting periods starting on or after this
date
There are no other new standards, amendments and interpretations
which are effective for periods beginning on or after 1 April 2022,
which had any impact on the Group's accounting policies and
disclosures in these financial statements.
New and revised accounting standards in issue but not yet
effective
Accounting standards, amendments and interpretations issued, but
not yet effective, up to the date of the issuance of the
consolidated financial statements are disclosed below. The Group
expects to adopt these standards, if applicable, in the accounting
period in which they become effective.
Effective
Standard Date*
-------------- ------------------------------------ -----------
Amendments to Disclosure of accounting policies 1 Jan 2023
IAS 1
Amendments to Definition of accounting estimates 1 Jan 2023
IAS 8
Amendment to Deferred tax relating to assets and 1 Jan 2023
IAS 12 liabilities arising from a single
transaction
-------------- ------------------------------------ -----------
* Effective for accounting periods starting on or after this
date
Basis of preparation of the financial statements
The financial statements have been prepared in accordance with
applicable accounting standards, and under the historical cost
accounting rules, except for forward contracts (stated at fair
value at year end) and defined benefit pension obligations (stated
at the projected unit credit method in accordance with IAS 19 at
year end).
In addition to statutory disclosures, the Group also measures
and presents performance in relation to various other non-GAAP
measures including Adjusted EBITDA. Adjusted results are not
intended to replace statutory results. These have been presented to
provide users with additional information and analysis of the
Group's performance, consistent with how the Board monitors
results.
Adjusted EBITDA is presented to provide a more comparable
indication of the Group's core business performance by removing the
impact of certain items including non-recurring items, depreciation
and amortisation relating to investment activities, share-based
payments and other separately reported items.
Going Concern
The Directors have considered the implications for going concern
below, for a period of at least twelve months from the signing of
these accounts.
The Directors have prepared and approved monthly-phased
projections for the 21 months from the balance sheet date. The
Directors consider the projections to be reasonable. The Directors
have assessed the future funding requirements of the Group within
the projections, compared them with the level of available
borrowing facilities, and assessed the impact of them on the
Group's cash flow, facilities and headroom within its future
banking covenants. In addition, the Directors have considered
reasonable downside risks and their potential impact on the
projections and headroom.
Based on this work, the Directors are satisfied that the Group
has adequate resources to continue in operational existence for the
foreseeable future.
In the 12-month period from the balance sheet date, capital
repayments of GBP3.4 million were due to the bank with the
remaining GBP1.3 million due in subsequent periods.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control is
achieved where the Group is exposed to, or has rights to, variable
returns and has the ability to affect those returns. The results of
subsidiaries acquired or sold are included in the consolidated
financial statements from the date that control commences to the
date that control ceases. Where necessary, adjustments are made to
the results of the acquired subsidiaries to align their accounting
policies with those of the Group. All intra-group transactions,
balances, income and expenditure are eliminated on
consolidation.
Business combinations
Business combinations are accounted for using the acquisition
method at the acquisition date, which is the date on which control
is transferred to the Group. In assessing control, the Group takes
into consideration potential voting rights that currently are
exercisable.
The Group measures goodwill as the fair value of the
consideration transferred (including the fair value of any
previously held equity interest in the acquiree) and the recognised
amount of any non-controlling interest in the acquiree, less the
net recognised amount (generally fair value) of the identifiable
assets acquired and liabilities assumed, all measured as at the
acquisition date. When the excess is negative, a bargain purchase
gain is recognised immediately in the income statement.
Any contingent consideration payable is recognised at fair value
at the acquisition date. If the contingent consideration is
classified as equity, it is not remeasured and settlement is
accounted for within equity. Otherwise, subsequent changes to the
fair value of the contingent consideration are recognised in the
income statement.
Revenue policy
Revenue is the total amount of income generated by the sale of
goods or services relating to the Group's primary operations. The
Group has multiple revenue streams, being revenue from Data,
Software & Technology Resourcing, Political Intelligence, and
Political Engagement (now Discontinued - see note 6).
Our Merit Data and Technology ("MD&T") business provides
services within Data and Software & Technology Resourcing.
Across each of these services, the performance obligation is the
delivery of the service as agreed with the client in the contract.
The performance obligation is satisfied over time as the customer
simultaneously receives and consumes the benefits provided by the
Group or via periodic delivery of data where that is the
contractual requirement. Revenue is recognised either:
-- in line with the hours used under the contract for services
in line with our right to invoice for the actual hours used at a
fixed contractual rate per hour; or
-- on delivery of the data where this reflects the completion of
the contractual deliverable;
in each case in accordance with IFRS15 and dependent upon the
nature of the contractual arrangement.
Political Intelligence is a subscription-based service; the
revenue is recognised on a straight-line basis over the life of the
subscription. The performance obligation is the provision and
availability of the subscription platform; the obligation is deemed
to be satisfied as the client has ongoing access to the
subscription platform. Where subscriptions are paid in advance, the
contract balances for services not yet delivered are treated as
deferred income.
Political Engagement activities (now Discontinued - see note 6)
include events and training, along with media publications which
comprise both on-line (website advertising) and off-line (printed
magazines) offerings. Events and training are delivery-based
activities and so revenue is recognised upon delivery of the
service. The performance obligation is the delivery of the event or
training course. Revenue for on-line media is recognised at the
point of publication; the performance obligation is publication
onto the relevant digital platform. Revenue for off-line media is
recognised at the point of distribution; where a campaign runs over
a number of print issues/editions, revenue is recognised equally
across the period of the campaign. The performance obligation for
off-line media is distribution (typically mailing) of the magazine
or publication.
Leases
A contract contains a lease if the contract gives a right to
control the use of an asset for a period of time in exchange for
consideration. Leases which meet the criteria of "short-term," for
which the lease term is less than 12 months, or "low-value assets"
are exempt from IFRS 16. Lease payments associated with
"short-term" and "low-value assets" are expensed on a straight-line
basis over the life of the lease.
For all other leases, at the lease commencement date, a
right-of-use asset and corresponding lease liability are recognised
in the Consolidated statement of financial position. The lease
liability is initially measured at the present value of the
remaining lease payments, discounted using the Group's incremental
borrowing rate. Right-of-use assets are measured at the value of
the associated lease liability plus any initial direct costs
incurred, adjusted for any prepaid or accrued lease payments. The
right-of-use asset is initially recognised at cost, and
subsequently measured at cost less accumulated depreciation and
impairment losses. Right-of-use assets are depreciated over the
shorter of the asset's useful life and the lease term on a
straight-line basis. The lease liability is increased by the
interest cost and decreased by the lease payments made.
Post-retirement benefits - defined contribution
The Group contributes to independent defined contribution
pension schemes. The amount charged to the profit and loss account
represents the contributions payable to the schemes in respect of
the accounting period.
Defined benefits pensions
The Group operates a defined benefit pension plan for eligible
employees based in India. The assets of the scheme are held
separately from those of the Group.
Pension scheme assets are measured using market values. Pension
scheme liabilities are measured using the projected unit credit
method.
Past service cost and settlement gains are recognised
immediately in the Income Statement. Remeasurements comprising of
actuarial gains and losses as well as the difference between the
return on plan assets and the amounts included in net interest on
the net defined benefit liability/asset, are recognised in other
comprehensive income (OCI), net of income taxes.
The pension scheme surplus (to the extent that it is
recoverable) or deficit is recognised in full.
Non-recurring items
Non-recurring items are items which in management's judgement
need to be disclosed by virtue of their size, incidence or nature.
Such items are included on the income statement on an independent
line to which they relate and are separately disclosed either in
the notes to the consolidated financial statements or on the face
of the Consolidated income statement.
Non-recurring items are not in accordance with any specific IFRS
definition and therefore may be different to other companies'
definition of non-recurring items.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
Current tax is based on taxable profit for the year and any
adjustment to tax payable in respect of previous years. Taxable
profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are
never taxable or deductible.
The Group's assets and liabilities for current tax are
calculated using tax rates that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profit will be available against which
temporary differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises from the
initial recognition of goodwill or from the initial recognition of
other assets and liabilities in a transaction that affects neither
the tax nor the accounting profit other than in a business
combination.
Deferred tax liabilities are recognised for temporary
differences arising on investments in subsidiaries except where the
Group is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse
in the foreseeable future.
The carrying amount of the deferred tax asset is reviewed at
each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates enacted or that are
expected to apply (substantively enacted) at the balance sheet
dated when the liability is settled or the asset is realised.
Deferred tax is charged or credited to the income statement, except
when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
Goodwill
Goodwill represents the difference between the cost of
acquisition of a business and the fair value of identifiable
assets, liabilities and contingent liabilities acquired.
Identifiable intangibles are those which can be sold separately or
which arise from legal rights regardless of whether those rights
are separable. Goodwill is stated at cost less any accumulated
impairment losses. Goodwill is allocated to cash generating units
and is tested annually for impairment. Any impairment is recognised
immediately in profit or loss.
Intangible assets
Intangible assets acquired by the Group are stated at cost less
accumulated amortisation and impairment losses, if any. Intangible
assets are amortised on a straight-line basis over their useful
lives in accordance with IAS 38 Intangible Assets. Assets are not
revalued. The amortisation period and method are reviewed at each
financial year end and are changed in accordance with IAS 8
Accounting Policies, "Changes in Accounting Estimates and Errors"
if this is considered necessary, there were no changes from last
year. The estimated useful lives are as follows:
Publishing rights 20-75 years (one specific right is
deemed to have a useful economic life
of 75 years)
Brand names 15-20 years
Customer relationships 1-8 years
Customer list 4-8 years
Order books 1 year
Other assets 1 year
Software which is not integral to a related item of hardware is
included in intangible assets and amortised over its estimated
useful lives of between 3-6 years. The salaries of staff employed
in the development of new software relating to the Group's
information services products and salaries of staff employed in
building our digital platform architecture within the Group are
capitalised into software.
Intangible assets - research and development
Research costs are expensed as incurred. Development expenditure
on an individual project is recognised as an intangible asset when
the Group can demonstrate:
-- the technical feasibility of completing the intangible asset
so that the asset will be available for use;
-- its intention to complete and its ability and intention to
use the asset;
-- how the asset will generate future economic benefits;
-- the availability of resources to complete the asset; and
-- the ability to measure reliably the expenditure during
development.
Following initial recognition of the development expenditure as
an asset, the asset is carried at cost less any accumulated
amortisation and accumulated impairment losses.
Amortisation of the asset begins from the date development is
complete and the asset is available for use. It is amortised over
the period of expected future benefit. Amortisation is charged to
the income statement. During the period of development, the asset
is tested for impairment.
The Directors assess the useful life of the completed
capitalised projects to be 3-10 years from the date of when
benefits begin to be realised and amortisation will begin at that
time.
Intangible assets - Impairment
The carrying amounts of the Group's intangible assets are
reviewed at each reporting date to determine whether there is any
indication of possible impairment. If any such indication of
possible impairment exists, then the asset's recoverable amount is
estimated and compared with the asset's carrying value. For
goodwill, the recoverable amount is estimated each year at each
balance sheet date.
The recoverable amount of an asset or cash-generating unit (CGU)
is the greater of its value in use and its fair value less costs to
sell.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset.
For the purpose of impairment testing, assets are grouped
together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the
cash inflows of other assets or groups of assets (the CGU). The
goodwill acquired in a business combination, for the purpose of
impairment testing, is allocated to cash-generating units that are
expected to benefit from the synergies of the combination.
An impairment loss is recognised whenever the carrying amount of
an asset or its cash-generating unit exceeds its estimated
recoverable amount. Impairment losses are recognised in profit or
loss. Impairment losses recognised in respect of cash-generating
units are allocated first to reduce the carrying amount of any
goodwill allocated to the units and then to reduce the carrying
amounts of the other assets in the unit (group of units) on a pro
rata basis.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates used to
determine the recoverable amount.
An impairment loss is reversed only to the extent that the
asset's carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and impairment losses, if any.
Depreciation is provided to write off the cost less estimated
residual value of property, plant and equipment by equal
instalments over their estimated useful economic lives as
follows:
Leasehold improvements Over the shorter of the life of the
asset or lease period
Equipment, fixtures and 3-10 years
fittings
Depreciation methods, useful lives and residual values are
reviewed at each balance sheet date.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Inventories are subsequently measured at average weighted
cost.
Cash
Cash includes cash in hand and in the bank.
Foreign currencies
The individual financial statements of each Group Company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group Company are expressed in Pounds Sterling,
which is the presentation currency of the Group.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are not retranslated but remain at the
exchange rate at the date of the transaction.
Exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items, are included in
profit or loss for the period. Exchange differences arising on the
retranslation of non-monetary items carried at fair value are
included in the income statement for the period except for
differences arising on the retranslation of non-monetary items in
respect of which gains and losses are recognised directly in
equity. For such non-monetary items, any exchange component of that
gain or loss is also recognised directly in equity.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the balance sheet date.
Income and expense items are translated at the average exchange
rates for the period ended on the balance sheet date. Exchange rate
differences arising, if any, are recognised directly in equity in
the Group's translation reserve. Such translation differences are
recognised as income or as expense in the income statement in the
period in which the operation is disposed of.
Provisions
A provision is recognised on the balance sheet when the Group
has a present legal or constructive obligation as a result of a
past event, and it is probable that an outflow of economic benefits
will be required to settle the obligation.
Financial Instruments
Financial assets
Financial assets are recognised on the Group's balance sheet
when the Group becomes a party to the contractual provisions of the
instrument.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs.
Derivative financial instruments
All of the Group's derivatives and forward contracts are
measured at their fair value at the end of each period. Derivatives
and forward contracts that mature within one year are classified as
current.
Financial assets
Financial Assets are measured at amortised cost, fair value
through other comprehensive income (FVTOCI) or fair value through
income statement (FVTPL). The measurement basis is determined by
reference to both the business model for managing the financial
asset and the contractual cash flow characteristics of the
financial asset. The Group's financial assets comprise of trade and
other receivables and cash and cash equivalents.
Trade receivables
Trade receivables are measured at amortised costs and are
carried at the original invoice amount less allowances for expected
credit losses.
Expected credit losses are calculated in accordance with the
simplified approach permitted by IFRS 9, using a provision matrix
applying a historical credit loss experience to the trade
receivables. The expected credit loss rate varies depending on
whether, and the extent to which, settlement of the trade
receivables is overdue, and it is also adjusted as appropriate to
reflect current economic conditions and estimates of future
conditions. For the purpose of determining credit loss rates,
customers are classified into groupings that have similar loss
patterns. The key driver of the loss rates is the ageing of the
debtor. When a trade receivable is determined to have no reasonable
expectation of recovery it is written off, firstly against any
credit loss allowance available, and then to the income
statement.
Subsequent recoveries of amounts previously provided for or
written off are credited to the income statement. Long term
receivables are discounted where the effect is material.
Cash & cash equivalents
Cash held in deposit accounts is measured at fair value.
Financial Liabilities
The Group's financial liabilities consist of trade payables,
loans and borrowings, and other financial liabilities. Trade
payables are non-interest bearing. Trade payables are initially
recognised at their fair value and subsequently measured at their
amortised cost. Loans and borrowings and other financial
liabilities are initially measured at fair value, net of
transaction costs, and are subsequently measured at amortised cost
using the effective interest rate method. Interest expense is
measured on an effective interest rate basis and recognised in the
income statement over the relevant period.
Fixed asset investments
Investments in unlisted entities which are held for long term
investment purposes are held at fair value through profit and loss
("FVTPL"). The carrying amount of the Group's fixed asset
investments are reviewed at each reporting date with changes in
fair value recognised in other gains/(losses) in the consolidated
income statement.
Associated companies
Associated companies are entities over which the Group has
significant influence, but not control, generally accompanied by a
shareholding giving rise to voting rights of 20% and above.
but not exceeding 50%. Investments in associated companies are
accounted for in the consolidated financial statements using the
equity method of accounting less impairment losses.
Investments in associated companies are initially recognised at
cost. The cost of an acquisition is measured at the fair value of
the assets given, equity instruments issued, or liabilities
incurred or assumed at the date of exchange, plus costs directly
attributable to the acquisition. Periodically management assesses
whether there is any sign of impairment in the investment in
Associate, management make judgement in regard to the investee's
ability to fulfil financial obligations, significant adverse
changes in the environment where the investee operate. If
management judge that evidence of impairment exists, an impairment
test will be conducted. The entire carrying amount of the
investment is tested for impairment as a single asset by comparing
its carrying amount to its recoverable amount. Recoverable amount
is the higher of value in use and fair value less costs to sell. If
the carrying amount of an investment in Associate is higher than
its recoverable amount, an impairment charge is recognised in the
Consolidated income statement.
In applying the equity method of accounting, the Group's share
of its associated companies' post-acquisition profits or losses are
recognised in the income statement and its share of
post-acquisition other comprehensive income is recognised in other
comprehensive income. These post-acquisition movements and
distributions received from the associated companies are adjusted
against the carrying amount of the investment. When the Group's
share of losses in an associated company equals or exceeds its
interest in the associated company, including any other unsecured
non-current receivables, the Group does not recognise further
losses, unless it has obligations or has made payments on behalf of
the associated company.
Unrealised gains on transactions between the Group and its
associated companies are eliminated to the extent of the Group's
interest in the associated companies. Unrealised losses are also
eliminated unless the transaction provides evidence of an
impairment of the asset transferred.
Gains and losses arising from partial disposals or dilutions in
investments in associated companies are recognised in the income
statement. Investments in associated companies are derecognised
when the Group loses significant influence. Any retained interest
in the entity is remeasured at its fair value. The difference
between the carrying amount of the retained investment at the date
when significant influence is lost and its fair value is recognised
in profit or loss.
Government grants
The Group recognises government grants under the accruals model,
which requires that the grant be recognised as "revenue based", in
the financial statements. This is recognised within other operating
income. Grants which are receivable as compensation for expenses or
losses already incurred or for the purpose of giving immediate
financial support to the Group with no future related costs or
unfulfilled conditions and other contingencies attached to the
government assistance, shall be recognised in income in the period
in which it becomes available.
Share based payments
Where share options are awarded to employees, the fair value of
the options at the date of grant is charged to the statement of
comprehensive income on a straight-line basis over the vesting
period. Fair value is calculated using the Monte Carlo simulation
model, details of which are given in Note 27.
Non-market vesting conditions are taken into account by
adjusting the number of options expected to vest at each statement
of financial position date so that, ultimately, the cumulative
amount recognised over the vesting period is based on the number of
options that eventually vest. Market vesting conditions are
factored into the fair value of the options granted. The cumulative
expense is not adjusted for failure to achieve a market vesting
condition.
2. Critical accounting estimates and judgements and adopted IFRS not yet effective
The key assumptions concerning the future and other key sources
of estimation and judgements at the balance sheet date that have a
risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed
below.
Significant Judgements and Estimates
a) Continuing and Discontinued Operations
During the year, the Group completed the disposal of the Media,
Events and Training operations of its Dods segment, including the
trade and assets of Le Trombinoscope SAS, which together
constituted the entire Media, Events and Training operations of the
Group. Further details of the disposals are disclosed in Note 6.
Whilst these operations were only part of the Dods CGU, they
generated approximately 60% of the revenues of that CGU and 35% of
total Group revenues. It is management's judgement that these
operations represented separate major lines of business, were part
of a single coordinated plan to dispose of that line of business,
and given the scale of these operations, it is appropriate to
consider the disposed activities as Discontinued Operations under
IFRS 5. Accordingly, management has adopted IFRS 5 disclosures in
presenting the Consolidated Income Statement and supporting Notes
on a Continuing Operations basis, including the results of the
Discontinued Operations as a single line within the Consolidated
Income Statement and restating the comparative figures
accordingly.
b) Going concern
Management applies judgement when determining to apply the going
concern basis for preparation of the financial statements, through
evaluation of financial performance and forecasts. See "Going
concern" section for further details.
c) Non-recurring administrative expenses
Due to the Group's significant restructuring and acquisition
related activity in recent years, there are a number of items which
require judgement to be applied in determining whether they are
non-recurring in nature. In the current year these relate largely
to disposals, restructuring and redundancy costs. See Note 5 for
further details.
d) Impairment testing
Where indicators of a possible impairment are identified, the
Directors use the value in use or fair value less costs to sell to
determine recoverable value. In the current year, the Directors
have used the fair value less costs to sell model. The key
judgements and estimates required in this model are:
-- the identification of cash-generating units (CGUs). The
Directors have judged that the primary CGUs used for impairment
testing should be MD&T and Dods.
-- the assessment of fair value, which was assessed using the
expected recurring earning of the CGUs and the average earnings
multiples for a group of listed businesses which the Directors
consider comparable to the MD&T and Dods CGUs and for which
published information allowing a comparable assessment is
available, with the key judgement being the identification of
comparable entities for which the Directors used their own
experience to identify entities that could be considered
comparable.
-- the estimate of costs to sell, which was based on
management's knowledge and experience of costs incurred on
transactions to buy and sell similar assets.
See Note 14 for further details.
3. Critical accounting estimates and judgements and adopted IFRS not yet effective
Significant Judgements and Estimates continued
e) Capitalisation of development costs
Management applies judgement when determining the value of
development costs to be capitalised as an intangible asset in
respect of its product development program. Judgement includes the
technical feasibility, intention and availability of resources to
complete the intangible asset so that the asset will be available
for use and assessment of likely future economic benefits. Details
of intangible assets capitalised are available in Note 15.
f) Recognition of deferred tax assets
Judgement is applied in the assessment of deferred tax assets in
relation to losses to be recognised in the financial statements.
Deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. The carrying
amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part
of the asset to be recovered. See Note 24 for further details.
g) Investments
The Group takes into account the power over its investee, its
exposure and rights to variable returns from its involvement with
the investee, and its ability to use the power over the investee to
affect the amount of the investor's return to determine whether the
investment is treated as an Associate or a controlling interest.
See Note 18 for further details. Where a controlling interest
exists, the investee is consolidated.
Adopted IFRS not yet applied
This report has been prepared based on the accounting policies
detailed in the Group's financial statements for the year ended 31
March 2023 and is consistent with the policies applied in the
previous financial year. There are no other new standards,
amendments and interpretations which are effective for periods
beginning on or after 1 April 2022, which had any impact on the
Group's accounting policies and disclosures in these financial
statements. None of the new standards, amendments and
interpretations, which are effective for periods beginning after 1
April 2022 and which have not been adopted early, are expected to
have a significant effect on the consolidated financial statements
of the Group.
4. Segmental information
The basis on which operating results are reviewed and resources
allocated is examined from both a business and geographic
perspective by the senior management team.
Business segments
The Group now considers that it has two operating business
segments, Merit Data & Technology (MD&T) and Dods, plus a
(non-revenue generating) central corporate segment.
-- The Merit Data & Technology business segment focuses on
the provision of data, data engineering and machine learning, and
on the provision of software and technology resourcing.
-- The Dods business segment concentrates on the provision of
key information and insights into the political and public policy
environments around the UK and the European Union.
-- The central corporate segment contains the activities and
costs associated with the Group's head office functions.
On 30 November 2022, the Group completed the disposal of the
Media, Events and Trading operations (the 'MET operations') of its
Dods segment. On 13 January 2023, the Group completed the disposal
of the trade and assets of Le Trombinoscope from its Dods segment.
Current year figures are presented on a Continuing Operations
basis, excluding the results of these disposed operations (the
"Discontinued Operations"), and prior year figures have been
similarly restated to exclude Discontinued Operations as outlined
in Note 6.
The following table provides an analysis of the Group's segment
revenue by business segment.
2022
Revenue by business segment - continuing 2023 (restated)
operations(1)
GBP'000 GBP'000
-------------------------------------------- ----------- ------------
Merit Data & Technology 11,644 10,696
Dods 6,941 6,902
18,585 17,598
-------------------------------------------- ----------- ------------
(1) Comparative figures for the year ended 31 March 2022 have
been restated to remove Discontinued Operations as outlined in Note
6.
No client accounted for more than 10 percent of total
revenue.
2022
Revenue by stream - continuing operations(1) 2023 (restated)
GBP'000 GBP'000
------------------------------------------------ ----------- -------------
Data 6,743 5,567
Software & Technology Resourcing 4,901 5,129
Political Intelligence 6,941 6,866
Political Engagement - 36
18,585 17,598
------------------------------------------------ ----------- -------------
(1) Comparative figures for the year ended 31 March 2022 have
been restated to remove Discontinued Operations as outlined in Note
6.
2023 Profit/(loss) before tax by business MD&T Dods Central Total
segment 2023 2023 2023 2023
GBP'000 GBP'000 GBP'000 GBP'000
Continuing operations(1)
-------------------------------------------- --------- --------- --------- ---------
Adjusted EBITDA 1,809 1,838 (995) 2,652
Depreciation of property, plant and
equipment (252) (368) - (620)
Depreciation of right-of-use assets (552) (517) (244) (1,313)
Amortisation of intangible assets acquired
through business combinations (510) (77) - (587)
Amortisation of software intangible
assets - (314) - (314)
Share based payments - - (63) (63)
Non-recurring items
Profits and losses on disposals - - (3,230) (3,230)
People-related costs (35) 10 (98) (123)
Other non-recurring items - - (62) (62)
-------------------------------------------- --------- --------- --------- ---------
Operating profit/(loss) 460 572 (4,692) (3,660)
Net finance expense 83 (226) (106) (249)
Share of profit of Associate - - 252 252
-------------------------------------------- --------- --------- --------- ---------
Profit/(loss) before tax from continuing
operations 543 346 (4,546) (3,657)
-------------------------------------------- --------- --------- --------- ---------
2022 Profit/(loss) before tax by business MD&T Dods Central Total
segment 2022 2022 2022 2022
GBP'000 GBP'000 GBP'000 GBP'000
Continuing operations(1)
-------------------------------------------- --------- --------- --------- ---------
Adjusted EBITDA 1,898 1,556 (991) 2,463
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) (77) - (588)
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 (252) (1,735) (1,410)
Net finance expense 74 (375) (110) (411)
Share of profit of Associate - - 144 144
-------------------------------------------- --------- --------- --------- ---------
Profit/(loss) before tax from continuing
operations 651 (627) (1,701) (1,677)
-------------------------------------------- --------- --------- --------- ---------
(1) Comparative figures for the year ended 31 March 2022 have
been restated to remove Discontinued Operations as outlined in Note
6.
Geographical segments
The following table provides an analysis of the Group's segment
revenue by geographical market. Segment revenue is based on the
geographical location of customers.
2022
Revenue by geographical segment - 2023 (restated)
continuing operations(1)
GBP'000 GBP'000
------------------------------------- ----------- ------------
UK 15,333 14,176
Belgium 1,707 1,793
USA 662 390
France 321 351
Germany 424 500
Rest of world 138 388
------------------------------------- ----------- ------------
18,585 17,598
------------------------------------- ----------- ------------
(1) Comparative figures for the year ended 31 March 2022 have
been restated to remove Discontinued Operations as outlined in Note
6.
2023 2022
Non-current assets by geographical GBP'000 GBP'000
segment(2)
-------------------------------------- --------- ---------
UK 35,171 43,511
Goodwill 26,919 28,911
Intangible assets 7,908 9,826
Property, plant and equipment 76 1,272
Right-of-use asset 268 3,502
India 1,871 2,693
Property, plant and equipment 265 535
Right-of-use asset 1,606 2,158
37,042 46,204
-------------------------------------- --------- ---------
(2) Excluding Investments held as non-current assets (see Note
18) and deferred tax assets (see Note 24).
Group Deferred revenue
The following table provides an analysis of the Group's deferred
revenue:
2023 2022
Aggregate Deferred Revenue GBP'000 GBP'000
------------------------------ --------- ---------
Merit Date & Technology 10 16
Dods 3,132 5,244
3,142 5,260
------------------------------ --------- ---------
Of revenue deferred at the year-end date, the Group expects to
recognise all GBP3.1 million over the next year ending 31 March
2024.
During the current year, the Group recognised GBP3.1 million of
deferred revenue from the prior period within Continuing
Operations, and GBP1.5 million within Discontinued Operations and
disposed of GBP0.5m, based on the performance obligation being
satisfied. The remaining GBP0.1 million is yet to be recognised,
and is expected to be recognised in the year ending 31 March 2024.
This also forms part of the current year balance.
4. Other operating income
Continuing Operations
During the year, the Group provided transitional services to the
Political Holdings Limited group, the purchaser of the disposed
Media, Events and Training operations, as part of the agreed
disposal. These services included finance, IT and occupancy
services, for which the costs are primarily incurred within the
Dods segment. The fees arising in the period from 1 December 2022
to 31 March 2023 of GBP416,000 have been recognised within Other
operating income.
Discontinued Operations
During the prior year, the Group participated in the UK
Government's Coronavirus Job Retention Scheme (CJRS) for its London
and Edinburgh based employees. Details of the scheme criteria and
eligibility are well documented.
The Group has accounted for this scheme using the accrual model;
all amounts received are recognised as Other Income in the
Consolidated income statement. There are no unfulfilled conditions
and other contingencies attaching to the government assistance.
The number of employees who were put on the CJRS in the prior
year varied from month to month up to a maximum of 6 and the total
amount received during the prior year was GBP39,000. In the current
year, no amounts were claimed for any employees.
In the prior year, the Group also received a grant from the
Scottish Government. The grant was issued by the Pivotal Event
Businesses Fund (the Issuer) and was for GBP2,500. The Group
accounted for this scheme using the accrual model, with the total
grant being recognised as Other operating income in the prior year
Consolidated income statement.
5. Non-recurring items
2022
Continuing operations(1) 2023 2023 (restated)
GBP'000 GBP'000 GBP'000
------------------------------------------- ----------- ----------- ------------
Transaction-related non-recurring
items:
Loss on disposal of investments in
Associates (303)
Loss on disposal of Shard lease (2,927)
Profits and losses on disposals (3,230) -
Impairments and asset write offs - (843)
People-related costs (123) (316)
Other: Professional services, consultancy
and finance fees (62) (46)
(3,415) (1,205)
------------------------------------------- ----------- ----------- ------------
(1) Comparative figures for the year ended 31 March 2022 have
been restated to remove Discontinued Operations as outlined in Note
6.
No impairments or asset write offs were made during the current
year. During the prior year, the Group made an impairment charge of
GBP97k against the carrying value of Investments in Associates and
wrote off GBP746k of intangible fixed assets under
construction.
People-related costs include deferred cash consideration on the
Meritgroup Limited acquisition. Also included are redundancy costs
reflecting the effect of Group initiatives to appropriately
restructure the business. Prior year costs included redundancy and
recruitment of senior management for roles which have been newly
created within the Group.
Other non-recurring costs in the prior year relate to one-off
consultancy and professional fees associated with the rental review
of the London premises. These costs are classified as non-recurring
as they related to a one-off rent review under the London lease,
which has since been reassigned to a third party, and are therefore
highly unlikely to arise again.
6. Disposal
On 30 November 2022, the Group completed the disposal of the
Media, Events and Training operations of its Dods segment
(together, the "MET Operations") for a cash consideration of GBP4.5
million to Political Holdings Limited.
On 12 January 2023, the Group completed the disposal of the
trade and assets of Le Trombinoscope SAS, the Paris-based
activities of the Dods segment ("Le Trombinoscope") to Trombimedia
Limited for GBP0.1 million cash consideration.
As a consequence of the disposals, the activities of the MET
Operations and Le Trombinoscope have been classified as
Discontinued Operations within the Consolidated income
statement.
The results of Discontinued Operations for the year, which for
2023 includes the results of the MET operations for 8 months (2022:
12 months) and Le Trombinoscope for 9.5 months (2022: 12 months),
are as follows:
6(a) - Profit from Discontinued Operations
Discontinued Operations 2023 2022
GBP'000 GBP'000
-------------------------------------------------- --------- ---------
Revenue 6,913 9,801
Cost of sales (5,861) (7,864)
-------------------------------------------------- --------- ---------
Gross profit 1,052 1,937
Administrative expenses (1,450) (2,158)
Other operating income - 42
Operating loss (398) (179)
Memorandum:
Adjusted EBITDA (69) 358
Depreciation of property, plant and equipment (58) (93)
Depreciation of right-of-use assets (25) (38)
Amortisation of intangible assets acquired
through business combinations (183) (274)
Amortisation of software intangible assets (8) -
Non-recurring items - people-related
costs (55) (132)
Operating loss (398) (179)
Net finance expense (66) (8)
Loss before tax (464) (187)
Income tax credit 58 421
-------------------------------------------------- --------- ---------
(Loss)/profit for the period from Discontinued
Operations (406) 234
1,290 -
Profit on disposal of Discontinued Operations
after tax (see Note 6(c))
-------------------------------------------------- --------- ---------
Profit from Discontinued Operations
for the period 884 234
-------------------------------------------------- --------- ---------
6(b) - Cashflows from Discontinued Operations
Cashflows generated by the Discontinued Operation for the period
were as follows:
Discontinued Operations 2023 2022
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Net cash outflow from operating activities (1,621) (330)
Net cash inflow from investing activities 3,846 -
Net cash outflow from financing activities (95) (44)
-------------------------------------------- --------- ---------
Net increase/(decrease) in cash, cash
equivalents and bank overdrafts from
Discontinued Operations 2,130 (374)
-------------------------------------------- --------- ---------
6(c) Disposal details
2023 2022
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Consideration received and receivable:
Cash (net of transaction costs) 3,846 -
Deferred consideration 450 -
--------- ---------
Total disposal consideration 4,296 -
Carrying amount of net assets sold 2,290 -
Gain on disposal before tax and reclassification 2,006 -
of foreign currency translation reserve
Reclassification of foreign currency translation 68 -
reserve
Tax charge on disposal (784) -
------------------------------------------------- --------- ---------
Profit on disposal of Discontinued Operations 1,290 -
after tax
------------------------------------------------- --------- ---------
7. Loss before tax
Loss before tax from Continuing Operations (1) has been arrived
at after charging/(crediting):
Note 2023 2022
Continuing Operations: GBP'000 GBP'000
----------------------------------------------- ----- --------- ---------
Depreciation of property, plant and equipment 16 620 596
Depreciation of right-of-use assets 26 1,313 1,277
Amortisation of intangible assets acquired
through business combinations 15 587 588
Amortisation of software intangible assets 15 314 255
Staff costs 9 11,991 12,336
Non-recurring items 5 3,415 1,205
Share of profit of Associate 18 252 144
Interest income 10 (77) (28)
Interest expense 11 607 574
Net foreign exchange (gain)/loss 10 (297) (147)
Loss on disposal of fixed assets 16 - 2
----------------------------------------------- ----- --------- ---------
(1) Comparative figures for the year ended 31 March 2022 have
been restated to remove Discontinued Operations as outlined in Note
6.
Loss before tax has been arrived at after charging:
2023 2022
Auditor's remuneration GBP'000 GBP'000
--------------------------------------------- ---------- ----------
Fees payable to the Company's auditor for
the audit of the Company's annual accounts 51 26
Fees payable to the Company's auditor and
its associates for other services:
- The audit of the Company's subsidiaries,
pursuant to legislation 137 125
- Non-audit services in relation to review
of interim accounts 5 3
- Non-audit services in relation to review
of ERS tax returns 4 7
197 161
--------------------------------------------- ---------- ----------
8. Directors' remuneration
The remuneration of the Directors of the Group for the years
ended 31 March 2023 and 31 March 2022 is set out below:
Salaries Committee Pension Other
/fees Bonus fees Contrib'ns Benefits Total
GBP GBP GBP GBP (8) GBP
GBP
----------------------- ----- ----------- -------- ---------- ------------ ---------- ----------
Executive Directors
David Beck 2023 227,820 25,000 - - 2,379 255,199
Chief Executive
Officer 2022 125,000(1) - - - 1,014 126,014
----------------------- ----- ----------- -------- ---------- ------------ ---------- ----------
Cornelius Conlon 2023 153,459 - - 3,375 270,708 427,542
Managing Director 2022 163,412 - - 3,000 260,929 427,341
----------------------- ----- ----------- -------- ---------- ------------ ---------- ----------
Philip Machray 2023 197,900 25,000 - 658 2,071 225,629
Chief Financial
Officer 2022 70,530(2) - - - 555 71,085
----------------------- ----- ----------- -------- ---------- ------------ ---------- ----------
Munira Ibrahim(3) 2023 145,000 - - 5,800 149,379 300,179
Managing Director 2022 210,000 - - 8,400 720 219,120
----------------------- ----- ----------- -------- ---------- ------------ ---------- ----------
Simon Bullock(4) 2023 - - - - - -
Former CFO 2022 158,333 - - 6,333 1,252 165,918
----------------------- ----- ----------- -------- ---------- ------------ ---------- ----------
Non-Executive
Directors
Lord Ashcroft 2023 - - - - - -
KCMG PC(5)
Non-Executive 2022 - - - - - -
Director
----------------------- ----- ----------- -------- ---------- ------------ ---------- ----------
Richard Boon(6) 2023 25,000 - 5,000 - - 30,000
Non-Executive
Director 2022 25,000 - 5,000 - - 30,000
----------------------- ----- ----------- -------- ---------- ------------ ---------- ----------
Angela Entwistle(7) 2023 25,000 - 5,000 - - 30,000
Non-Executive
Director 2022 25,000 - 5,000 - - 30,000
----------------------- ----- ----------- -------- ---------- ------------ ---------- ----------
Diane Lees 2023 25,000 - 5,000 - - 30,000
Non-Executive
Director 2022 25,000 - 5,000 - - 30,000
----------------------- ----- ----------- -------- ---------- ------------ ---------- ----------
Mark Smith 2023 50,000 - 5,000 - - 55,000
Non-Executive
Chairman 2022 50,000 - 5,000 - - 55,000
----------------------- ----- ----------- -------- ---------- ------------ ---------- ----------
Vijay Vaghela(6) 2023 25,000 - 10,000 - - 35,000
Non-Executive
Director 2022 25,000 - 10,000 - - 35,000
----------------------- ----- ----------- -------- ---------- ------------ ---------- ----------
Total for 2023 874,179 50,000 30,000 9,833 424,537 1,388,549
----------------------- ----- ----------- -------- ---------- ------------ ---------- ----------
Total for 2022 877,275 - 30,000 17,733 264,470 1,189,478
----------------------- ----- ----------- -------- ---------- ------------ ---------- ----------
1 Appointed as Interim Chief Executive Officer on 13 July 2021.
Appointed as Chief Executive Officer and to the Board on 7
September 2021. In addition to the above Director's remuneration,
in the prior year David Beck received GBP40,000 remuneration prior
to his appointment to the Board.
2 Appointed as Chief Financial Officer on 17 November 2021. In
addition to the above Director's remuneration, in the prior year
Philip Machray received GBP15,944 remuneration prior to his
appointment to the Board.
3 Resigned as a Director on 30 November 2022.
4 Resigned as a Director on 17 November 2021.
5 Lord Ashcroft was appointed to the Board on 13 December 2022.
During the year he received GBPnil remuneration.
6 Resigned as a Director on 31 January 2023.
7 The GBP30,000 (2022: GBP30,000) paid for the services of
Angela Entwistle as a Non-Executive Director is paid to Deacon
Street Partners Limited. See also related party transactions - Note
29.
8 Other benefits are health insurance, overseas living
allowance, and (i) deferred cash consideration on acquisition of
Meritgroup Limited in respect of Cornelius Conlon, and (ii)
redundancy and compensation for loss of office payments in respect
of Munira Ibrahim.
Remuneration of the highest paid Director was GBP427,542 (2022:
GBP427,341). The highest paid Director received pension
contributions of GBP3,375 (2022: GBP3,000).
During the year, three (2022: three) directors accrued benefits
under money purchase pension schemes.
The current Directors and their interests in the share capital
of the Company at 31 March 2023 are disclosed within the Directors'
Report of the Annual Report & Accounts.
9. Staff costs
The average number of persons employed by the Group (including
Executive Directors) during the year within each category was:
2022
Continuing Operations(1) 2023 (restated)
Number Number
------------------------------------- ---------- ------------
Editorial and production staff 39 35
Sales and marketing staff 17 15
Managerial and administration staff 17 25
Technology and support staff 904 895
977 970
------------------------------------- ---------- ------------
2022
2023 (restated)
Continuing Operations(1) GBP'000 GBP'000
------------------------------------- ----------- ------------
Wages and salaries 10,810 11,298
Social security costs 976 922
Pension and other costs 142 164
Share-based payment charge/(credit) 63 (48)
------------------------------------- ----------- ------------
11,991 12,336
------------------------------------- ----------- ------------
(1) Comparative figures for the year ended 31 March 2022 have
been restated to remove Discontinued Operations as outlined in Note
6.
Staff costs do not include deferred cash consideration in
relation to the Meritgroup Limited acquisition. This is treated as
non-recurring (see Note 5) and is included in Directors'
Remuneration (see Note 8).
10. Finance income
2023 2022
Continuing Operations(1) GBP'000 GBP'000
------------------------------ --------- ---------
Bank interest income 77 28
Pension finance credit 8 9
Net foreign exchange gain(2) 297 147
------------------------------ --------- ---------
382 184
------------------------------ --------- ---------
(1) Comparative figures for the year ended 31 March 2022 have
been restated to remove Discontinued Operations as outlined in Note
6.
(2) Includes GBP5k FX loss on derivative (2022: GBP35k
gain).
11. Finance expense
2023 2022
Continuing Operations(1) GBP'000 GBP'000
---------------------------- --------- ---------
Bank interest expense 313 205
Pension finance charge 24 21
Lease interest expense 294 369
631 595
---------------------------- --------- ---------
(1) Comparative figures for the year ended 31 March 2022 have
been restated to remove Discontinued Operations as outlined in Note
6.
12. Income tax credit
2023 2022
Continuing Operations(1) GBP'000 GBP'000
----------------------------------------- --------- ---------
Current tax
Current tax on income for the year at
19% (2022: 19%) 32 27
Adjustments in respect of prior periods 10 -
----------------------------------------- --------- ---------
42 27
Overseas tax
Current tax expense on income for the
year 364 318
----------------------------------------- --------- ---------
Total current tax expense 406 345
----------------------------------------- --------- ---------
Deferred tax (see Note 24)
Origination and reversal of temporary
differences (416) (286)
Effect of change in tax rate - 95
Adjustments in respect of prior periods (78) (25)
----------------------------------------- --------- ---------
Total deferred tax income (494) (216)
----------------------------------------- --------- ---------
Total income tax (credit)/charge (88) 129
----------------------------------------- --------- ---------
(1) Comparative figures for the year ended 31 March 2022 have
been restated to remove Discontinued Operations as outlined in Note
6.
The tax credit for the year differs from the standard rate of
corporation tax in the UK of 19% (2022: 19%). A reconciliation is
provided in the table below:
2023 2022
Continuing Operations(1) GBP'000 GBP'000
------------------------------------------ --------- ---------
Loss before tax (3,657) (1,677)
------------------------------------------ --------- ---------
Notional tax credit at standard rate
of 19% (2022: 19%) (695) (319)
Effects of:
Expenses not deductible for tax purposes 429 (24)
Non-qualifying depreciation - 7
Adjustments to brought forward value (78) (25)
Effect of deferred tax rate changes
on realisation and recognition - 94
Deferred tax not recognised 32 46
Utilisation of losses not provided for 5 -
Tax losses carried forward 104 240
Adjustment to agree foreign tax charge 119 72
Other (4) 38
------------------------------------------ --------- ---------
Total income tax (credit)/charge (88) 129
------------------------------------------ --------- ---------
(1) Comparative figures for the year ended 31 March 2022 have
been restated to remove Discontinued Operations as outlined in Note
6.
13. Earnings per share
2023 2022
Continuing Operations(1) GBP'000 GBP'000
------------------------------------------------- --------- ---------
Loss attributable to shareholders (3,569) (1,806)
Add: non-recurring items 3,415 1,205
Add: amortisation of intangible assets acquired
through business combinations 587 588
Add: net exchange (gains)/losses (Note 10) (297) (147)
Add: share-based payment expense/(credit) 63 (48)
------------------------------------------------- --------- ---------
Adjusted post-tax profit/(loss) attributable
to shareholders 199 (208)
------------------------------------------------- --------- ---------
(1) Comparative figures for the year ended 31 March 2022 have
been restated to remove Discontinued Operations as outlined in Note
6.
2023 2022
Discontinued Operations GBP'000 GBP'000
------------------------------------------------- --------- ---------
Profit attributable to shareholders 884 234
Add: non-recurring items (2,019) 132
Add: amortisation of intangible assets acquired
through business combinations 183 274
------------------------------------------------- --------- ---------
Adjusted post-tax (loss)/profit attributable
to shareholders (952) 640
------------------------------------------------- --------- ---------
2023 2022
Ordinary Ordinary
shares shares
------------------------------------ ----------- -----------
Weighted average number of shares
In issue during the year - basic 23,956,124 22,367,910
Adjustment for share options - -
In issue during the year - diluted 23,956,124 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 year ended 31 March 2023 because their exercise is contingent
on the satisfaction of certain criteria that had not been met at
that date.
2023 2022
Pence Pence
Continuing Operations(1) per share per share
-------------------------------------------- ------------ ------------
Earnings per share - continuing operations
Basic (14.90) (8.07)
Diluted (14.90) (8.07)
Adjusted earnings per share - continuing
operations
Basic 0.83 (0.93)
Diluted 0.83 (0.93)
-------------------------------------------- ------------ ------------
(1) Comparative figures for the year ended 31 March 2022 have
been restated to remove Discontinued Operations as outlined in Note
6.
2023 2022
Pence Pence
Discontinued Operations per share per share
-------------------------------------------- ------------ ------------
Earnings per share - continuing operations
Basic 3.69 1.05
Diluted 3.69 1.05
Adjusted earnings per share - continuing
operations
Basic (3.97) 2.86
Diluted (3.97) 2.86
-------------------------------------------- ------------ ------------
2023 2022
Pence Pence
TOTAL per share per share
----------------------------- ------------ ------------
Earnings per share
Basic (11.21) (7.03)
Diluted (11.21) (7.03)
Adjusted earnings per share
Basic (3.14) 1.93
Diluted (3.14) 1.93
----------------------------- ------------ ------------
14. Goodwill
2023 2022
GBP'000 GBP'000
----------------------- --------- ---------
Cost as at 1 April 28,911 28,911
Disposals in the year (1,992) -
Cost as at 31 March 26,919 28,911
----------------------- --------- ---------
Goodwill acquired in a business combination is allocated at
acquisition to the cash-generating units (CGUs) that are expected
to benefit from that business combination. The CGU is the smallest
identifiable group of assets that generates cash inflows that are
largely independent of the cashflows from other groups of assets.
Management determined that the smallest level that they could
reasonably allocate the group of assets to was MD&T CGU and
Dods CGU.
Of the carrying value of goodwill, GBP15.6 million has been
allocated to the MD&T CGU (2022: GBP15.6 million), and GBP11.3
million had been allocated to the Dods CGU (2022: GBP13.3
million).
Goodwill is not amortised but is tested annually for
impairment.
In the prior year, the assessment for impairment was undertaken
with the recoverable amount being determined from value in use
calculations. The key assumptions for the value in use calculations
are those regarding the discount rate, growth rates and forecasts
of income and costs.
The Group assessed whether the carrying value of goodwill was
supported by the discounted cash flow forecasts of the Group based
on financial forecasts approved by management covering a five-year
period, considering past performance, known developments and
committed plans, and expectations for future business developments.
Management selected a discount rate (10.52%) reflective of the
Group's estimated weighted average cost of capital and the cost of
debt financing for the Group, which it considered reflected the
market assessments of the time value of money and the risks
specific to each separate business.
In the current year, the assessment for impairment has been
undertaken with the recoverable amount being determined as fair
value less costs to sell, under Level 3 of the fair value hierarchy
of IFRS 13, the key assumptions being the assessment of fair value
and the estimate of costs to sell.
The Group assessed fair value using the expected recurring
earnings of the CGUs, based on the Board's approved projections,
and the average earnings multiples for a group of listed businesses
which the Directors consider comparable to the MD&T and Dods
CGUs and for which published information allowing a comparable
assessment is available. The estimate of costs to sell was based on
management's knowledge and experience of costs incurred on
transactions to buy and sell similar assets.
The Directors have changed the basis for assessment as they
consider the fair value less costs to sell method to be more
applicable to the Group's circumstances and strategy.
Based on the above assessments, the Directors concluded at each
year-end that the recoverable amount for each CGU was in excess of
their carrying value, including the value of goodwill, for both the
MD&T and Dods CGUs. Therefore no impairment charge was
recognised in the year (2022: GBPnil).
15. Intangible assets
Under construction
Assets acquired capitalised
through business costs
combinations(1) Software Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------------------- ----------- ------------------- ---------
Cost
At 1 April 2022 28,042 6,074 - 34,116
Transferred from tangible
fixed assets (Note
16) - - 70 70
Additions - internally
generated - 101 74 175
Disposals (16,833) (3,999) - (20,832)
At 31 March 2023 11,209 2,176 144 13,529
---------------------------- ------------------- ----------- ------------------- ---------
Accumulated amortisation
At 1 April 2022 20,145 4,145 - 24,290
Charge for the year 770 322 - 1,092
Disposals (15,825) (3,936) - (19,761)
At 31 March 2023 5,090 531 - 5,621
--------------------------- --------- -------- ---------
Net book value
At 31 March 2022 7,897 1,929 - 9,826
At 31 March 2023 6,119 1,645 144 7,908
--------------------- -------- -------- ---- --------
(1) Assets acquired through business combinations comprise:
Customer
Publishing Brand Relationships Other
rights names and lists assets Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ------------- -------- --------------- --------- ---------
Cost
At 1 April 2022 18,934 1,277 7,677 154 28,042
Disposals (13,451) (1,277) (2,051) (54) (16,833)
------------------- ------------- -------- --------------- --------- ---------
At 31 March 2023 5,483 - 5,626 100 11,209
------------------- ------------- -------- --------------- --------- ---------
Accumulated amortisation
At 1 April 2022 13,742 1,277 4,972 154 20,145
Charge for the year 260 - 510 - 770
Disposals (12,443) (1,277) (2,051) (54) (15,825)
At 31 March 2023 1,559 - 3,431 100 5,090
-------------------------- --------- -------- -------- ------ ---------
Net book value
At 31 March
2022 5,192 - 2,705 - 7,897
--------------- -------- ---- ------ ---- ------
At 31 March
2023 3,924 - 2,195 - 6,119
--------------- -------- ---- ------ ---- ------
15. Intangible assets continued
The useful economic lives of the intangible assets are as
follows:
Publishing rights 20-75 years (one specific right
is deemed to have a useful economic
life of 75 years)
Brand names 15-20 years
Customer relationships 1-8 years
Customer list 4-8 years
Order books 1 year
Software 3-6 years
The carrying value of publishing rights with a useful economic
life of 75 years is GBP3.9 million (2022: GBP4.0 million).
Included within intangible assets are internally generated
assets with a net book value of GBP1.8 million (2022: GBP1.6
million).
During the period there was GBPnil expense to income statement
for Research & Development (2022: GBPnil)
16. Property, plant and equipment
Leasehold IT Equipment
Improvements and Fixtures Total
and Fittings
GBP'000 GBP'000 GBP'000
------------------------------ -------------- -------------- --------
Cost
At 1 April 2022 2,037 2,521 4,558
Transferred to intangible
fixed assets - (70) (70)
Additions - 69 69
Foreign exchange differences - (1) (1)
Disposals (2,037) (1,070) (3,107)
At 31 March 2023 - 1,449 1,449
------------------------------- -------------- -------------- --------
Accumulated depreciation
At 1 April 2022 1,128 1,623 2,751
Charge for the year 209 469 678
Disposals (1,337) (984) (2,321)
At 31 March 2023 - 1,108 1,108
--------------------------- -------- ------ --------
Net book value
At 31 March 2022 909 898 1,807
At 31 March 2023 - 341 341
--------------------- ------ ---- ------
17. Subsidiaries
Company Activity % holding Country of
registration
-------------------------------------- --------------------- ---------- ----------------
Dods Group Limited(1) Political monitoring 100 England and
Wales
Le Trombinoscope SAS(2) Political monitoring 100 France
Merit Data & Technology Limited(1) Data and technology 100 England and
Wales
Merit Data and Technology Private Data and technology 99.99 India
Limited(3)
European Parliamentary Communications Dormant 100 Belgium
Services SPRL(4)
Monitoring Services Limited(1) Dormant 100 England and
Wales
Vacher Dod Publishing Limited(1) Dormant 100 England and
Wales
VDP Limited(1) Dormant 100 England and
Wales
-------------------------------------- --------------------- ---------- --------------
On 30 November 2022, the Group disposed of its shareholdings in
the following companies:
Company Activity
-------------------------------- ----------------
Political Engagement Limited(5) Publishing
Fenman Limited Publishing
Holyrood Communications Ltd Publishing
Total Politics Limited Publishing
Training Journal Limited Holding company
-------------------------------- ----------------
On 14 March 2023, notice to strike off and dissolve three of the
Group's subsidiaries - Monitoring Services Limited, Vacher Dod
Publishing Limited, and VDP Limited - was published in the London
Gazette. These three companies were formally dissolved on 30 May
2023.
There were no acquisitions during the current year.
1 Registered address: 9th Floor, The Shard, 32 London Bridge Street, London, SE1 9SG.
2 Registered address: Tour Voltaire, 1 place des Degrés - La
Défense, 92800 Puteaux, Paris, France.
3 Registered address: SP 52, 3(rd) Street, Ambattur Industrial Estate, Chennai 600 058.
4 Registered address: Boulevard Charlemagne 1, 1041 Bruxelles, Belgium.
5 Incorporated on 5 July 2022.
18. Investments
Investments are presented on the balance sheet as follows:
2023 2022
GBP'000 GBP'000
----------------------------------------- --------- ---------
Non-current asset investments
Investments in Associates - 327
Other Unlisted Investments 450 450
----------------------------------------- --------- ---------
450 777
Current asset investments
Investment in Associate held for resale - 410
----------------------------------------- --------- ---------
450 1,187
----------------------------------------- --------- ---------
The above balances are represented by:
2023 2022
GBP'000 GBP'000
---------------------------- --------- ---------
Investments in Associates - 737
Other unlisted investments 450 450
---------------------------- --------- ---------
450 1,187
---------------------------- --------- ---------
Investments in Associates
During the year, the Group disposed of its shareholdings in both
of its former Associates, Sans Frontières Associates Ltd (SFA) and
Social 360 Limited. The entities each had share capital consisting
solely of ordinary shares, which were held directly by the Group
prior to disposal The Group accounted for both entities as
equity-accounted Associates up to the date of disposal.
Carrying Share of Share Carrying
Amount profit of Disposed amount
% ownership 2022 before tax in the 2023
Name of entity GBP'000 tax in charge year GBP'000
year GBP'000 GBP'000
GBP'000
---------------------- -------------- --------- --------- --------- ----------- ---------
Sans Frontières
Associates Ltd 40% 327 252 (32) (547) -
Social 360 Limited 30% 410 - - (410) -
---------------------- -------------- --------- --------- --------- ----------- ---------
737 252 (32) (957) -
====================== ============== ========= ========= ========= =========== =========
Place of business/country of incorporation of both entities is
England and Wales.
The total share of profit recognised from Associates during the
year, which is based on the unaudited management accounts as 31
March 2023, is GBP220k (2022: GBP117k). This is the net of the
Group's share of Associates' profit before tax of GBP252k less
share of Associates' tax charge of GBP32k.
The Group recognised a loss on disposal of Associates of GBP303k
during the year, having made an impairment charge of GBP97k against
the carrying value of its investment in Social 360 Limited in the
prior year (current year: GBPnil impairment charge).
Other unlisted Investments
Fair value 2023 2022
GBP'000 GBP'000
------------------------------------- --------- ---------
At 01 April 450 -
Additions 51 450
Unrealised losses recognized though (51) -
profit and loss
At 31 March 450 450
-------------------------------------- --------- ---------
In 2019, The Group acquired a 13.3% stake in Acolyte Resource
Group Limited as part of the acquisition of Meritgroup Limited.
Acolyte Resource Group Limited is an unlisted business registered
in and operated from England & Wales and is engaged in the
development and operation of an online recruitment platform. The
Group's investment was written down to GBPnil on acquisition.
During the year, the Group participated in a fundraising round
by Acolyte Resource Group Limited via a debt-for-equity swap and
increased its shareholding to 13.5%. The GBP51k book cost of this
investment was written off during the year.
During the prior financial year, the Group acquired a 9.2% stake
in Web Data Works Limited ("DataWorks") for GBP450k. DataWorks is
an unlisted business registered in and operated from the Republic
of Ireland, engaged in the development of e-commerce data
management software and applications.
After taking into account the Group's voting rights, exposure
and rights to variable returns from its involvement with the
investee, and its ability to use the power over the investee to
affect the amount of investor's return, the Directors have
concluded that the Group does not have a significant influence over
DataWorks. The investment is therefore carried as a fixed asset
investment at fair value through profit and loss.
The Directors' assessment of the fair value of other unlisted
investments falls within Level 3 of the fair value hierarchy of
IFRS 13. This assessment has been based on management's experience
of investing in unlisted investments and the financial information,
including financial projections, received from the investee
companies. As such, the fair value can be subject to material
change as the investee business develops and performs over
time.
The Directors have determined that the fair value (FVTPL) of
each investment is as follows:
Investee entity 2023 2022
GBP'000 GBP'000
-------------------------------- --------- ---------
Acolyte Resource Group Limited - -
Web Data Works Limited 450 450
--------------------------------- --------- ---------
GBP51,000 of loss in respect of these investments has been
recognised in the year (2022: GBPnil).
19. Work in progress and inventories
2023 2022
GBP'000 GBP'000
---------------------------------- ---------- ---------
Work in progress and inventories - 14
- 14
--------------------------------------------- ---------
20. Financial instruments
The carrying amount of financial assets and liabilities
recognised at the balance sheet date of the reporting periods under
review may also be categorised as follows:
2023 2022
GBP'000 GBP'000
---------------------------------------------- --------- ---------
Financial assets
Trade and other receivables (amortised
cost) 4,342 4,346
Derivative Contracts (FVTPL*) - 35
Loan receivable (amortised cost) - 210
Deferred consideration receivable (amortised 450 -
cost)
Cash and cash equivalents (amortised
cost) 2,144 2,321
6,936 6,912
Financial liabilities
Trade and other payables (amortised
cost) (3,501) (4,618)
Derivative Contracts (FVTPL*) (5) -
Lease liabilities (amortised cost) (1,880) (6,721)
Bank loan & RCF (amortised cost) (4,715) (4,378)
---------------------------------------------- --------- ---------
(10,101) (15,717)
Net financial assets and liabilities (3,165) (8,805)
-------------------------------------- -------- --------
*FVTPL stands for "Fair value through profit and loss".
The deferred consideration receivable is due within the next 12
months and accrues no interest. Its fair value is therefore the
same as the booked value with no discounting of the outstanding
amount.
Between 1 August 2022 and 30 January 2023, the Group signed
forward contracts for a total value of approximately GBP2.1 million
with maturity dates ranging from 20 April 2023 to 20 September
2023. The forward contracts are for currency pairing of GBP to
INR.
The Group has exposure to several forms of risk through its use
of financial instruments. Details of these risks and the Group's
policies for managing these risks are included below.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group's principal financial assets
are trade and other receivables, and cash.
The Group's credit risk is primarily attributable to its trade
receivables. The amounts presented in the balance sheet are net of
allowances for doubtful receivables. The Group has no significant
concentration of credit risk, with exposure spread over a large
number of counterparties and customers.
At 31 March 2023, GBP422,000 of the Group's trade receivables
were exposed to risk in countries other than the United Kingdom
(2022: GBP475,000).
The ageing of trade receivables at the reporting date was:
Provided Provided
Loss Allowance Loss Allowance
Gross Gross
2023 2023 2022 2022
GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- ---------------- --------- ----------------
Trade Receivables 3,682 (82) 3,971 (103)
3,682 (82) 3,971 (103)
------------------- --------- ---------------- --------- ----------------
The maximum credit risk exposure for which the Group has made
provision is GBP82k.
Gross Lifetime expected
carrying amount Default credit losses*
GBP'000 rate GBP'000
Current 2,603 0.40% 10
1-30 days past due 827 1.00% 8
31-60 days past
due 94 3.40% 3
61-90 days past
due 76 34.40% 26
More than 90 days
past due 82 41.90% 35
-------------------- ----------------- -------- ------------------
3,682 82
-------------------- ----------------- -------- ------------------
* Expected credit losses = Gross carrying amount x Default
rate.
The movement in allowance for doubtful accounts in respect of
trade receivables during the year was as follows:
2023 2022
GBP'000 GBP'000
----------------------------- --------- ---------
Balance at the beginning of
the year 103 162
Charged in the year - -
Released in the year (21) (59)
Balance at the end of the
year 82 103
------------------------------- --------- ---------
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The contractual
cash flows of each financial liability are materially the same as
their carrying amount.
A reconciliation of the Group's liabilities arising from
financing activities is disclosed below.
Total
Bank Loan Lease Financing
and RCF Liabilities Liabilities
GBP'000 GBP'000 GBP'000
------------------------------------ ------------ -------------- -------------
At 1 April 2021 4,631 7,936 12,567
Cash movements:
Repayments of Term Loan principal (253) - (253)
Lease payments - (1,871) (1,871)
Non-cash movements:
Lease additions - 287 287
Lease interest - 369 369
At 31 March 2022 4,378 6,721 11,099
Cash movements:
Repayment of 2019 Loan and
RCF (4,378) - (4,378)
Drawdown of 2022 Term Loan
and RCF 5,000 - 5,000
Repayment and cancellation
of 2022 Term Loan (2,000) - (2,000)
Repayments of Term Loan principal (85) - (85)
Drawdown of 2023 Property Term
Loan 1,800 - 1,800
Lease payments - (1,897) (1,897)
Non-cash movements:
Lease disposals - (3,242) (3,242)
Lease interest - 298 298
At 31 March 2023 4,715 1,880 6,595
------------------------------------ ------------ -------------- -------------
Banking covenants
Under the Group's bank facilities (see Note 23), the Group is
subject to selected covenant compliance tests on a rolling 12 month
basis and at each quarter end date. These covenant compliance tests
are as follows:
Covenant Compliance test
Leverage ratio Gross debt shall not be more than x Adjusted
EBITDA
----------------------------------------------------
Profit Cover Ratio Gross financing costs (capital & interest)
shall not be less than x Adjusted EBITDA
----------------------------------------------------
Cashflow Cover Gross financing costs (capital & interest)
Ratio shall not be less than x cashflow before financing
----------------------------------------------------
Adjusted EBITDA: earnings before interest, tax, depreciation
& amortisation adjusted for share based payments and
non-recurring items.
Rolling 12 month basis, ending Leverage Profit Cashflow
on: Ratio Cover Ratio Cover Ratio
-------------
30 June 2023 2.0x 3.0x n/a
30 September 2023 2.0x 1.5x n/a
31 December 2023 2.0x 1.5x n/a
31 March 2024 2.0x 1.5x n/a
30 June 2024 1.5x 1.5x n/a
30 September 2024 1.5x 1.5x n/a
31 December 2024 1.5x 1.5x n/a
31 March 2025 1.5x 3.0x 1.5x
30 June 2025 1.0x 3.0x 1.5x
30 September 2025 1.0x 3.0x 1.5x
31 December 2025 and thereafter 1.0x 3.0x 1.5x
--------------------------------- -------------
The Directors have prepared and approved monthly-phased
projections for the 21 months from the balance sheet date. The
Directors consider the projections to be reasonable.
In agreeing to the above covenants, the projections were
sensitised to ensure suitable headroom to enable compliance with
the covenant tests.
Based on this work the Directors are satisfied that the Group is
unlikely to breach any of the above covenants.
Maturity of financial liabilities:
The table below analyses the Group's financial liabilities into
relevant maturity groupings based on their contractual maturities
as at 31 March 2023. The amounts disclosed in the table are the
contractual undiscounted cash flows.
Due within Due Due after
1 year 2-5 years 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ----------- ----------- ---------- ----------
Trade and other payables 3,501 - - 3,501
Derivative contracts 5 - - 5
Bank loan/RCF 3,373 1,342 - 4,715
Lease liabilities 769 1,501 37 2,307
-------------------------- ----------- ----------- ---------- ----------
The Group has a long standing and supportive relationship with
Barclays, having agreed secured loan facilities for a five-year
period to 2027 in July 2022. The Group has recently agreed an
additional 18-month facility to part fund the disposal of the
Group's lease of premises in The Shard, London. The Group has a
five-year plan that has been shared with Barclays and formed the
basis of the banking arrangements that have been put in place.
The Group has a strong track record on cash and working capital
management and carefully monitors its aged debtors to ensure its
cash receipts are as expected. The Group does not anticipate paying
dividends to shareholders at this time.
Currency risk
The Group is exposed to currency risk on transactions
denominated in Euros, US Dollars and Indian Rupees; see Notes 21
and 22.
Share capital
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company. For further details of share
capital, see Note 25.
Sensitivity analysis
In managing interest rate and currency risks, the Group aims to
reduce the impact of short-term fluctuations on the Group's
earnings. Over the longer term, however, changes in foreign
exchange and interest rates would have an impact on consolidated
earnings. The balances of the financial assets and liabilities
exposed to these sensitivities are GBP184,000 Trade receivables,
GBP821,000 Cash and cash equivalents and GBP263,000 Trade payables
for the year.
At 31 March 2023, it is estimated that a general increase of one
percentage point in interest rates would have decreased the Group's
profit before tax from Continuing Operations by approximately
GBP47,000 (2022: GBP50,000).
It is estimated that a general increase of one percentage point
in the value of the Euro and Dollar against Sterling would have
increased the Group's profit before tax from Continuing Operations
by approximately GBP23,000 (2022: GBP14,000).
It is estimated that a general increase of one percentage point
in the value of the Rupee against Sterling would have decreased the
Group's profit before tax from Continuing Operations by
approximately GBP84,000 (2022: GBP72,000).
Fair values
The Directors consider that the fair value of financial
instruments is materially the same as their carrying amounts.
Capital management
The Group manages its capital to ensure that all entities will
be able to continue as a going concern while maximising return to
stakeholders, as well as sustaining the future development of the
business. The capital structure of the Group consists of cash and
cash equivalents and equity attributable to the owners of the
parent, comprising issued share capital, other reserves and
retained earnings.
2023 2022
Capital Management GBP'000 GBP'000
------------------------- --------- ---------
Cash & cash equivalents 2,144 2,321
Share Capital 6,708 6,708
Other reserves 14,699 14,666
Retained Earnings 10,976 13,032
------------------------- --------- ---------
34,527 36,727
------------------------- --------- ---------
21. Other financial assets
2022
Trade and other receivables 2023 (restated*)
GBP'000 GBP'000
----------------------------------- ----------- -------------
Trade receivables 3,600 3,868
Other receivables 742 513
Deferred consideration receivable 450 -
Prepayments and accrued income 710 773
----------------------------------- ----------- -------------
5,502 5,154
----------------------------------- ----------- -------------
*comparative figures for the year ended 31 March 2022 have been
restated to present deferred tax assets within non-current assets,
as outlined in Note 30.
Trade and other receivables denominated in currencies other than
Sterling comprise GBP137,000 (2022: GBP339,000) denominated in
Euros, GBP24,000 (2022: GBP49,000) denominated in USD and GBP23,000
(2022: GBP87,000) denominated in Indian Rupees.
The Group had a balance of GBP56,000 of accrued income relating
to contract assets (2022: GBP421,000).
2023 2022
Cash related GBP'000 GBP'000
--------------------------- --------- ---------
Cash and cash equivalents 2,144 2,321
2,144 2,321
--------------------------- --------- ---------
Cash includes GBP251,000 (2022: GBP141,000) denominated in
Euros, GBP29,000 (2022: GBP126,000) denominated in USD and
GBP541,000 (2022: GBP311,000) denominated in Indian Rupees.
22. Trade and other payables
2023 2022
Current GBP'000 GBP'000
------------------------------------------ --------- ---------
Trade creditors 490 396
Other creditors including tax and social
security 1,058 2,876
Accruals and deferred income 5,100 6,446
------------------------------------------ --------- ---------
6,648 9,718
------------------------------------------ --------- ---------
Current liabilities denominated in currencies other than
Sterling compromise GBP21,000 (2022: GBP24,000) denominated in
Euros, GBP7,000 (2022: GBPnil) denominated in USD and GBP235,000
(2022: GBP21,000) denominated in Indian Rupees.
The Group had a balance of GBP3.1 million of deferred revenue
relating to contract liabilities (2022: GBP5.1 million).
23. Net debt
2023 2022
GBP'000 GBP'000
---------------------------------------- --------- ---------
Bank loan / RCF due within one year 3,373 2,860
Bank loan due after more than one year 1,342 1,518
--------- ---------
4,715 4,378
Cash and cash equivalents (2,144) (2,321)
---------------------------------------- --------- ---------
Net debt 2,571 2,057
---------------------------------------- --------- ---------
Interest-bearing loans and borrowings
On 22 July 2022, the Company agreed new secured loan facilities
with Barclays which include:
-- 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.
On 1 December 2022, the Company repaid and cancelled GBP2
million of the Term Loan following receipt of the proceeds of
disposals.
On 22 March 2023, the Company secured a further GBP1.8 million
18-month Term Loan, amortising on a straight-line basis at
GBP300,000 per quarter, in order to fund the disposal of the
Company's Shard lease.
At 31 March 2023, the balances outstanding on the Company's loan
and RCF facilities were as follows:
Facility Outstanding
at 31 March
2023
GBP'000
--------------------------- -------------
GBP1 million Term Loan: 915
GBP1.8 million Term Loan: 1,800
RCF 2,000
--------------------------- -------------
Total Term Loans and RCF 4,715
--------------------------- -------------
See Note 20 for the maturity analysis of the bank loan.
24. Deferred taxation
The following are the major deferred tax liabilities and assets
recognised by the Group, and movements thereon during the current
year and prior year:
Liabilities Assets
----------------------------------- ---------------------------
Accelerated
Intangible Other capital
assets arising timing allowances Tax losses Total
on consolidation differences GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
-------------------------- -------------- ------------ ------------- ----------
At 31 March 2021 (959) 24 25 688 (222)
(Charge)/credit (99) 62 37 637 637
-------------------------- ------------------- -------------- ------------ ------------- ----------
At 31 March 2022 (1,058) 86 62 1,325 415
(Charge)/credit 165 (83) 119 352 553
Derecognised on disposal 252 - - (1,036) (784)
-------------------------- ------------------- -------------- ------------ ------------- ----------
At 31 March 2023 (641) 3 181 641 184
-------------------------- ------------------- -------------- ------------ ------------- ----------
Deferred tax assets and liabilities have been offset in both the
current year and preceding year as the current tax assets and
liabilities can be legally offset against each other, and they
relate to taxes levied by the same taxation authority or the Group
intends to settle its current tax assets and liabilities on a net
basis.
At the balance sheet date, the Group has total carried forward
tax losses of GBP9.6 million (2022: GBP13.6 million) available to
offset against future taxable profits. Of these, the Group has
recognised deferred tax assets of GBP641,000 (2022: GBP1,325k) in
respect of carried forward tax losses of GBP2.2 million (2022:
GBP5.3 million) as it is probable that these assets shall be
recovered against the taxable profits over the foreseeable period.
On the remaining GBP7.4 million (2022: GBP8.3 million) carried
forward taxable losses, the Group has not recognised a deferred tax
asset as it is less probable that the potential asset would be
utilised.
25. Issued capital
9p deferred 1p ordinary 28p ordinary
shares shares shares Total
Number Number Number GBP'000
------------------------- ------------- ------------- ------------- ----------
Issued share capital as
at 31 March 2022 - - 23,956,124 6,708
Issued share capital as
at 31 March 2023 - - 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 the 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 to increase the nominal value by a
factor of 28 (from 1 penny 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.
26. Leases
Right-of-use Lease
assets liabilities
GBP'000 GBP'000
--------------------- ------------- -------------
As at 1 April 2021 6,688 (7,936)
Additions 287 (287)
Depreciation (1,315) -
Lease Interest - (369)
Lease payments(1) - 1,871
As at 31 March 2022 5,660 (6,721)
Depreciation (1,338) -
Lease Interest - (298)
Lease payments(1) - 1,897
Disposals (2,448) 3,242
As at 31 March 2023 1,874 (1,880)
Current (678)
Non-current (1,202)
---------------------- ------------- -------------
(1) Total lease payments in the year amounted to GBP1,901k
(2022: GBP2,424k), of which GBP4k (2022: GBP553k) was in settlement
of trade creditors and accruals at 31 March 2021.
The Consolidated income statement includes the following amounts
relating to leases:
2023 2022
GBP'000 GBP'000
--------------------------------------- ---------- ----------
Depreciation charge of right-of-use
assets 1,338 1,315
Interest expense (included in finance
cost) 298 370
---------------------------------------- ---------- ----------
The right-of-use assets relate to office space in four locations
and at the balance sheet date have remaining terms ranging up to 7
years.
There were GBPnil of expenses relating to diminutive payments
not included in the measurement of lease liabilities (2022:
GBPnil).
Lease liabilities includes liabilities in respect of IT
equipment with a cost of GBP77,000 (2022: GBP77,000). These assets
are capitalised within IT equipment (see Note 16).
27. Share-based payments
Performance Share Plan (PSP)
During the prior year, the Company granted a conditional award
to two executive Directors under a performance share plan as below.
No awards were made in the current year.
Date of grant Director Outstanding Granted Lapsed Outstanding
Options during During options at
at the year the year 31 March
1 April 2023
2022
--------------- ----------------- ------------ ---------- ---------- ------------
28 January Chief Executive
2022 Officer 762,376 - - 762,376
28 January Chief Financial
2022 Officer 658,415 - - 658,415
1,420,791 - - 1,420,791
--------------------------------- ------------ ---------- ---------- ------------
The options become exercisable on the third anniversary of the
date of announcement of the intention to grant (17 November 2021).
The performance condition for full vesting of these options is for
the share price of the Company to increase by 100% from the closing
share price on the day prior to approval of intention to grant the
options, which was 50.5 pence.
A Monte Carlo Arithmetic Brownian Motion simulation model has
been used to determine the fair value of the share options on the
date of grant. The fair value is expensed to the income statement
on a straight-line basis over the vesting period. The model
assesses a number of factors in calculating the fair value. These
include the market price on the day of grant, the exercise price of
the share options, the expected share price volatility of the
Company's share price, the expected life of the options, the
risk-free rate of interest and the expected level of dividends in
future periods. The inputs into the model were as follows:
Date of grant Risk free Share price Share price
rate volatility at date of
grant
----------------- ---------- ------------ ------------
28 January 2022 2.3% 40.0% 50.5p
----------------- ---------- ------------ ------------
Expected volatility was determined by calculating the historical
volatility of the Company's share price for three years prior to
the date of grant. The expected life used in the model is the term
of the options. The PSP share options outstanding during the year
were as follows:
Number of Weighted average
Ordinary shares exercise price
(pence)
------------------------ ----------------- -----------------
As at 31 March 2022 1,420,791 n/a
Granted during the year - n/a
------------------------ ----------------- -----------------
As at 31 March 2023 1,420,791 n/a
------------------------ ----------------- -----------------
The following options were outstanding under the Company's PSP
scheme as at 31 March 2023:
Date of grant Number of Exercise price Exercise
Ordinary shares per share period
(pence)
----------------- ----------------- --------------- ---------
28 January 2022 1,420,791 nil Nov 2024
1,420,791
----------------- ----------------- --------------- ---------
The income statement charge in respect of the PSP for the year
was GBP63,000 (2022: GBP10,000 charge in respect of PSP and
GBP58,000 credit in respect of historic lapsed schemes).
28. Pensions
Defined benefit pension
The Group operates a defined benefit pension scheme for
qualifying employees based in India known as Gratuity Benefits
which is classified as Post-Retirement Benefits under IAS19
(revised). Under the scheme, the eligible employees are entitled to
a retirement benefit in cash based on final salary on attainment of
retirement age (or earlier withdrawal/resignment or death) after 5
years of continual service. The assets of the scheme are held
separately to the assets of the Group in a trustee administered
fund.
The Group employed an independent actuary to update the Gratuity
Benefits valuation to measure the scheme's liabilities.
The present value of the defined benefit obligation, the related
current service cost and past service cost were measured using the
projected unit credit method. The projected unit credit method is
based on the plan's accrual formula and upon services as of the
beginning or end of the year, but using a member's final
compensation, projected to the age at which the employee is assumed
to leave active service. The plan liability is the actuarial
present value of the "projected accrued benefits" as of the
beginning of the year for active members.
The scheme's costs are borne by the Group. Any surplus or
deficits in the scheme may affect the Group through periodic
adjustments to the Group's contribution rate as determined by the
actuary.
The plan exposes the Group to actuarial risks such as interest
rate risk, investment risk, longevity risk and inflation risk.
-- Interest rate risk - The present value of the defined benefit
liability is calculated using a discount rate determined by
reference to market yields of high quality corporate bonds.
-- Investment risk - The entire plan assets at 31 March 2023
comprise an insurance policy. The value of assets certified by the
insurer may not be the fair value of instruments backing the
liability. In such cases the present value of the asset is
independent of the future discount rate. This can result in wide
fluctuations in the net liability or the funded status if there are
significant changes in the discount rate during the valuation
period.
-- Longevity risk - The Group is required to provide benefits
for the members in the gratuity scheme. Increases in the continual
tenure of employment will increase the defined benefit
liability.
-- Inflation risk - A significant proportion of the defined
benefit liability is linked to inflation. An increase in the
inflation rate will increase the Group's liability. High salary
growths will lead to higher level of benefits to be paid by the
Group.
The significant actuarial assumptions for the determination of
the defined benefit obligation are the discount rate, the salary
growth rate, and the withdrawal rates. The assumptions used for the
valuation of the defined benefits obligation are as follows in the
table "Principal actuarial assumptions".
Funded status of the plan
2023 2022
GBP'000 GBP'000
------------------------------------------- -------- --------
Present value of funded defined benefit
obligations (374) (392)
Fair value of plan assets 49 110
------------------------------------------- -------- --------
Present value of unfunded defined benefit
obligations (325) (282)
------------------------------------------- -------- --------
Current (76) (85)
Non-current (249) (197)
------------------------------------------- -------- --------
Net Deficit (325) (282)
------------------------------------------- -------- --------
Net Liability (325) (282)
------------------------------------------- -------- --------
Movement in present value of obligation 2023 2022
GBP'000 GBP'000
------------------------------------------ -------- --------
At 1 April (392) (371)
Current service cost (83) (73)
Interest cost (24) (21)
Remeasurement losses (gains) (OCI)
Due to changes in financial assumptions 41 11
Due to experience adjustments 28 (7)
Benefits paid from fund 50 72
FX revaluation 6 (3)
------------------------------------------ -------- --------
At 31 March (374) (392)
------------------------------------------ -------- --------
Movement in fair value of plan assets 2023 2022
GBP'000 GBP'000
--------------------------------------- -------- --------
At 1 April 110 132
Net interest Income 8 9
Return on plan assets (24) (1)
Contribution by employer 6 41
Benefits paid (50) (72)
FX revaluation (1) 1
--------------------------------------- -------- --------
At 31 March 49 110
--------------------------------------- -------- --------
The plan asset relates 100% to an insurance policy. The plan
assets are all based geographically in India.
The amounts included in the Consolidated income statement,
Consolidated statement of other comprehensive income and
Consolidated statement of financial position arising from the
Group's obligations in respect of its defined benefit pension
scheme are as follows:
Amounts recognised in Consolidated income
statement 2023 2022
GBP'000 GBP'000
------------------------------------------- -------- --------
Service cost 83 73
Interest cost 24 21
Interest Income (8) (9)
FX Revaluation (5) 2
------------------------------------------- -------- --------
Total expense recognised in Consolidated
income statement 94 87
------------------------------------------- -------- --------
Amounts recognised in Consolidated statement
of OCI 2023 2022
GBP'000 GBP'000
---------------------------------------------- -------- --------
Actuarial changes in financial assumptions (41) (11)
Actuarial experience adjustments (28) 7
Return on plan assets 24 1
---------------------------------------------- -------- --------
Total credit recognised in Consolidated
statement of OCI (45) (3)
---------------------------------------------- -------- --------
Movement in pension scheme net deficit 2023 2022
GBP'000 GBP'000
---------------------------------------- -------- --------
Opening pension scheme net deficit (282) (239)
Contributions by employer 6 41
Consolidated income statement (94) (87)
Consolidated statement of OCI 45 3
---------------------------------------- -------- --------
Closing pension scheme net deficit (325) (282)
---------------------------------------- -------- --------
Principal actuarial assumptions (expressed as weighted averages)
are as follows:
Principal Actuarial assumptions 2023 2022
p.a. p.a.
-------------------------------- ------- -------
Discount rate 7.35% 6.70%
Salary growth rate 7.00% 8.50%
Withdrawal rates by age
Below 35 25.00% 25.00%
35 to 45 15.00% 15.00%
Above 45 10.00% 10.00%
Rate of return on plan assets 7.35% 6.70%
-------------------------------- ------- -------
In valuing the liabilities of the pension fund, mortality
assumptions have been made as indicated below.
Mortality rates
---------------- -------- ------
Age (in years) 2023 2022
------------------ ------ ------
20 0.09% 0.09%
30 0.10% 0.10%
40 0.17% 0.17%
50 0.44% 0.44%
60 1.12% 1.12%
------------------ ------ ------
At 31 March 2023 the mortality rates were derived from the
Indian Assured Lives Mortality (2012-2014) report.
The Group expects to contribute approximately GBP76,000 in the
next financial year.
The weighted average duration of the defined benefit plan
obligation at the end of the reporting period is 6.15 years (2022:
6.13 years).
The calculation of the defined benefit obligation (DBO) is
sensitive to the assumptions set out above. The following table
summarises how the define benefit obligation at the end of the
reporting period would have been because of a change in the
respective assumptions.
Sensitivity to key assumptions 2023 2022
GBP'000 GBP'000
p.a. p.a.
-------------------------------- -------- --------
Discount rate
Increase by 0.5% 364 381
Decrease by 0.5% 385 405
Salary growth rate
Increase by 0.5% 383 402
Decrease by 0.5% 366 384
Withdrawal rate (W.R)
W.R x 110% 373 388
W.R x 90% 375 398
-------------------------------- -------- --------
29. Related party transactions
MET operations
On 30 November 2022, the Group completed the disposal of the
Media, Events and Training operations of its Dods Political
Engagement business (together, the "MET Operations") to Political
Holdings Limited, for a cash consideration of GBP4.5 million.
Political Holdings Limited is a private company owned by Lord
Ashcroft KCMG PC, a substantial shareholder in the Company as
defined by the AIM Rules. Further, Angela Entwistle, a
non-executive director of the Company, is a director of Political
Holdings Limited. The Disposal therefore constitutes a related
party transaction under Rule 13 of the AIM Rules. The Independent
Directors of the Company (being all Directors save for Angela
Entwistle) consulted with Canaccord Genuity Limited in its capacity
as the Company's nominated adviser for the purposes of the AIM
Rules and concluded following this consultation that the terms of
the Disposal to be fair and reasonable insofar as the Group's
shareholders are concerned. At the year-end, 10% of the cash
consideration (GBP450,000) remains outstanding and is due for
payment in October 2023.
As part of the disposal of the MET Operations, the Group agreed
to provide transitional services to the Political Holdings Limited
group of companies covering areas such as occupancy, IT systems and
support and finance and accounting services. In total, the group
charged GBP416,000 for these services during the year, which has
been recognised as Other Operating Income within the Income
Statement. At 31 March 2023, a balance of GBP145,991 was
outstanding in respect of invoicing for these services.
Since its acquisition of the MET operations, the Political
Holdings Limited group has been a customer of MD&T and was
billed GBP35,336 during the year for marketing and data services.
At 31 March 2023, there was a balance of GBP16,094 due.
Further, as part of the disposal, the Group has continued to act
as agent for the political Holdings Limited group, invoicing
customers, collecting book debts and paying for services under
contracts which were pending legal novation to Political Holdings
Limited group companies. During the year, revenue of GBP7,722,749
was invoiced, cash of GBP5,010,321 was collected and payments for
purchases and payroll amounting to GBP3,776,250 were made by the
Group on behalf of Political Holdings Limited group companies. None
of these revenues or costs, all of which arises post disposal are
recognised within the Income Statement of the Group. At 31 March
2023, GBP233,053 of funds were held on trust for Political Holdings
Limited group companies.
Investments and Associates
During the year, the Group received a repayment of GBP210,000
(2022: GBP350,000) of its interest free loan to its then Associate,
Sans Frontières Associates (SFA), reducing the balance outstanding
to GBPnil (2022: GBP210,000).
On 3 March 2023, the Company disposed of its 40% equity stake in
SFA for cash consideration of GBP250,000 via a share repurchase by
SFA.
During the prior year, an amount of GBP62,945 was payable to the
Company's then Associate, Social 360 Limited, in relation to
profit-share for monitoring services provided. The balance
outstanding at 31 March 2022 of GBP16,973 was paid prior to
disposal of the Company's shares in Social 360 Limited for cash
consideration of GBP420,000 on 8 August 2022.
During the year, an amount of GBPnil (2022: GBP105,000) was
payable to Web Data Works Limited, a company in which the Group has
a 9.2% investment, and of which Cornelius Conlon is a Director. At
31 March 2023, there was a balance of GBP105,000 (2022: GBP105,000)
outstanding.
During the year, an amount of GBP18,000 (2022: GBP56,000) was
billed in relation to recruitment services charged by Acolyte
Resource Group Limited, a company in which the Group has a 13.5%
investment, and of which Cornelius Conlon is a Director. At 31
March 2023, there was a balance of GBPnil (2022: GBPnil)
outstanding.
Acolyte Resource Group Limited is also a customer of MD&T
and was billed GBP237,201 (2022: GBP290,000) for Software and
Technology Resourcing services. At 31 March 2023, there was a
balance of GBP63,989 (2022: GBP104,000) due.
Meritgroup Limited acquisition
Cornelius Conlon, a Director of the Company was entitled to
shares and a cash consideration on the first 3 anniversaries of the
Meritgroup Limited acquisition in 2019. During the year, Cornelius
Conlon received cash consideration of GBP220,000, In the prior
year, he received cash consideration of GBP220,00 plus 854,732
ordinary shares having a value of GBP533,352.
On acquisition of Meritgroup Limited, an arm's length
non-repairing 7-year lease was entered into between a Merit
subsidiary (Letrim Intelligence Services Private Limited) and Merit
Software Services Private Limited. Cornelius Conlon, a Director of
the Group, is the beneficial owner of Merit Software Services
Private Limited. The lease relates to the Chennai office of
MD&T. During the year, payments of GBP726,000 (2022:
GBP781,000) were made to Merit Software Services Private Limited in
relation to the lease and other property-related costs.
Other related party transactions
During the year, an amount of GBP141,181 (2022: GBPnil) was
billed for Software and Technology Resourcing services to System1
Group plc, a company of which Philip Machray is a Non-Executive
Director and shareholder. At 31 March 2023, there was a balance of
GBP44,423 (2022: GBPnil) outstanding.
During the current and previous years, Deacon Street Partners
Limited, a company related by virtue of Angela Entwistle, a
Director of the Company also being a Director, invoiced GBP30,000
(2022: GBP30,000) to the Company for the services of Angela
Entwistle as a Non-Executive Director. At 31 March 2023, the
balance outstanding was GBP2,500 (2022: GBP2,500).
The Spouse of Con Conlon, a Director of the Company, is employed
by a subsidiary of the Company and received GBP44,873 remuneration
in the year (2022: GBP35,897).
The Executive Directors of the Group are considered key
management personnel. See Note 8 for details of Directors'
remuneration.
30. Prior period restatement
The consolidated statement of financial position for the year
ended 31 March 2022 has been restated to correctly classify
deferred tax assets of GBP415,000 as non-current assets. These were
previously included within Current assets as part of Trade and
other receivables.
The reclassification has no impact on Total assets, Total equity
and liabilities or Capital and reserves as at the 31 March 2022,
nor the Comprehensive income for the year ended 31 March 2022.
The impact of the reclassification on items within the
Consolidated statement of financial position is as follows:
As previously
reported Change As restated
At 31 March 2022 GBP'000 GBP,000 GBP'000
Total non-current assets 46,981 415 47,396
Current assets 8,114 (415) 7,699
Assets held for resale 410 - 410
-------------------------- -------------- --------- ------------
Total assets 55,505 - 55,505
-------------------------- -------------- --------- ------------
ENDS
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END
FR EAKNKEFADEEA
(END) Dow Jones Newswires
September 06, 2023 02:30 ET (06:30 GMT)
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