Merit Group PLC (AIM:MRIT) shares dropped 30% on Monday after the Dods political intelligence publisher issued a profit warning, as its Merit Data & Technology division faced reluctance from clients to commit to large-scale IT projects.
Full-year revenue and profit are now expected to come in approximately 10% and 40% below market expectations, respectively.
The AIM-listed company said that underlying profit (EBITDA) for the first half will be down 33% year-on-year to roughly £1.2 million, with revenues down 6% to around £9.3 million.
While trading at its Dods Political Intelligence division performed in line with management's expectations, revenues from its Merit Data & Technology wing fell 8.5% year-on-year, as the conversion of its sales pipeline for new work "fell short of expectations, with both macro and local factors affecting prospects' willingness to commit to large-scale IT projects".
Revenue for the year to 31 March is now expected to be around £18.5 million, down 8%, with adjusted EBITDA around £2.0 million. A swing to a loss before tax and non-recurring items of approximately £0.8 million is expected, based on current trading.