REG - Triad Group Plc - Annual Financial Report
12/06/2023 07:00
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RNS Number : 2936C Triad Group Plc 12 June 2023
Legal Entity Identifier (LEI) No. 213800MDNBFVEQEN1G84
Triad Group Plc ("Triad" or "the Company")
Audited results for the year ended 31 March 2023
(Company number: 02285049)
Triad Group Plc is pleased to announce its audited results for the year ended
31 March 2023.
The Board is proposing a final dividend of 4p per share, bringing the total
dividend to 6p for the financial year. The dividend is subject to shareholder
approval at the Annual General Meeting ("AGM"), and details of the AGM will be
announced at the appropriate time.
For further information, please contact:
Triad Group Plc
James McDonald
Finance Director and Company Secretary
Tel: 01908 278450
Zeus Capital Limited
Alexandra Campbell-Harris
Tel: 020 7614 5900
Strategic report
Financial highlights
Year ended Year ended Difference
31 March 2023
31 March 2022
Revenue £14.9m £17.0m -£2.1m
Gross Profit £3.5m £4.8m -£1.3m
Gross Profit % 23.6% 28.1% -4.5%
Profit before tax £0.0m £1.1m -£1.1m
(Loss)/Profit after tax (£0.0m) £1.2m -£1.2m
Cash reserves £4.8m £5.3m -£0.5m
Basic (loss)/earnings per share (0.27p) 7.16p -7.43p
Final dividend - proposed 4p 4p -
Chairman's statement
Dr John Rigg
Financial headlines
For the year ended 31 March 2023 the Group reports revenue of £14.9m (2022:
£17.0m). The gross profit as a percentage of revenue has reduced to 23.6%
(2022: 28.1%) primarily as a result of reduced levels of consultant
utilisation in the first half. The profit before tax reduced to £9k (2022:
£1.1m). The loss after tax was £44k (2022: profit £1.2m). Cash reserves
have reduced to £4.8m (2022: £5.3m). The reasons for this performance is
explained below.
The first half performance was negatively impacted by the external economic
and political environment, but the Group recovered in the second half of the
year primarily through achieving new business wins. Total revenue in the year
reduced by a net £2.1m due to the ongoing increase of consultancy revenues as
a proportion of total revenue, serviced by permanent fee earning consultants.
Gross profit as a percentage of revenue has reduced to 23.6% (2022: 28.1%) due
to the increased number of consultants temporarily off charge in the first
half of the year. This is in any case a requirement if we are to have the
capacity and rapid reaction capability to achieve future growth. Cash has
reduced by £0.5m during the year to £4.8m (2022: £5.3m), which is the net
effect of improved operating cash flows offset by a larger dividend
distribution to shareholders.
Overview of results
In my statement dated 30th November 2022 regarding the first half results, I
said that "Although the results for the first half are obviously
disappointing, I must emphasise that they are entirely due to external factors
beyond our control". I also said that the outlook was extremely positive.
I am now delighted to report that my optimism has proved to be fully
justified. During the second half of the financial year, we have retrieved
the losses reported in the unaudited interim financial statements of the first
half and I regard this as a remarkable achievement on the part of the
Directors and staff of the Group, for which I tender my wholehearted thanks
and appreciation.
Outlook
Our vital signs continue to be extremely strong. Staff turnover is very low,
our recruitment of the highest quality consultants continues apace, cash flow
is very healthy, and the quality of our work is being rewarded by impressive
levels of compliment from our major clients. Our margins and overhead
control continue to be extremely robust. The comments I made regarding the
future in my 'Outlook' statement on the 30th November are still totally
valid. We have successfully ridden out the effects of the Covid-19 pandemic.
We are increasingly focusing our executive Board and senior management on
outward facing activity in order to raise our profile and continue to create
long term relationships of trust and confidence with our major clients and new
ones to come. This reflects the next stage in regaining our traditional
culture as a consultant led, high quality, boutique operation, after
significant strengthening of the management structure.
Our corporate strategy is based on the longer term and we believe the Group is
capable of organically expanding substantially and in a quality controlled way
for a number of years to come, which of course should be reflected in profits
and dividends. I look forward to the future with great enthusiasm.
Board Update
On 1 June 2023, positive steps were taken to consolidate and strengthen the
Triad Board with the promotion of non-Executive Director Charlotte Rigg to
Deputy Executive Chairman and the appointment of Alison Lander to the position
of non-Executive Director. Charlotte was appointed to the Board as
non-Executive Director on 1 January 2020, and during her time with the
business has proven to be an invaluable member of the Board. Alison has many
years' experience in the IT sector, including an extensive working
relationship with Triad, and her appointment will bring relevant and valuable
experience to the Board.
Dividend
Recognising the strength of this year's performance and the Group's confidence
in the near future, the Board proposes a final dividend of 4p per share (2022:
4p per share), which together with the interim dividend already paid of 2p
(2022: 2p per share), totals 6p per share for the financial year (2022: 6p per
share).
Employees
On behalf of the Board of Directors, I would like to thank all of the staff
for their commitment and contribution during a very important year.
Dr John Rigg
Executive Chairman
9 June 2023
Managing Director's statement
Adrian Leer
Business commentary
The Chairman has set out some of the external macro conditions that made for a
challenging first half. I am delighted with the way in which our teams
responded to that difficult first half, resulting in a profit for the year
overall.
The company has made some bold changes to its operating model, a happy
consequence of which has been a significant increase in consultant headcount.
With nearly twice the number of consultants since 2021, it has been critically
important to retain the Triad culture that has permeated through the business
for nearly 35 years. The combination of challenges and rewarding work
throughout the year has seen that culture not only preserved but enriched. We
now have a strong platform for future headcount growth that does not
compromise the quality of service cherished by our clients.
When it comes to client delivery, the year saw another significant
contribution to improving public services in the UK, a source of great pride
and satisfaction to all in the company. Highlights included the delivery of an
array of project outcomes into the Ministry of Justice. Our team of project
management and programme management specialists were involved in projects
including digital prisons, technology delivery into prison cells, legacy
platform retirement initiatives, and counter-fraud interventions. The service
has bent and flexed to accommodate a range of challenging objectives, whilst
consistently impressing the customer.
Elsewhere, we have enjoyed similar success at the erstwhile Department of
Business, Energy and Industrial Strategy (BEIS). Operating across several
discrete contracts, we have supported BEIS in the areas of project management,
agile delivery, software development, platform migration and technical
architecture. Highlights have included the successful launch of a case
management system within the Office of Product Safety and Standards, being
part of a mixed supplier/client team that won the accolade of "Information
Records Management Team of the Year" and completing the Discovery stage for
the Clean Heat Market Mechanism service. The latter assignment cementing our
position as one of the digital leaders in the net zero space.
At Department for Transport, we successfully steered the Road Transport Greenhouse Gas Service product through a GDS Beta assessment; no mean feat for a system of such complexity. It was particularly pleasing to pick up a range of positive comments, including the extent to which our user research activities addressed the accessibility needs of a wide range of users, including those who identified as dyslexic.
Our law enforcement footprint increased significantly during the year. On top
of work with our long-term national law enforcement client, we also delivered
projects concerned with the digital implementation of recent law enforcement
legislation as it relates to international crime. Our relationship with the
Home Office's Accelerated Capability Environment (ACE) went from strength to
strength, and we became one of the select ACE Core+ partners within the ACE
community. A source of real advantage is that over 90% of our consultants are
already security-cleared, meaning that we have been able to mobilise teams at
short notice to work within sensitive domains.
From a public sector perspective, it is extremely gratifying to see that our
work is directly helping to make the country safer, cleaner, greener and more
efficient. Within the private sector, we successfully completed our delivery
programme within Westcoast. The Westcoast CIO praised not only our delivery
capabilities but also upskilling of the Westcoast team, enabling them to
utilise the latest engineering methods on a self-sufficient basis.
Our Microsoft 365 specialists continued to offer solutions to a range of
clients including Electoral Commission, RES, QEnergy and BEIS. In all cases,
clients are relying on us for the benefits of low-code solutions which are as
robust and durable as their more engineered cousins.
Our user centred design team have continued to combine the latest academic
thinking with creative approaches to championing the needs of the user,
resulting in the delivery of systems which are a pleasure to use.
Routes to market were improved during the year with successful enrolment on to
the National Highways ITC Framework, in addition to ongoing participation in
frameworks including DOS, G-Cloud, and Digital Services & Programmes.
Significant investment went into the development of our "Communities of
Practice" model. The three practice areas cover (a) business analysis, user
research, and user experience (b) technical and (c) delivery management,
project management and PMO. Every consultant is a member of at least one
practice area, and these are self-organising groups that seek to develop the
collective skill-base to continuously improve our client offering. Cutting
across the practice areas we developed "The Model Consultant" framework, aimed
at producing a consistently rewarding experience for our clients and providing
staff with a means of continuous professional development. The solidification
of these support systems during the year is a crucial part of preparing the
company for further headcount development.
Beyond delivery, the company has continued to contribute to the greater good.
A number of volunteers took part in the "Boycott your Bed" campaign run by the
charity Action for Children. The company also achieved level two status on the
"Disability Confident" employer scheme, and we continued to support the
TechTalent Charter in its quest to make the technology sector more accessible.
The Company also provided mentoring services to students from Hull and
Northampton universities, and is contributing actively to the Digital Justice
and the Central Government supplier forums facilitated by the industry body
TechUK.
Looking forward, it is pleasing to note that we start the new year with a
significant contract to deliver the Alpha and Beta stages of the Clean Heat
Market Mechanism, following a competitive tendering process after the
Discovery stage. With significant extensions in place across a number of
existing clients, and a number of promising bids in the pipeline, we are well
positioned to build on the momentum created within the second half of last
year. We hope that Crown Commercial Services makes good on its commitment to
restore the levels of transparency associated with the now defunct Digital
Marketplace in the replacement platform, as this is a key ingredient in
helping suppliers understand how best to support buyers' needs.
I would like to echo the Chairman's vote of thanks to our staff for their
outstanding contributions, and to our clients for allowing us the opportunity
to support them in their objectives.
Adrian Leer
Managing Director
9 June 2023
Organisation overview
Triad Group Plc is engaged in the provision of information technology
consultants to deliver technology-enabled business change to organisations in
the public sector, private sector, and not-for-profit sector.
Business model
The Group provides a range of consultancy services to clients to help them
deliver a tangible return on their investment in technology. Our primary
engagement model is to deliver these services via our permanent consultants,
sometimes augmented by carefully selected associates. We rely upon our
in-house resourcing team to provide both permanent and associate staff,
ensuring that we maintain tight control of our supply chain and quality at all
times.
Our services span the delivery life cycle from high level consulting, early
strategy, programme management, project delivery, software delivery, and
support activities.
The Group operates mainly in the United Kingdom. Our workforce is increasingly
distributed across the UK too, and we have permanent office space in Godalming
(registered office) and Milton Keynes.
Principal objectives
The principal objectives of the Group are to;
· Provide clients with industry leading service in our core skills.
· Achieve sustainable profitable growth across the business and
increase long term shareholder value.
The key elements of our strategy to achieve our objectives are;
To provide a range of specialist services relevant to our clients' business
· Our services include consultancy, change leadership, project
delivery, software development and business insights. Further capacity and
expertise may be provided via our associate network.
· We continue to adopt a "business first, technology second"
approach to solving our clients' problems. A cornerstone of our service offer
is our consultancy model, offering advice and guidance to clients in terms of
technology investments.
To develop long term client relationships across a broad client base
· Enduring client relationships fuel profitability. A hallmark of
our trading history has been the frequency of repeat business, which itself
has been a function of outstanding delivery and proactive business development
within existing accounts.
· Our consistent track record in this regard is our major asset
when developing propositions for new clients, along with the use of case
studies and references.
· We have structured our service offering to enable clients to
engage early, thus enabling the building of trust and confidence from the
outset.
To work with partners
· Our strategy includes working with carefully chosen partners
operating under their client frameworks in addition to the frameworks on which
Triad is listed. This will expose more opportunities whilst reducing the cost
of sale.
To leverage group capability and efficiency to increase profitability
· We continue to develop synergies across the Group's activities
both externally and internally, driving better outcomes for clients whilst
improving efficiency and effectiveness. The management team sets objectives to
ensure that these synergies are exploited.
· We enable our clients to benefit from access to a full range of
IT services, delivered through a single, easy to access, point of sale.
· We will continue to provide the highest quality of service to our
customers through our teams of skilled consultants and market experts.
Principal risks and uncertainties
The Group's business involves risks and uncertainties, which the Board
systematically manages through its planning and governance processes.
The Board has conducted a robust assessment of the principal risks facing the
Group, examining the Group's operating environment, scanning for potential
risks to the health and wellbeing of the organisation. The Directors factor
into the business plan the likelihood and magnitude of risk in determining the
achievability of the operational objectives. Where feasible, preventive and
mitigating actions are developed for all principal risks.
Senior management review the risk register and track the status of these risk
factors on an on-going basis, identifying any emerging risks as they appear.
Regular meetings are held between the Executive Chairman and the Managing
Director to ensure risks are identified and communicated.
The outputs of this management review form part of the Board's governance
process, reviewed at regular Board meetings. When emerging risks arise, these
are reviewed by senior management on an immediate basis and communicated to
the Board as appropriate.
The principal risks identified are:
IT services market
The demand for IT services is affected by UK market conditions. This includes,
for example, fluctuations in political and economic uncertainty, and the level
of public sector spending. Negative impacts can reduce revenue growth and
maintenance due to the loss of key clients, reduction in sales pipelines and
reduction in current services. The creation of new services, acquisition of
new clients and the development of new commercial vehicles are important in
protecting the Group from fluctuations in market conditions.
Economy
The political and economic uncertainty generated by Brexit still has the
potential negatively to affect the Group's marketplace due to an impact on
Government spending plans and the cancellation or delay of IT projects. The
strong relationships the Group enjoys with a large range of public sector
clients within the UK mitigated this risk during the year. During and
following the Brexit transition, the Group continued to build strong trading
partnerships with EU based companies. Due to the current lack of restrictions
of trading digital services within the EU, the Directors do not foresee this
changing in the future.
Due to the nature of the Group's client base and activities in the UK, the
current conflict in Ukraine has not had a direct impact, and is not considered
to do so in the future, however there may be a secondary effect as a result of
the impact on the wider economy. The Directors will continue to monitor this
situation closely.
Inflationary pressures and the challenging interest rate environment in the UK
mainly affect the Group's ability to attract and retain staff as wage
inflation will continue to be a risk to the business. The Group's response to
this risk is outlined within the Availability of staff below.
Revenue visibility
The pipeline of contracted orders for time and materials consultancy work can
be relatively short and this reduces visibility on long-term revenue
generation. Political uncertainty, particularly in the public sector, can
reduce visibility in securing new business. The Board carefully reviews
forecasts to assess the level of risk arising from business that is forecast
to be won and maintains very strong relationships with key client
relationships.
Availability of staff
In an extremely difficult market for talent acquisition, the ability to access
appropriately skilled resources, recruit and retain the best quality staff is
key to ensuring the ability to deliver profitable growth and deliver IT
services to our clients. This situation has been exacerbated by the cost of
living crisis which has resulted in general inflation increases. The Group
continues to recruit the best quality individuals and ensures a resilient
network of associate resources is scaled appropriately to meet the demands of
the business. To mitigate these risks, the Group reviews remuneration and
benefits on an annual basis and adjusts these accordingly within market rates.
In addition, the Group operates a Company-wide staff development programme to
ensure continuous personal growth and consistent staff engagement. The
on-boarding of new consultants is managed by a highly experienced and
dedicated team of resourcing professionals, and this provides quality
assurance processes to accelerate hiring and reduce attrition.
Competition
The Group operates in a highly competitive environment. The markets in which
the Group operates are continually monitored to respond effectively to
emerging opportunities and threats. The Group ensures a high quality of
service to long-tenured clients, which includes continuous review of delivery
against project plan and obtaining client feedback. This promotes longevity of
client relationships and to a high degree mitigates the risk of competition.
The risk associated with environmental, social and corporate governance (ESG)
is considered to be low, although the group takes its responsibilities in this
regard very strongly. Details of these responsibilities can be found on page
10.
There are or may be other risks and uncertainties faced by the Group that the
Directors currently deem immaterial, or of which they are unaware, that may
have a material adverse impact on the Group.
The risk appetite of the Group is considered in light of the principal risks
and their impact on the ability to meet its strategic objectives. The Board
regularly reviews the risk appetite which is set to balance opportunities for
business development and growth in areas of potentially higher risk, whilst
maintaining reputation, regulatory compliance, and high levels of customer
satisfaction.
Section 172 statement
Section 172 of the Companies Act 2006 requires Directors to take into
consideration the interests of key stakeholders in the Group in their decision
making. Engagement with the Group's stakeholders is essential to successfully
managing the business and the effectiveness of this engagement helps to
understand the impact of key decisions on stakeholders.
The Board has identified the key stakeholders as shareholders, clients,
partners, employees and suppliers.
· Shareholders: Shareholders play a significant part in deciding
the direction of the business. Dialogue is maintained with shareholders and
their advisors and issues of significance are communicated to shareholders as
necessary. In addition, a full shareholder briefing is presented at the
Group's annual general meeting of shareholders. Despite the political
uncertainty in the first half of the financial year which negatively impacted
the business, the Board awarded an interim dividend of 2p per share (2022: 2p
per share) to shareholders. This decision was made following a detailed review
of second half profitability and cash flow which showed a material
improvement. The Board has proposed a final dividend of 4p per share for the
year ended 31 March 2023 due to the recent trading performance and expected
cash flows (2022: 4p per share).
· Clients: Delivering a quality service is the key to the Group's
future success, and effective and successful delivery of services to our
clients is the key focus of the Group. To increase effectiveness, a constant
review of utilisation rates and delivery structures has been undertaken to
enhance the efficiency of the Group's service to clients. Key account delivery
and management tools have also been reviewed and enhanced to promote
efficiencies. The Group continues the strategy of building permanent
consultant numbers to improve and broaden the skill sets and enhance delivery
to clients, and utilise associates only on a limited basis where rare
technical expertise is required.
· Partners: Effective working relationships that enable future
growth are important to the Group. The Group continue to cultivate strong
relationships with our business partners, which may include intermediaries and
sub-vendor arrangements, with regular dialogue and updates to ensure that
delivery to our shared clients is as effective as possible. During the
financial year, the Group continued to explore delivery methods with partners
that enable the acquisition of new business.
· Employees: Motivated and satisfied employees are the lifeblood of
our business and our people are key to our success. The Group strives to
achieve the highest standards in its dealings with all employees. During the
financial year, the Group continued to deliver a high level of communication
with employees, including regular Group meetings chaired by the Managing
Director. One-to-one meetings with employees and the Managing Director are
also available on request, which regularly take place. The Group continued to
provide appropriate comprehensive induction and ongoing training tailored to
individual needs. Extensive employee benefits are provided which are
continually reviewed to enhance the wellbeing of all employees. Remuneration
packages are reviewed on an annual basis to ensure retention of employees, as
are flexible working environments and grading reviews. During the year ended
31 March 2022, the new Triad Employee Share Incentive Plan was implemented,
which facilitates awards of restricted stock units (RSUs) to employees from
time to time within allowable limits. See page 37 for details.
· Suppliers: Effective engagement with suppliers enables the Group
to deliver a quality service to our clients. The Group maintains appropriate
arm's-length trading relationships with quality suppliers and is fully
committed to fairness in its dealing with them, including embracing the
principle of paying suppliers within agreed credit terms during the course of
normal business.
The Directors continue to ensure there is full regard to the long-term
interests of both the Group and its key stakeholders including the impact of
its activities on the community, the environment and the Group's reputation.
In doing this, the Directors continue to act fairly and in good faith taking
into account what is most likely to promote the long-term success of the
Group.
· Relations with key stakeholders such as shareholders, employees,
and suppliers are maintained by regular, open and honest communication in both
verbal and written form.
· The Directors are fully aware of their responsibilities to
promote the success of the Group in accordance with section 172 of the
Companies Act 2006.
· The Directors continuously take into account the interests of its
principal stakeholders and how they are engaged. This is achieved through
information provided by management and also by ongoing direct engagement with
the stakeholders themselves.
· The Board has ensured an appropriate business structure is in
place to ensure open and effective engagement with the workforce via the
Executive Directors and the senior management team.
· The Board and the senior management team continue to work
responsibly with all relevant stakeholders and has appropriate anti-corruption
and anti-bribery, equal opportunities and whistleblowing procedures and
policies in place.
· As required, non-Executive Directors, professional advisors and
the Company Secretary provide support to the Board to help ensure that
sufficient consideration is given to stakeholder issues.
Viability statement
In accordance with the Listing Rules the Directors have assessed the Company's
viability over the next three financial years. Given the Group's business
model and commercial and financial exposures the Directors consider that three
years is an appropriate period for the assessment. The maximum period of
visibility of commercial arrangements with clients is currently two years,
however in considering the assessment period assumptions have been made beyond
this immediate timeframe based upon the strategic direction of the business.
As part of the long-term viability assessment the Directors have considered
the principal risks.
This assessment of viability has been made with reference to the Group's
current financial and operational positions. Revenue projections, cash flows,
availability of required finance, commercial opportunities and threats, and
the Group's experience in managing adverse conditions in the past have been
reviewed. The Group was founded in 1988 and has survived several recessions.
An example of the robust performance of the business model was the successful
navigation of the Covid-19 pandemic. Despite the overwhelming threat the
pandemic presented, the Group was able to improve profitability and increased
cash reserves without the requirement for external funding or needing to take
advantage of Government support schemes. This success was due to the agility
of the business model, client delivery techniques and the quality of our
employees and hiring processes.
Brexit has had no material negative impact upon the Group's client base and
trading results. In some areas trading relationships have increased with new
EU and European trading partners, and this is expected to improve.
The effects of IR35 legislation is minimal as the Group has continued to
reduce associate fee earners in favour of higher margin permanent employees.
The risk in this area is not considered material.
The Directors have approached the budget and forecasting cycle for the 2024
financial year with a conservative outlook, but are confident in the business
model and the ability of the highly skilled and long tenured consultants to
improve upon these conservative expectations.
The viability assessment considered the principal risks as set out on page 6.
The Board modelled a number of realistic scenarios based upon conservative
budgets and forecasts. This included modelling the most severe scenario
possible which assumed that all current client contracts discontinued at
expiry, with no extension or replacement and with no further cost mitigation.
The group have extended at a high level these forecasts to 3 years for the
purposes of considering viability.
In all scenarios, it was found that there was sufficient headroom in cash flow
to continue operating within current resources for the next 18 months, and
without the requirement to utilise the available financing facility as
detailed in note 3, or procure further external funding. The Group was
therefore found to have sufficient financial strength to withstand
considerable financial headwinds.
The Board believes that the Group remains well placed to navigate effectively
a prolonged period of uncertainty and to mitigate the risks presented by it.
Based upon the results of this analysis, the Board has a reasonable
expectation that the Group will be able to continue in operation and be able
to meet its liabilities over the next 3-year viability period. In reaching
this assessment, the Board has taken into account future trading, access to
external funding and cash flow expectations.
Performance assessment, financial review and outlook
Financial and non-financial key performance indicators (KPIs) used by the
Board to monitor progress are revenue, profit from operations, EBITDA, gross
margin and headcount. Financial KPIs are discussed in more detail in the
Financial review below. The outlook for the Group is discussed in the
Chairman's statement on page 1.
The KPIs are as follows;
2023 2022
Revenue £14,858,000 £17,015,000
Profit from operations £35,000 £1,108,000
Earnings before interest, tax, depreciation and amortisation (EBITDA)¹
£308,000 £1,379,000
Gross margin 23.6% 28.1%
Average headcount 115 104
¹ EBITDA - Profit from operations of £35,000 (2022: £1,108,000) adding back
the depreciation and amortisation charge in the year of £273,000 (2022:
£271,000)
Corporate social responsibility
Our employees
The Group is committed to equal opportunities and operates employment policies
which are designed to attract, retain and motivate high quality staff,
regardless of gender, age, race, religion or disability. The Group has a
policy of supporting staff in long term career development.
Culture and engagement
The Group recognises the importance of having effective communication and
consultation with, and of providing leadership to, all its employees. The
Group promotes the involvement of its employees in understanding the aims and
performance of the business. An assessment of culture, engagement and future
contribution made to the business by employees is made at each Board meeting
and is considered a key aspect of the meetings. The Board has been satisfied
with policies and practices and they are aligned with the Group's purpose and
strategy and no corrective action is required.
The Group strives to recruit and retain high quality employees at the cutting
edge of technology. A key engagement factor is the continuous professional
development of all staff and the Group is committed to providing increased
training and development opportunities, to enhance both the expertise and
engagement of our workforce, and improving the quality of our services to our
clients.
Diversity and inclusion
Diversity and inclusion is a key component of working life in the Group.
Employees are encouraged to take an active role in decision making and driving
the business forward, including several platforms within the business to share
good practice, successes and potential improvements. We continue to include
diversity within our recruitment policies and make improvements as
appropriate.
The following table shows the average number of persons employed during the
year, by gender, who were Directors, senior managers or employees of the
Company.
Male Female Total
Directors 6 1 7
Senior managers 2 - 2
Employees 75 31 106
Total 83 32 115
The average female employees as a proportion of the total Group employees
continues to improve and during the year ending 31 March 2023 this increased
to 28% (2022: 26%).
The following table shows the gender identity and ethnic background of the
board and senior management team during the year.
Number of Board members Percentage of the Board Number of senior positions on the Board Number in the senior management team Percentage of senior management
Men 6 86% 4 2 100%
Women 1 14% - - -
White British or other White 7 100% 4 2 100%
The appointment of Alison Lander to the Board on 1 June 2023 has increased the
female representation on the Board to 25%. The Board consists of mainly long
Triad Group tenured Directors, and with respect to both female and non - white
British directors, there are no specific plans to increase representation
other than continuing to recruit and nurture the best available talent,
regardless of gender or ethnicity.
Environment and greenhouse gas reporting
This statement contains the Group's TCFD aligned disclosure in accordance with
FCA requirements of Premium Listed UK Corporates. We have not yet completed
planning for different climate related scenarios, including 2 degree or lower,
and expect to complete this planning by March 2024. The Group has provided
responses across the TCFD's pillars and aims to advance the maturity of its
climate-related actions and disclosures on an annual basis. The four pillars
are as follows:
Governance - Governance of climate related risks and opportunities Assessing, identifying, and managing climate related issues is part of the
management team's responsibilities. The Board are informed of any climate
related issues identified by the management team as and when they arise. When
an issue is identified, the Board will monitor the progress of addressing this
issue on a relevant basis.
Strategy - Impacts of actual or potential climate related risks and No actual or potential impacts on the Group have been analysed due to the
opportunities limited impact of climate related issues over the short, medium and long term,
including lower carbon economy considerations and a 2°C or lower scenario,
and these have not been considered when making strategic decisions. If, and
when a risk is deemed to have a greater impact, the Group will follow the same
process as identifying and assessing other risks, described on page 6.
The service nature of the business and the potential downtime of consultants
in between assignments, means that climate risk is mitigated in this
situation.
With the Group's workforce currently working remotely from locations across
the country and having in excess of 3 years' remote working experience, no
localised climate issues will have a material impact. The management team has
assessed the impact of the warnings from the National Grid regarding the
potential of localised planned three-hour outages and have deemed this to have
no material impact. National climate related risks, including electrical
supply issues to the entire country at a single time, have been deemed
exceptionally remote and not assessed.
There are no financial related disclosures due to the immateriality of the
risks, in line with the TCFD recommendations.
The Group has been involved in climate related projects, such as the
Department for Transport's Renewable Transport Fuels Obligation Operating
System (ROS) and with the Department for Business, Energy and Industrial
Strategy's Clean Heat Market Mechanism discovery. This work and our increased
expertise in this area provides further opportunities to be involved in future
projects of this nature.
Risk Management - identification, assessment, and management of climate related risks
Climate related risks are assessed as per other risks to the Group, described
on page 6.
There are no regulatory requirements that would have a material impact on the
Group, and in line with our Carbon Reduction Plan, the Group is moving towards
zero rated emissions by 2050.
Metrics - metrics and targets used to assess, manage and report relevant The Group's emissions per scope are detailed below in line with SECR
climate-related risks and opportunities requirements, along with our KPIs of tCO(2)e per £1m of revenue and per
average total headcount, using the emission factors from the Government's GHG
Conversion Factors 2022.
Scope 1 - Combustion of fuel; one of the Group's offices uses gas for heating,
which due to the current remote nature of the workforce is being used at a
minimum level for both properties. A single company car is also being used
where public transport is not available.
Scope 2 - Electricity; both offices now are now supplied by renewable energy
suppliers, with the small increase due to an increase in office visits.
Scope 3; this covers business travel and employee commuting, with the increase
of 13 tCO(2)e due to an increased requirement for on-site working. Our
employees are encouraged to use public transport where available.
In November 2022 the Group published its latest Carbon Reduction Plan,
available on our website, committing to achieving Net Zero emissions by 2050.
It included a shorter-term target to reduce carbon emissions by 18.1% to 150
tCO(2)e by 2025. During the year, we have promoted remote collaborative
working to minimise travel, reduced paper usage by >95% since our baseline
emissions calculation and changed to renewable energy suppliers at both of our
offices. The continuing reduction will be achieved by continuing to embed a
degree of working from home as an ongoing policy, finalise a paperless office
environment, increasing the profile of environmental issues and the promotion
of good practices through staff communication channels. The management team
will continue to review the scope 1 and 2 emissions from office activities and
identify and implement reductions through changes to policies and practices.
The current measurements remain on target against this plan.
The Group has used mileage reports, public transport journey details and meter
readings converted to tCO(2)e using the 2022 UK Government's conversion
factors for company reporting of greenhouse gas emissions.
The annual quantity of greenhouse gas (GHG) emissions for the period 1 April
2022 to 31 March 2023 in tonnes of carbon dioxide equivalents (tCO(2)e) for
the Group is shown in the table below, updated following reassessment of
carbon footprint criteria:
GHG emissions 2023 2022
tCO(2)e¹ tCO(2)e¹
Emission source:
Scope 1 - Combustion of fuel 7 8
Scope 2 - Electricity and heat purchased for own use 29 26
Total 36 34
Scope 3 - Including business travel and commuting 24 11
Total 60 45
tCO(2)e per £1m revenue 4.0 2.6
FTE 115 104
Intensity ratio (tCO(2)e per FTE) 0.5 0.4
¹ The calculation of tCO(2)e for each source has been prepared in accordance
with DEFRA guidelines for GHG reporting.
The annual energy consumed as a result of the purchase of electricity and heat
for the period 1 April 2022 to 31 March 2023 in kWh is shown in the table
below:
2023 2022
Energy consumed (kWh) 151,355 124,397
kWh per £1m revenue 10,158 7,317
FTE 115 104
Intensity ratio (kWh per FTE) 1,316 1,196
The emissions are generated solely by activities in the UK. Emissions
generated by electricity consumption is 48% (2022: 59%).
The Group has not been subject to any environmental fines during the year
ended 31 March 2023 (2022: nil).
Social, community and human rights issues
Triad takes its responsibilities to the community and society as a whole very
seriously. With people at the core of our values, during 2020 Triad was proud
to have achieved its first Disability Confident badge - Disability Confident
Level 1 ("Committed"). To show our continued commitment in this area, during
the year we achieved Disability Confident Level 2 ("Employer"), with the
ambition to move to the highest level (Level 3 - "Leader") over the next 12
months.
We are using this to guide our practices, particularly with regards to
equality of opportunity for disabled staff and through our recruitment
process. An example of this is the introduction of a Disability &
Accessibility Network, which has been set up to support Triad employees
including those with physical and mental impairments.
From becoming members of Tech Talent Charter in 2021, we have continued to
improve our monitoring of under-represented groups in the workplace through
the introduction of company-wide surveys on social mobility and diversity,
alongside updating our Equal Opportunities Policy to reflect our commitments.
We believe we are working to make a real difference to inclusion and diversity
within our organisation and across the technology sector.
The Group actively supports charities. Managing Director Adrian Leer is a
board member of Action for Children, and our staff participate in regular
fund-raising activities for the charity, promoted and supported by Triad.
Further charitable donations made in the year included The City of London
Police Cadets, which helped to fund extra-curricular development activities
for young people within the organisation.
There are no human rights issues that impact upon operations.
Financial review
Group performance
Group revenue has decreased to £14.9m (2022: £17.0m) due to an ongoing
increase of consultancy revenues replacing associate led assignments as a
proportion of total revenue, serviced by permanent fee earning consultants.
Gross profit reduced to £3.5m (2022: £4.8m), primarily due to the increased
number of consultants temporarily off charge in the first half of the year,
and this has also resulted in the gross profit as a percentage of revenue
reducing to 23.6% (2022: 28.1%).
The Group reports a profit from operations before taxation of £9k (2022:
£1.1m). The reduction in profitability before tax of £1.1m and the reduction
in gross profit (£1.3m), was primarily due to reduced consultant utilisation.
This is offset by the reduction in administrative personnel overheads of
£0.2m. The Group reports a loss after tax of £44k (2022: profit £1.2m).
The balance sheet remains strong with no external debt, with the exception of
the lease liabilities arising due to the application of IFRS 16, and the Group
enjoys strong reserves of cash at £4.8m (2022: £5.3m) and no bad debts
(2022: nil).
Overheads
Administrative expenses for the year are £3.5m (2022: £3.7m). The reduction
of £0.2m was the net effect of a reduction in administrative personnel costs
derived from a reduction in discretionary one-off payments of £0.3m,
reduction in other personnel related costs of £0.1m and an increase in
share-based payments of £0.2m and other personnel related costs.
Non-personnel costs remained static in the period.
Staff costs
Total staff costs have increased to £10.0m (2022: £8.6m) (note 7) which is
predominantly due to the increase in the average fee earning consultant number
to 93 (2022: 77) in line with the Group's organic growth strategy. This growth
in consultant numbers has materially improved the ratio of fee earners to
administration staff to 19:1 (2022: 9:1).
Cash
Cash and cash equivalents as at 31 March 2023 reduced to £4.8m (2022:
£5.3m). The maintenance of working capital efficiencies during the year
resulted in a net cash inflow from operating activities of £0.7m (2022:
£1.2m). During the year, the Group was not required to seek external funding
and the Lloyds financing facility remains unutilised. The net cash outflow
from financing activities was £1.3m (2022: outflow £0.8m), which included
dividends paid of £1.0m (2022: £0.7m). The net cash inflow from investing
activities was £0.1m (2022: outflow £0.01m) reflecting the low investment in
capital expenditure during the period.
Non-current assets
Non-current assets excluding taxation increased by £0.4m (2022: reduction
£0.1m). This was due to the increase in the right of use asset of £0.2m
(2022: reduction £0.2m) and the finance lease receivable of £0.4m (2022:
reduction £0.1m) as the lease break on one property was not taken, a
reduction of £0.08m was related to purchased assets (2022: increase £0.05m)
and trade receivables reduced by £0.1m (2022: increase £0.1m).
Taxation
The Group adopts a low-risk approach to its tax affairs. The Group does not
employ any complex tax structures or engage in any aggressive tax planning or
tax avoidance schemes. The deferred tax asset decreased to £0.11m (2022:
£0.16m) in the year, mainly due to the expectation that tax losses brought
forward will be offset against future profits at a relatively lower level (see
note 8).
Net assets
The net asset position of the Group at 31 March 2023 was £5.2m (2022:
£6.0m). The effect of the non-enacted lease break on one property increased
total assets by £0.6m and total liabilities by a corresponding £0.6m, and so
no overall effect upon net assets in the year. Further movements during the
year are detailed on page 52.
Share options and restricted stock units
A total of 43,084 options were exercised by staff during the year (2022:
511,000). No further options were granted in the year (2022: nil).
No restricted stock options (RSUs) were granted to either Directors or staff
during the year (2022: 750,000).
A share-based expense has been recognised in the year of £200,128 (2022:
£476).
Dividends
With the strong expectation of continued profitability and future positive
cash flows, the Board are proposing a final dividend of 4p per share (2022: 4p
per share), which together with the interim dividend already paid of 2p (2022:
2p per share), totals 6p per share for the financial year (2022: 6p per
share). See note 9.
By order of the Board
James McDonald
Finance Director
9 June 2023
Directors' report
The Directors present their Annual report on the activities of the Group,
together with the financial statements for the year ended 31 March 2023. The
Board confirms that these, taken as a whole, are fair, balanced and
understandable, and that they provide the information necessary for
shareholders to assess the Group's and Company's position and performance,
business model and strategy, and that the narrative sections of the report are
consistent with the financial statements and accurately reflect the Group's
performance and financial position.
The Strategic report provides information relating to the Group's activities,
its business and strategy and the principal risks and uncertainties faced by
the business, including analysis using financial and other KPIs where
necessary. These sections, together with the Directors' remuneration and
Corporate Governance reports, provide an overview of the Group, including
environmental and employee matters and give an indication of future
developments in the Group's business, so providing a balanced assessment of
the Group's position and prospects, in accordance with the latest narrative
reporting requirements. The Group's subsidiary undertakings are disclosed in
the note 14 to the financial statements.
Corporate Governance disclosures required within the Directors' report have
been included within our Corporate Governance report beginning on page 22 and
form part of this report.
Share capital and substantial shareholdings
Share capital
As at 31 March 2023, the Company's issued share capital comprised a single
class of shares referred to as ordinary shares. Details of the ordinary share
capital can be found in note 19 to these financial statements.
Voting rights
The Group's articles provide that on a show of hands at a general meeting of
the Company every member who (being an individual) is present in person and
entitled to vote shall have one vote and on a poll, every member who is
present in person or by proxy shall have one vote for every share held. The
notice of the Annual General Meeting specifies deadlines for exercising voting
rights and appointing a proxy or proxies to vote in relation to resolutions to
be passed at the Annual General Meeting.
Transfer of shares
There are no restrictions on the transfer of ordinary shares in the Company
other than as contained in the Articles:
· The Board may, in its absolute discretion, and without giving any
reason for its decision, refuse to register any transfer of a share which is
not fully paid up (but not so as to prevent dealing in listed shares from
taking place) and on which the Company has a lien. The Board may also refuse
to register any transfer unless it is in respect of only one class of shares,
in favour of no more than four transferees, lodged at the Registered office,
or such other place as the Board may decide, for registration, accompanied by
a certificate for the shares to be transferred (except where the shares are
registered in the name of a market nominee and no certificate has been issued
for them) and such other evidence as the Board may reasonably require to prove
the title of the intending transferor or his right to transfer the shares.
Certain restrictions may from time to time be imposed by laws and regulations,
for example:
· Insider trading laws; and
· Whereby certain employees of the Group require the approval of
the Company to deal in the Company's ordinary shares.
Appointment and replacement of directors
The Board may appoint Directors. Any Directors so appointed shall retire from
office at the next Annual General Meeting of the Company but shall then be
eligible for re-appointment.
The current Articles require that at the Annual General Meeting one third of
the Directors shall retire from office but shall be eligible for
re-appointment. The Directors to retire by rotation at each Annual General
Meeting shall include any Director who wishes to retire and not offer
themselves for re-election and otherwise shall be the Directors who, at the
date of the meeting, have been longest in office since their last appointment
or re-appointment.
A Director may be removed from office by the service of a notice to that
effect signed by at least three quarters of all the other Directors.
Amendment of the Company's Articles of Association
The Company's Articles may only be amended by a special resolution passed at a
general meeting of shareholders.
Substantial shareholdings
As at 31 March 2023, since the date of the last annual report in May 2022, the
Company had received the following notifications relating to interests in the
Company's issued share capital, as required under the Disclosure and
Transparency Rules (DTR 5) when a notifiable threshold is crossed:
Percentage of issued share capital
M Needham and S Cook (as the joint trustees in bankruptcy of M Makar)
W Barbour 20.98%
5.03%
Since the year end, the Company received the following further notifications:
Percentage of issued share capital
AM Fulton 3.00%
As at 9 June 2023, no further notifications have been received since the year
end.
Dividends
There was a 2p per share interim dividend paid during the year (2022: 2p per
share).The Directors propose a final dividend of 4p per share (2022: 4p per
share).
Financial instruments
The Board reviews and agrees policies for managing financial risk. These
policies, together with an analysis of the Group's exposure to financial risks
are summarised in note 3 of these financial statements.
Research and development activity
Research and development activities are undertaken with the prospect of
gaining new technical knowledge and understanding and developing new software.
During the year, our activities included the utilisation of a dedicated team
to complete the development of a unique lightweight SharePoint site
provisioning tool, which would provide a competitive advantage in the
marketplace. Also of note, a prototype service was also developed that will
allow industry to assess their exposure with respect to new heat pump
legislation, which builds upon on the Group's net zero experience and
credentials. None of the research and development activity met the required
criteria for capitalisation.
Directors' interests in contracts
Directors' interests in contracts are shown in note 21 to the accounts.
Directors' insurance and indemnities
The Company maintains Directors' and Officers' liability insurance which gives
appropriate cover for any legal action brought against its Directors and
Officers. The Directors also have the benefit of the indemnity provisions
contained in the Company's Articles of Association. These provisions, which
are qualifying third-party indemnity provisions as defined by Section 236 of
the Companies Act 2006, were in force throughout the year and are currently in
force.
Disclosure of information to auditor
All of the current Directors have taken all the steps that they ought to have
taken to make themselves aware of any information needed by the Company's
auditor for the purposes of their audit and to establish that the auditor is
aware of that information. The Directors are not aware of any relevant audit
information of which the auditor is unaware.
Forward-looking statements
The Strategic report contains forward-looking statements. Due to the inherent
uncertainties, including both economic and business risk factors, underlying
such forward-looking information, the actual results of operations, financial
position and liquidity may differ materially from those expressed or implied
by these forward-looking statements.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position, are set out in the Strategic
report. The financial position of the Group, its cash flows, liquidity
position and borrowing facilities are described in the Strategic report. In
addition, note 3 to the financial statements includes the Group's objectives,
policies and processes for managing its capital, its financial risk management
objectives, details of its financial instruments and hedging activities, and
its exposure to credit risk and liquidity risk. The Group meets its day to day
working capital requirements through cash reserves and an invoice finance
facility (which is currently unutilised).
The Group operates an efficient low-cost and historically cash generative
model. The client base generally consists of large blue-chip entities,
particularly within the public sector, enjoying long-term and productive
client relationships. As such, debtor recovery has been reliable and
predictable with a low exposure to bad debts. For the year ended 31 March
2023, the Group has not utilised any external debt or the current finance
facility.
The going concern assessment considered a number of realistic scenarios
covering the period ending 30 September 2024, including the ability of future
client acquisition, and the impact of the reduction in services of key clients
upon future cash flows. In addition, in the most severe scenario possible, a
reverse stress test was modelled which included all current client contracts
discontinued at expiry with no extension or replacement and with no cost
mitigation. Even in the most extreme scenario, the Group has enough liquidity
and long-term contracts to support the business through the going concern
period. The Directors have concluded from these assessments that the Group
would have sufficient headroom in cash balances to continue in operation.
Further information in relation to the Directors' consideration of the going
concern position of the Group is contained in the Viability statement on page
8.
After making enquiries, including a review of the wider economy including
Brexit, inflationary pressures and the Ukraine conflict, the Directors have a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and at least twelve months
from the date of approval of the financial statements. Accordingly, they
continue to adopt the going concern basis in preparing the annual report and
accounts.
Auditor
BDO LLP have indicated their willingness to continue in office. Accordingly, a
resolution to reappoint BDO LLP as auditors of the Company will be proposed at
the next Annual General Meeting.
Environment and greenhouse gas reporting
Carbon dioxide emissions data is contained in the Corporate social
responsibility section of the Strategic report.
Statement of Directors' responsibilities
The Directors are responsible for preparing the annual report and the
financial statements in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and applicable law
and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors are required to prepare the
Group financial statements and have elected to prepare the Parent Company
financial statements in accordance with UK adopted international accounting
standards ('IFRS'). Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and company and of the profit or
loss for the group for that period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and accounting estimates that are reasonable
and prudent;
· state whether they have been prepared in accordance with UK
adopted international accounting standards ('IFRS'), subject to any material
departures disclosed and explained in the financial statements
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and the Company will
continue in business;
· prepare a directors' report, a strategic report and directors'
remuneration report which comply with the requirements of the Companies Act
2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006.
They are also responsible for safeguarding the assets of the company and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities. The Directors are responsible for ensuring that the
annual report and accounts, taken as a whole, are fair, balanced, and
understandable and provides the information necessary for shareholders to
assess the group's performance, business model and strategy.
Website publication
The directors are responsible for ensuring the annual report and the financial
statements are made available on a website. Financial statements are
published on the company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the company's website is the responsibility of
the directors. The directors' responsibility also extends to the ongoing
integrity of the financial statements contained therein.
Directors' responsibilities pursuant to DTR4
The directors confirm to the best of their knowledge:
· The financial statements have been prepared in accordance with
the applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit and loss of the group and
company.
· The annual report includes a fair review of the development and
performance of the business and the financial position of the Group and
Company, together with a description of the principal risks and uncertainties
that they face.
By order of the Board
James McDonald
Company Secretary
9 June 2023
Corporate Governance report
The Board has considered the principles and provisions of the UK Corporate
Governance Code 2018 ("the Code") applicable for this financial period. The
changes made in the revised Code attempt to improve corporate governance
processes and encourage companies to demonstrate how good governance
contributes to the achievement of long-term success for stakeholders. The
Group keep governance matters under constant review. Despite the changes in
the Code requiring a review of processes, there has not been a requirement to
make fundamental changes to strategy or working practices.
The following statement sets out the Group's application of the principles of
the Code and the extent of compliance with the Code's provisions, made in
accordance with the requirements of the Listing Rules.
The Board
The Board is responsible for the long-term and sustainable success of the
business, and considers all opportunities and risks as set out in the
principal risks and uncertainties on page 6. Further, the Board considers how
good governance can assist in promoting the delivery of the strategy, by
reference to strong stakeholder engagement. Details of how the Board drive
this engagement can be found within the S172 statement on page 7.
The Directors who held office during the financial year were:
Executive Directors
Dr John Rigg, Chairman
Adrian Leer, Managing Director
James McDonald, Finance Director
Tim Eckes, Client Services Director
Independent non-Executive Directors
Alistair Fulton, senior independent non-Executive Director
Chris Duckworth
Charlotte Rigg
On 1 June 2023 the Board was consolidated and strengthened by the appointment
of non-Executive Director Charlotte Rigg to her new role as Deputy Executive
Chairman. On the same date, Alison Lander was appointed to the Board as
non-Executive Director.
Current directorships are as follows:
Dr John Rigg is Chairman. He is a Chartered Accountant. He was a founder
of Marcol Group Plc and was its Managing Director from 1983 until 1988. Marcol
was floated on the Unlisted Securities Market in 1987. He was Chairman of Vega
Group plc from 1989 until 1996, holding the post of Chief Executive for much
of this period. Vega floated on the main market in 1992. He was a founder
shareholder of Triad and served as the Chairman of the Company from 1988 up to
just before its flotation in 1996, when he resigned to develop new business
interests overseas. He was appointed as non-Executive Chairman in June 1999:
in May 2004 he became part-time Executive Chairman.
Adrian Leer is Managing Director. He was appointed to the Board on 3 March
2015. He initially joined Triad in 2009 in a consultative capacity, providing
advice to the business regarding its fledgling geospatial product, Zubed, and
helping to secure significant wins with major clients. In 2010, he became
General Manager of Zubed Geospatial. Adrian became Commercial Director of
Triad Consulting & Solutions in 2012.
Tim Eckes is Client Services Director. He was appointed to the Board on 1
January 2020. Tim Eckes joined Triad in 1991 as a graduate software engineer
before moving into a number of technical and commercial roles. He has
multi-sector experience, having been involved in engagements across finance,
telecoms, travel and central government. In 5 years preceding his appointment
to the Board, as Managing Consultant he played a significant role in growing
the business, through the development of long lasting and profitable
relationships with key clients.
Alistair Fulton is a non-Executive Director. He is a Chartered Engineer and
member of the British Computer Society. He was the founding Managing Director
of Triad. He continued in this role until February 1997 when he became
non-Executive Chairman, a position he retained until June 1999, when he took
up his present position. He was a board member of CSSA for 15 years, President
in 2000/2001, and has recently served as the Master of the Worshipful Company
of Information Technologists, the 100th Livery Company of the City of London.
Chris Duckworth was appointed on 1 July 2017 as a non-Executive Director. He
has held numerous positions within public and private companies as Finance
Director, Managing Director, non-Executive Director and Chairman. He was a
founding shareholder and from 1989 to 1994 was Finance Director of Triad where
he remained as a non-Executive Director until 1999. From 1989 to 1994 he was
Finance Director of Vega Group PLC after which he served as a non-Executive
Director until 1997. He was a founding shareholder and Chairman of Telecity
PLC in May 1998 and subsequently acted as a non-Executive Director until
August 2001.
Charlotte Rigg is Deputy Executive Chairman and was appointed to this position
on 1 June 2023. She was appointed to the Board as non-Executive Director on 1
January 2020. Charlotte Rigg's experience is both extensive and diverse. Over
the last 25 years she has built an internationally recognised stud farm and
runs a sizeable upland grazing farm in Cumbria where the stud is based. In
addition, Charlotte runs a successful and expanding investment property
portfolio which has been established for over 20 years.
James McDonald is Finance Director and was appointed to the Board on 16 June
2020. He joined the Company in February 2020 and, in March 2020, assumed the
position of Company Secretary and acting Finance Director. He is a Chartered
Certified Accountant and has previously held a senior finance position at
Foxtons Group plc, prior to which he was Group Finance Director and Company
Secretary at Brook Street Bureau Plc. He qualified with EY in London.
Alison Lander is a non-Executive Director and was appointed to this position
on 1 June 2023. She is a science graduate with many years' experience of
working with blue-chip organisations within the IT sector, including Vickers
Shipbuilding, Fokker Space and Triad Group Plc. She has also had a continuous
relationship with the Group, assisting the Chairman and Board for over 20
years.
The Board exercises full and effective control of the Group and has a formal
schedule of matters specifically reserved to it for decision making, including
responsibility for formulating, reviewing and approving Group strategy,
budgets and major items of capital expenditure.
Regularly the Board will consider and discuss matters that include, but are
not limited to:
· Strategy;
· Shareholder value;
· Financial performance and forecasts;
· Alignment of culture to Group values;
· Employee engagement;
· Human resources; and
· City and compliance matters.
The Executive Chairman, John Rigg, is responsible for the leadership and
efficient operation of the Board. This entails ensuring that Board meetings
are held in an open manner and allow sufficient time for agenda points to be
discussed. It also entails the regular appraisal of each Director, providing
feedback and reviewing any training or development needs.
Employee engagement is taken very seriously by the Board, and the need to
engage with the workforce is even more important since the onset of the
pandemic. Bi-weekly Group-wide communication meetings chaired by the Managing
Director take place where there is a forum available for all staff to
participate and contribute directly with management. Senior management meet
daily to discuss the business and create appropriate communications that
predominantly seek to enhance the well-being of staff, but also look to align
Group values to strategy. Further, on-line platforms exist that enable
constructive discussions concerning operational delivery and best practice.
Given the size of the Group, it is not appropriate to develop any
sub-committees for this purpose and direct Group forums encourage all staff to
participate without dilution of message.
In a competitive marketplace for talent, the Board ensure further engagement
via regular pay reviews and formal staff development processes, which enable
training and career aspirations to be discussed along with the facilitation of
individual career paths. The Board are firmly of the view that the culture
centred around the recruitment and retention of quality staff, their
wellbeing, development and future career and remuneration aspirations will
drive the strategic aims of the business and drive stakeholder value in the
long-term.
The Board meets regularly with senior management to discuss operational
matters. The non-Executive Directors must satisfy themselves on the integrity
of financial information and that financial controls and systems of risk
management are robust. Following presentations by senior management and a
disciplined process of review and challenge by the Board, clear decisions on
the policy or strategy are adopted that preserve Group values and are
sustainable over the long-term. The responsibility for implementing Board
decisions is delegated to management on a structured basis and monitored at
subsequent meetings.
During the period under review, and to date, the Executive Chairman has not
held any business commitments outside the Group.
Alistair Fulton is the nominated senior independent non-Executive Director.
Charlotte Rigg is Deputy Executive Chairman and both Chris Duckworth and
Alison Lander are non-Executive Directors. All have long-standing experience
as company directors and are free from any business or other relationship that
could materially interfere with the exercise of their independent judgement.
The Board benefits from their experience and independence, when they bring
their judgement to Board decisions. The Board considers that all continue to
remain independent for the reasons stated above.
The Group has a procedure for Directors to take independent professional
advice in connection with the affairs of the Group and the discharge of their
duties as Directors.
The Board has an Audit Committee, comprised of the Executive Chairman John
Rigg, and the independent non-Executive Directors, Alistair Fulton and Chris
Duckworth. The Committee is chaired by Alistair Fulton.
The Board has a Remuneration Committee, comprised of the Executive Chairman
John Rigg, the independent non-Executive Director Alistair Fulton and Deputy
Executive Chairman Charlotte Rigg. No third-party advisors have a position on
the committee or have provided services to the Committee during the year. The
Committee is chaired by Alistair Fulton.
The following table shows the attendance of Directors at scheduled meetings of
the Board and Audit and Remuneration Committees during the year ended 31 March
2023 and shows that the Board are able to allocate sufficient time to the
company to discharge their responsibilities effectively.
Board Audit Remuneration
Committee
Committee
Number of meetings held 14 1 2
Number of meetings attended
Executive Directors:
John Rigg (Chairman) 14 1 2
Adrian Leer 14 - -
Tim Eckes 13 - -
James McDonald 14 - -
Non-Executive Directors:
Alistair Fulton 11 1 2
Chris Duckworth 11 1 -
Charlotte Rigg 14 - 2
Audit Committee
The members of the Audit Committee are shown above.
The Board believe that John Rigg, a Chartered Accountant with broad experience
of the IT industry, Alistair Fulton, who has been a Director of companies in
the IT sector for over 30 years and Chris Duckworth, with many years of
experience in senior finance positions in listed companies, have recent and
relevant financial experience, as required by the Code.
The Audit Committee is responsible for reviewing the Group's annual and
interim financial statements and other announcements. It is also responsible
for reviewing the Group's internal financial controls and its internal control
and risk management systems. It considers the appointment and fees of the
external auditor and discusses the audit scope and findings arising from
audits. The Committee is also responsible for assessing the Group's need for
an internal audit function.
Consideration of significant issues in relation to the financial statements
The Audit Committee have considered the following significant issues in
relation to the preparation of these financial statements;
Revenue recognition: The Committee has considered revenue recognised in
projects during, and active at the end of the financial year to ensure revenue
has been recognised correctly. Furthermore, the Committee has also assessed
whether the Group is acting as agent or principle in a transaction.
IFRS 16 'Leases': The Committee have considered the accounting treatment with
respect to the critical accounting estimates.
Dilapidations provisions: The Committee have considered the accounting
treatment with respect to the critical accounting estimates.
Going concern: The Committee has reviewed budgets, deferred tax calculations
and cash flow projections against borrowing facilities available to the Group,
to ensure the going concern basis of preparation of the results remains
appropriate.
Meetings with auditor and senior finance team
Members of the Audit Committee met with the senior finance team in advance of
their meeting with the auditor, prior to commencement of the year-end audit to
discuss;
· Audit scope, strategy and objectives
· Key audit and accounting matters
· Independence and audit fee
A meeting was held prior to the completion of the audit with the senior
finance team and the auditor to assess the effectiveness of the audit and
discuss audit findings.
Effectiveness of external audit process
The Committee conducts an annual review of the effectiveness of the annual
report process. Inputs into the review include feedback from the finance team,
planning and scope of the audit process and identification of risk, the
execution of the audit, communication by the auditor with the Committee, how
the audit adds value and a review of auditor independence and objectivity.
Feedback is provided to the external auditor and management by the Committee,
with any actions reviewed by the Committee.
Auditor independence and objectivity
The Committee has procedures in place to ensure that independence and
objectivity is not impaired. These include restrictions on the types of
services which the external auditor can provide, in line with the FRC Ethical
Standards on Auditing. The external auditor has safeguards in place to ensure
that objectivity and independence is maintained and the Committee regularly
reviews independence taking into consideration relevant UK professional and
regulatory requirements. The external auditor is required to rotate the audit
partner responsible for the Group audit every five years.
Non-audit fees
During the year the Group did not engage its auditor for any non-audit work.
The Committee is responsible for reviewing any non-audit work to ensure it is
permissible under EU audit regulations and that fees charged are justified,
thus ensuring auditor independence is preserved.
Appointment of external auditor
BDO LLP was reappointed external auditor in 2017 following a tendering
process.
BDO LLP has confirmed to the Committee that they remain independent and have
maintained internal safeguards to ensure that the objectivity of the
engagement partner and audit staff is not impaired.
Mandatory rotation of the auditor is required for the year ending 31 March
2025 and the Board are preparing to apply the appropriate tendering and
selection process to appoint a new auditor.
Internal audit
The Audit Committee has considered the need for a separate internal audit
function this year but does not consider it appropriate in view of the size of
the Group. The Group is certified to ISO 9001:2015 and ISO 27001:2013.
Internal controls and risk management
The Board has applied the internal control and risk management provisions of
the Code by establishing a continuous process for identifying, evaluating and
managing the significant and emerging risks faced by the Group. The Board
regularly reviews the process, which has been in place from the start of the
year to the date of approval of this report and which is in accordance with
FRC guidance on risk management, internal control and related financial and
business reporting. The Board is responsible for the Group's system of
internal control and for reviewing its effectiveness. Such a system is
designed to manage rather than eliminate risk of failure to achieve business
objectives and can only provide reasonable and not absolute assurance against
misstatement or loss.
In compliance with the Code, the Audit Committee regularly reviews the
effectiveness of the Group's systems of internal financial control and risk
management. The Board's monitoring covers all controls, including financial,
operational and compliance controls and risk management. It is based
principally on reviewing reports from management to consider whether
significant weaknesses and risks are effectively managed and, if applicable,
considering the need for more extensive monitoring.
The Board has also performed a specific assessment for the purpose of this
annual report. This assessment considers all significant aspects of internal
control and risk management arising during the period covered by the report.
The key elements of the internal control and risk management systems are
described below:
· Clearly documented procedures contained in a series of manuals
covering Group operations and management, which are subject to internal
project audit and external audit as well as regular Board review.
· The Group's controls include appropriate segregation of duties
which are embedded in the organisation
· The Group has a formal process for planning, reporting and
reviewing financial performance against strategy, budgets, forecasts and on a
monthly, bi-annual and annual basis.
· An appropriate budgeting process where the business prepares
budgets for the coming year, which are approved by the Board.
· Close involvement in the day-to-day management of the business by
the Executive Directors.
· Regular meetings between the Executive Chairman, Executive
Directors and senior managers to discuss and monitor potential risks to the
business, and to implement mitigation plans to address them.
Remuneration Committee
The Remuneration Committee is responsible for setting remuneration for
Executive Directors and the Chairman in accordance with the remuneration
policy below. In addition, the Committee is responsible for recommending and
monitoring the level and structure of remuneration for senior management.
The Group's Remuneration Committee is authorised to take appropriate counsel
to enable it to discharge its duty to make recommendations to the Board in
respect of all aspects of the remuneration package of Directors. The Committee
also takes into account the general workforce remuneration awards when setting
Director remuneration.
The Directors' remuneration report can be found on page 29.
Whistleblowing
Staff may contact the senior independent non-Executive Director, in
confidence, to raise genuine concerns of possible improprieties in financial
reporting, or employee related matters.
Board evaluation
Board members are made fully aware of their duties and responsibilities as
Directors of listed companies and are supported in understanding and applying
these by established and more experienced Directors. The Executive Chairman
continuously evaluates the ability of the Board to perform its duties and
recognises the strengths and addresses any weaknesses of the Board. In
addition, training is available for any Director at the Group's expense should
the Board consider it appropriate in the interests of the Group.
Relations with shareholders
Substantial time and effort is spent by Board members on meetings with and
presentations to existing and prospective investors. The views of shareholders
derived from such meetings are disseminated by the Chairman to other Board
members.
Private shareholders are invited to attend and participate at the Annual
General Meeting.
Terms of reference
The terms of reference of the Audit and Remuneration Committees are available
on request from the Company Secretary.
Statement of compliance
The Board considers that it has been compliant with the provisions of the Code
for the whole of the period, except as detailed below:
Provision 9 The roles of chairman and chief executive should not be exercised by the same
individual. John Rigg is the Executive Chairman. Adrian Leer is Managing
Director. The Board currently has no plans to recruit a Chief Executive
Officer as it considers that the duties are being satisfactorily covered by
members of the Executive Board and the Group's senior management.
Provisions 17/23 There should be a nominations committee which should lead the process for
board appointments and make recommendations to the board. The Board considers
that because of its size, the whole Board should be involved in Board
appointments.
Provision 18 All directors should be subject to annual re-election. The Board consider that
because of its size, re-election by rotation in accordance with the Company's
Articles of Association at the Annual General Meeting is sufficient.
Provision 19 The chair should not remain in post beyond nine years from the date of their
first appointment to the board. The Board considers that because of its size
and critically, due to the experience of the Executive Chairman, this would
not be appropriate. The Board believe that re-election in accordance with the
Company's Articles of Association is sufficient.
Provisions 21/23 The board should undertake a formal and rigorous annual evaluation of its own
performance and that of its committees and individual Directors. There is a
process of continuous informal evaluation, due to the small size of the Board.
Provision 20 Open advertising and/or an external search consultancy should generally be
used for the appointment of the chair and non-executive directors. The Board
has a strong culture of promoting from within with relevant experience to the
Group.
Provision 24 The chair of the board should not be a member of the audit committee. The
Board considers that because of its size, and the relevant knowledge and
experience of the Executive Chairman, that this is not appropriate.
DTR 7.2.8 ARR The requirement to detail performance against a diversity policy. The Group
has a diversity policy which meets our legal requirements. The monitoring of
performance against this policy is an area which the Board take very seriously
and continuously look to improve. The size of the Group and the long tenure of
senior staff provide constraints to improving ratios in the short-term.
By order of the Board
James McDonald
Company Secretary
9 June 2023
Directors' remuneration report
On the following pages we set out the remuneration report for the year ended
31 March 2023. The members of the Remuneration Committee are shown in the
Corporate Governance report on page 22.
This report has been prepared in accordance with the Companies Act 2006 and is
split into two sections as follows;
1. The Directors' remuneration policy.
2. The Annual report on remuneration. This will be subject to an advisory
shareholder vote at this year's Annual General Meeting.
During the year the Committee carefully reviewed Directors' remuneration.
Given the continued positive trajectory under strong strategic and
operational guidance, the Committee awarded salary increases to the Board
that would be effective in the next financial year.
Directors' remuneration policy
The remuneration policy sets out the framework within which the Company
remunerates its Directors. The Company's remuneration report was put to a
shareholder vote at the 2022 Annual General Meeting of the Company and was
approved by 99.97% of shareholders with no votes withheld. See page 17 of the
Directors' report for further details of voting rights.
The Committee welcomed the unanimous approval of the shareholders, which
represented 43% of the total shareholding. The Committee aims to align
meaningful remuneration with Group financial performance by taking into
account the difficult trading environment, and to ensure the long-term health
of the business. The performance of the Directors has been deemed by the
Committee to be more than satisfactory, with progression on key strategic
objectives and a return to profitability.
The Committee therefore concludes that the remuneration is fair and
appropriate but will continue to seek shareholder feedback.
The remuneration policy will be put to a shareholder vote every three years
unless any changes to the policy are proposed before then.
The Committee intends to implement the Directors' remuneration for the
following year as agreed at the 2023 General Meeting.
Policy table - Executive Directors
Element & purpose Operation Maximum payable Performance metrics
Base salary Reviewed annually taking into consideration market data, business performance, Ordinarily, salary increases will be in line with average increases awarded to None, although individual performance is considered when setting salary
external economic factors, the complexity of the business and the role, cost, other employees in the Company. levels.
and the incumbent's experience and performance as well as the wider employee
pay review. In certain circumstances, such as a change in responsibility or development in
Reflects the individual's skills, responsibilities and experience. role increases beyond this may be made subject to the factors mentioned in the
Operation column
Supports the recruitment and retention of Executive Directors.
Benefits in kind Benefits in kind include company cars or allowances, private medical Benefits are set at a level considered to be appropriate taking into account None.
insurance, life cover and permanent health insurance. Benefits are reviewed individual circumstances.
periodically.
Protects the well-being of Directors and provides fair and reasonable market
competitive benefits.
The Remuneration Committee retains discretion to provide other benefits
depending on the circumstances which may include but are not limited to
relocation costs or allowances to facilitate recruitment.
Pension The Company pays contributions into a personal pension scheme or cash The Company matches individual contributions up to a maximum of 5%. None.
alternative.
Provides competitive post-retirement benefits to support the recruitment and This limit is in line with the limits available for all employees.
retention of Executive Directors.
All employee share scheme Executive Directors shall be eligible to participate in any future all The limits will be in line with the HMRC limits for the relevant schemes. Any conditions shall be in line with HMRC guidance for such schemes and there
employee share schemes (e.g. Save-as-you-earn or Share Incentive Plan) if may be no performance conditions if appropriate.
adopted by the Company.
To provide employees with the opportunity to own shares in the Company.
Share option scheme The Company operates an EMI share option scheme. Discretionary awards are made The potential value of options held rises as the Company's share price Specific performance criteria are specified at the time of awarding the share
in accordance with the scheme rules. increases. options to ensure alignment with the interests of shareholders.
Encourages share ownership amongst employees and aligns their interests with
the shareholders.
Employee Share Incentive Plan The Remuneration Committee may make share awards annually under the Plan. The maximum award that may be granted shall be 200% of salary. Awards may have performance conditions attached.
Incentivises long-term value creation, aligning the interests of Executives The Plan will give the Remuneration Committee flexibility to make awards in The Remuneration Committee has discretion to determine appropriate measures,
and shareholders through share awards. the form of conditional awards (performance share award). targets and ranges in respect of each award when made.
Performance share awards shall have a performance period of at least 3 years. The Remuneration Committee may also adjust the formulaic outcome of awards
where it deems that it is not reflective of overall business performance.
Awards shall not vest in full any earlier than 3 years, but the Remuneration
Committee retains discretion to vest in tranches. Awards made to Executive
Directors will have an additional post-vesting holding period of 2 years
during which shares cannot be sold other than to settle tax liabilities which
may arise.
Malus and clawback provisions apply.
The award of shares under the Plan or EMI scheme is at the sole discretion of
the Remuneration Committee: there is no contractual entitlement for any
Director to receive an award annually or otherwise. The Group does not believe
that a performance related annual cash bonus is appropriate at the present
time and that solely equity-based incentives are a more appropriate mechanism
for incentivising, rewarding and retaining Executive Directors.
Shareholding Guidelines
The Remuneration Committee is introducing shareholding guidelines in order to
encourage a build-up of shares over time for the Executive Directors.
Whilst there is no formal requirement beyond the 2 year post-vesting holding
period, the Remuneration Committee expects that a substantial portion of
shares earned from incentive arrangements will continue to be held by the
Executive Directors in the longer term.
Policy table - non-Executive Directors
Element Relevance to short and long-term strategic objectives Operation Maximum payable Performance metrics
Fees Competitive fees to attract experienced Directors. Reviewed annually. In general, the level of fee increase for the non-Executive Directors will be Not applicable.
set taking account of any change in responsibility.
The remuneration of the non-Executive Directors is agreed by the Board.
However, no Director is involved in deciding their own remuneration.
Malus and Clawback provisions
The Plan contains malus and clawback provisions which may trigger in
exceptional circumstances and which include:
· material misstatement of company accounts;
· fraud, gross misconduct or misbehaviour;
· materially mistaken, misrepresented or incorrect information has
been used to assess the value of an award;
· an error in assessing or setting performance conditions;
· material reputational damage or
· a downturn in financial performance or corporate failure for
which the relevant individual is responsible or has significantly contributed
to.
Malus may apply until settlement, and clawback may apply after vesting for up
to 2 years, and these provisions allow the Remuneration Committee to recover
value delivered in connection with awards and amend or reduce awards in the
above circumstances (potentially to nil).
Discretion
The Remuneration Committee has discretion in several areas of the remuneration
policy as set out in this report. The Remuneration Committee may also exercise
operational and administrative discretions under relevant plan rules approved
by shareholders as set out in those rules. In addition, the Remuneration
Committee has the discretion to amend the remuneration policy in respect of
minor or administrative matters where it would be, in the opinion of the
Remuneration Committee, disproportionate to seek or await shareholder
approval.
As noted, the Remuneration Committee reviews all incentive outturns to assess
whether they align to the overall performance of the business and the
experience of its key stakeholders over the period e.g., shareholders and
employees. The Remuneration Committee retains discretion to adjust the
formulaic outcome of incentives upwards or downwards to reflect its judgement.
Any such exercise of discretion will be disclosed in the relevant annual
report.
Pre-existing remuneration arrangements and minor changes
The Remuneration Committee may make remuneration payments outside of the terms
of this remuneration policy where the terms of the payment were agreed prior
to the introduction of this or prior remuneration policies, provided the terms
were in line with the remuneration policy in place at that time, or where the
terms were agreed prior to the relevant Director being a member of the Board.
Any such payments may be satisfied in line with the terms agreed.
Approach to recruitment remuneration
The Group's remuneration policy is to provide remuneration packages which
secure and retain management of the highest quality. Therefore, when
determining the remuneration packages of new Executive Directors, the
Remuneration Committee will structure a package in accordance with the general
policy for Executive Directors as shown above. In doing so the Remuneration
Committee will consider a number of factors including:
· the salaries and benefits available to Executive Directors of
comparable companies;
· the need to ensure Executive Directors' commitment to the
continued success of the Group;
· the experience of each Executive Director; and
· the nature and complexity of the work of each Executive Director.
The Remuneration Committee may determine that an initial salary positioning
below market is appropriate and in those circumstances, may in the years
following appointment award increases greater than levels awarded to the wider
workforce in the short-term.
Incentive levels will be in line with the limits for Executive Directors and
the structure will be as permissible under the policy.
If applicable, relocation allowances may be made in line with the policy.
The Company may offer to buy out incentives which have been forfeited from a
previous employer. Where such awards are made, they will seek to match the
value and time horizons of foregone awards and will reflect any performance
conditions attached.
The Company will not make any sign-on bonuses or "golden hello" payments when
appointing Executive Directors
Directors' service contracts and policy
The details of the Directors' contracts are summarised as follows:
Date of contract Notice period
J C Rigg 01/07/1999 1 month
A M Fulton 19/02/1997 1 month
A Leer 03/03/2015 6 months
C J Duckworth 01/07/2017 1 month
T J Eckes 01/01/2020 6 months
C M Rigg 01/01/2020 1 month
J McDonald 16/06/2020 6 months
A J Lander 01/06/2023 1 month
All contracts are for an indefinite period. No contract has any provision for
the payment of compensation upon the termination of that contract.
Illustrations of application of remuneration policy
As there are currently no performance related or variable elements of
Executive Director remuneration it is not appropriate to prepare illustrations
required under the legislation.
Policy on payment for loss of office
The primary principle underpinning the determination of any payments on loss
of office is that payments for failure will not be made. Contracts and
incentive plan rules have been drafted in such a way that the Remuneration
Committee has the necessary powers to ensure this.
It is the Group's policy in relation to Directors' contracts that:
· Executive Directors should have contracts with an indefinite term
providing for a maximum of six months' notice by either party.
· non-Executive Directors should have terms of engagement for an
indefinite term providing for one month notice by either party.
· there is no provision for termination payments to Directors.
In relation to the Plan, awards will normally lapse for a leaver and the plan
rules contain Good Leaver provisions that shall determine the treatment of
awards in the following cases:
· death,
· ill-health, injury, disability
· the employing company / business / part of the business being
transferred outside of the Group or
· any other reason at the discretion of the Remuneration Committee
In such cases:
· Awards will ordinarily be pro-rated based on time served over the
vesting period.
· Vesting will normally occur at the normal time except upon death
where vesting may be accelerated.
· Performance conditions shall still apply.
The Remuneration Committee reserves discretion however to determine the exact
treatment of awards having due regard to the circumstances at the relevant
time.
Consideration of employment conditions elsewhere in the Group
In setting the Executive Directors' remuneration, the Committee takes into
account the pay and employment conditions applicable across the Group in the
reported period. No consultation has been held with employees in respect of
Executive Directors' remuneration.
Consideration of shareholders' views
The Remuneration Committee considers the views of institutional investors and
published guidelines of its shareholders when making remuneration decisions.
Furthermore, the Remuneration Committee is open to conversations with
shareholders on the design of the policy and any remuneration decisions made
concerning Executive Directors.
Annual report on remuneration (audited)
Directors' remuneration - single total figure of remuneration
The remuneration of each of the Directors for the period they served as a
Director are set out below:
2023
Director Basic salary Benefits Pension Total Fixed Pay One-time Total Variable Pay Total
and fees in kind Discretionary
payment
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Executive
J C Rigg 60 - - 60 - - 60
A Leer 180 19 33 232 - - 232
T J Eckes 145 2 25 172 - - 172
J McDonald 153 - 16 169 - - 169
Non-Executive
A M Fulton 40 - - 40 - - 40
C J Duckworth 35 - - 35 - - 35
C Rigg 35 - - 35 - - 35
Total 648 21 74 743 - - 743
2022
Director Basic salary Benefits Pension Total Fixed Pay One-time Total Variable Pay Total
and fees in kind Discretionary
payment
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Executive
J C Rigg 60 - - 60 - - 60
A Leer ¹ 163 18 30 211 161 161 372
T J Eckes ² 133 2 21 156 64 64 220
J McDonald ³ 139 - 14 153 64 64 217
Non-Executive
A M Fulton 40 - - 40 - - 40
C J Duckworth 35 - - 35 - - 35
C Rigg 35 - - 35 - - 35
Total 605 20 65 690 289 289 979
¹ Adrian Leer's basic salary was increased from £175,000 to £200,000 p.a.
with effect from 1 January 2022
² Tim Eckes' basic salary was increased to £150,000 p.a. with effect from 1
January 2022.
³ James McDonald's basic salary was increased to £150,000 p.a. with effect
from 1 January 2022.
Other Remuneration
In November 2021, the Executive Directors were awarded a one-time
discretionary payment for their commitment and contribution during a very
challenging year as follows: Adrian Leer £160,500, Tim Eckes £64,200 and
James McDonald £64,200. Other than vesting conditions in relation to
outstanding share award schemes (see note 20), no performance measures or
targets were in place for either the year ended 31 March 2023 or any prior
financial year, upon which any variable pay elements could become payable
during the year.
Benefits in kind include the provision of company car and medical insurance.
Pension includes a 5% employer contribution together with contributions made
under an employee salary sacrifice scheme.
Three Directors are members of a money purchase pension scheme into which the
Group contributed during the year.
Payments to past Directors
There were no payments to past Directors during the year.
Payment for loss of office
There were no payments for loss of office during the year.
Directors' interests in shares
The Directors who held office at the end of the financial year had the
following beneficial interests in the ordinary shares of the Company.
1 April 2022 31 March 2023
A M Fulton 337,040 337,040
J C Rigg 4,594,400 4,794,400
A Leer 305,379 305,379
C J Duckworth 22,026 22,026
T J Eckes 120,374 120,374
C M Rigg 112,000 312,000
J McDonald 27,600 27,600
Total 5,518,819 5,918,819
Since the year end, A M Fulton's shareholding increased to 497,780 ordinary
shares. A J Lander (appointed to the Board on 1 June 2023) holds 134,545
ordinary shares.
Directors' share options
EMI scheme
The interests of Executive Directors in the EMI share option scheme were as
follows:
At 1 April 2021 Exercised during At 31 At 31 March 2023 Exercise price Exercise period
year March 2022
A Leer:
granted 09.03.18 150,000 (150,000) - - 53.5p 09.03.21 to 09.03.28
T J Eckes:
granted 09.03.18 60,000 (60,000) - - 53.5p 09.03.21 to 09.03.28
210,000 (210,000) - -
No EMI options were available to the Directors during the year ended 31 March
2023 (2022: 210,000) As the performance conditions were met all 210,000 above
were exercisable on 1 April 2021 and were subject to relevant close period.
Share options are exercisable provided that the relevant performance
requirement has been satisfied.
For options granted on 9 March 2018: The vesting date was set at 31 March 2021
and the exercise period ends on 9 March 2028, and 100% of the shares granted
under an Option will vest if the Company's share price at 31 March 2021 has
increased by 30% or more from the share price as at the date of grant. 50% of
shares granted under an Option will vest if the Company's share price at 31
March 2021 has increased by 15% from the share price as at the date of grant.
Between these upper and lower thresholds, awards vest on a straight-line
basis.
The total share-based payment expense recognised in the year in respect of
Directors' EMI share options is nil (2022: nil).
The total cash remitted to the Company by the Directors to exercise share
options during the year was nil (2022: £112k)
Restricted Stock Units
On 30 March 2022 the Committee awarded the Executive Directors the following
restricted stock units (RSUs):
Director Date award made Number Performance condition Vesting date
Adrian Leer 30 March 2022 60,000 135.0p 30 March 2025
Tim Eckes 30 March 2022 60,000 135.0p 30 March 2025
James McDonald 30 March 2022 60,000 135.0p 30 March 2025
The Award will Vest if the Board determines that the Market Value of a Share
on the third anniversary of the Award Date is equal to or greater than the
Market Value of a Share on the Award Date. The market value at the Award Date
is 135p.
The total share-based payment expense recognised in the year in respect of
Directors' RSU share options is £53,447 (2022: £114).
Malus, clawback and hold over periods are as per the Plan.
The market price of the Company's shares was 137.5p at 31 March 2023 and the
range during the year was between 81p and 145p.
Further details relating to share awards can be found in note 20.
Annual report on remuneration (unaudited)
Performance graph
The following graph shows the Group's performance, measured by total
shareholder return, compared with the performance of the FTSE Fledgling Index
("FTSEFI") also measured by total shareholder return ("TSR"). The FTSEFI has
been selected for this comparison because it is an index of companies with
similar current market capitalisation to Triad Group Plc.
http://www.rns-pdf.londonstockexchange.com/rns/2936C_1-2023-6-9.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/2936C_1-2023-6-9.pdf)
Chief Executive remuneration
For the financial year ended 31 March 2023 the salary of the Executive
Chairman was £60,000 (2022: £60,000). Employee salaries increased, on
average, by 6.5% in the year (2022: 3.8%).
The remuneration paid to the Executive Chairman for the financial years 2014
to 2023 were as follows:
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
£25,000 £25,000 £25,000 £25,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000
The annual amounts paid above relate to salary only. The Executive Chairman
did not receive any discretionary payments during these periods.
Relative importance of spend on pay
The total dividends or other cash distributions to shareholders during the
year was £995k (2022: £653k), see note 9. The total employee remuneration
(including Directors) during the year was £10.028m (2022: £8.620m).
Percentage change in Directors' remuneration
The tables below show the change in Directors' remuneration compared to the
employees of the company, where Directors and employees have been employed by
Triad for the full relevant financial years (2021: 41 employees, 2022: 43
employees, 2023: 57 employees).
Basic salary and fees 2021 2022 2023
J C Rigg 0% 0% 0%
A Leer 0% 3.6% 10.3%
T J Eckes n/a 0.1% 10.3%
J McDonald n/a 9.4% 10.6%
A M Fulton 0% 0% 0%
C J Duckworth 0% 0% 0%
C Rigg n/a 0% 0%
Employees of the company 3.7% 3.8% 6.5%
Benefits in kind ¹ 2021 2022 2023
J C Rigg n/a n/a n/a
A Leer (1.7%) 19.9% ² 2.3%
T J Eckes n/a (23.4%) 4.6%
J McDonald n/a n/a n/a
A M Fulton n/a n/a n/a
C J Duckworth n/a n/a n/a
C Rigg n/a n/a n/a
Employees of the company (5.7%) (18.3%) (7.1%)
¹ The negative values in this table represent a reduction in costs for the
provision of identical benefits
² Represents the increase in provision of company car
Other (includes commission and bonus payments) 2021 2022 2023
J C Rigg n/a n/a n/a
A Leer n/a 100% (100%)
T J Eckes n/a 100% (100%)
J McDonald n/a 100% (100%)
A M Fulton (100%) ³ n/a n/a
C J Duckworth n/a n/a n/a
C Rigg n/a n/a n/a
Employees of the company (9.5%) (44.3%) ⁴ (88.2%) ⁴
³ Represents back pay paid in 2020
⁴ Represents cessation of a commission scheme for a small number of
employees
The Group is exempt from disclosing data with respect to the CEO pay ratio due
to employee numbers being less than 250.
Consideration of matters related to Directors' remuneration
During the financial year, the Remuneration Committee met twice to discuss
Directors' remuneration. No external advice was sought in relation to matters
discussed at this meeting.
Alistair Fulton
Chairman, Remuneration Committee
9 June 2023
Independent auditor's report to the members of Triad Group Plc
Opinion on the financial statements
In our opinion the financial statements:
· give a true and fair view of the state of the Group's and of the
Parent Company's affairs as at 31 March 2023 and of the Group's and Parent
Company's profit for the year then ended;
· have been properly prepared in accordance with UK adopted
international accounting standards; and
· have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of Triad Group Plc (the 'Parent
Company') and its subsidiaries (the 'Group') for the year ended 31 March 2023
which comprise the Group and Company Statements of comprehensive income and
expense, Group and Company Statements of changes in equity, Group and Company
Statements of financial position, Group and Company Statements of cash flows
and notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied
in their preparation is applicable law and UK adopted international accounting
standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are
further described in the
Auditor's responsibilities for the audit of the financial statements section
of our report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion. Our audit
opinion is consistent with the additional report to the audit committee.
Independence
Following the recommendation of the audit committee, we were appointed by the
Directors to audit the financial statements for the year ended 31 March 2006
and subsequent financial periods. The period of total uninterrupted engagement
including retenders and reappointments is 18 years, covering the years ended
31 March 2006 to 31 March 2023. We remain independent of the Group and the
Parent Company in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the FRC's
Ethical Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements. The non-audit services prohibited by that standard were not
provided to the Group or the Parent Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Directors'
assessment of the Group and the Parent Company's ability to continue to adopt
the going concern basis of accounting included:
· We considered the nature of the Group, its business model and
related risks to going concern arising.
· We evaluated the Directors' assessment of the Group's ability to
continue as a going concern, including challenging the underlying data in the
forecasts by comparing it to actual performance in the current financial year,
client contracts and comparing it to post year-end financial performance.
· We challenged the rationale for the key assumptions, using our
knowledge of the business and the sector, corroborating to supporting
documentation where appropriate.
· We examined the forecasts and stress tests provided by the Group
and the appropriateness of the assumptions made.
· We tested the integrity of the models by checking the formulae,
the arithmetic accuracy and any hard coding.
· Enquires were made of management as to any future events or
conditions that may affect the Group's ability to continue as a going concern,
we have also inspected the minutes of Board meetings to support our enquiries.
· We obtained confirmation of the financing facilities available to
the Group and assessed the availability of cash to the Group over the forecast
period and the level of headroom available.
· Reviewing post-balance sheet results, specifically the cash flow
position against that budgeted; and
· Considering the adequacy of the disclosures in the financial
statements against our knowledge of the Group, the Directors' going concern
assessment and the requirements of the accounting standards.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group and the Parent Company's
ability to continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
In relation to the Parent Company's reporting on how it has applied the UK
Corporate Governance Code, we have nothing material to add or draw attention
to in relation to the Directors' statement in the financial statements about
whether the Directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
Overview
Coverage 100% (2022: 100%) of the Group profit before tax
Key audit matters 2023 2022
Revenue recognition X X
Materiality Group financial statements as a whole
£74
k
(20
22:
£85
k)
bas
ed
on
0.5
%
(20
22:
0.5
%)
of
rev
enu
e
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its
environment, including the Group's system of internal control, and assessing
the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
The Group operates solely in the United Kingdom. The Group consists of six
companies, five which are dormant, with the Parent Company being the only
trading entity and significant component. The Group engagement team performed
a full scope audit of the Parent Company.
Climate change
Our work on the assessment of potential impacts on climate-related risks on
the Group's operations and financial statements included:
· Enquiries and challenge of management to understand the actions
they have taken to identify climate-related risks and their potential impacts
on the financial statements and adequately disclose climate-related risks
within the annual report;
· Our own qualitative risk assessment taking into consideration the
sector in which the Group operates and how climate change affects this
particular sector;
· Review of the minutes of Board and Audit Committee meeting and
other papers related to climate change and performed a risk assessment as to
how the impact of the Group's commitment as set out in Corporate social
responsibility may affect the financial statements and our audit;
· We challenged the extent to which climate-related considerations,
including the expected cash flows from the initiatives and commitments have
been reflected, where appropriate, in the Directors' going concern assessment
and viability assessment; and
· We also assessed the consistency of managements disclosures
included as 'Other Information' on page 12 with the financial statements and
with our knowledge obtained from the audit.
Based on our risk assessment procedures, we did not identify there to be any
Key Audit Matters materially impacted by climate-related risks.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key audit matter How the scope of our audit addressed key audit matter
Revenue recognition We considered there to be a significant risk of material misstatement due to We performed testing on a sample basis over the revenue postings pre and post
fraud relating to the existence of revenue around year end (cut-off) and year end, agreeing the posting to supporting documentation, checking that the
overstatement of revenue. We considered that this fraud risk could arise transaction has been recorded in the correct period and revenue has been
through: recognised appropriately.
As detailed in note 1 and 4 to the financial statements.
· fictitious contractor/candidates; We performed testing on a sample basis over the contractor costs incurred
before and after the year end, agreeing these to supporting documentation and
· manipulation of cut-off through revenue not being recognised checking that the revenue associated with these has been recorded in the
appropriately in line with their respective performance obligations; correct period.
· manipulation of revenue through journal entries;
· inappropriate recognition of accrued income; and We tested a sample of credit notes recognised post year end to supporting
documentation to confirm recognition in the correct period.
· manipulation of contractor accrual.
We performed testing on a sample basis over the timecards received either side
In view of the significance of revenue recognition to the financial statements of the year end, agreeing them to sales invoices to check that these have been
and the potential for fraud this was considered to be key audit matter. recorded in the correct period.
We performed testing on a sample basis over the revenue postings throughout
the year, agreeing the postings to payment, timecard, confirmation of charge
out rate and sales invoice as appropriate, checking that the transactions
exist and are recorded in line with the accounting policy and in the correct
accounting period.
We tested a sample of journal postings to revenue, agreeing the posting to
supporting documentation to assess the validity thereof.
We tested a sample of year end accrued and deferred income balances and agreed
them to sales invoices, bank payment where appropriate and timecards.
We agreed a sample of new customers and contractors during the period to
supporting documentation to confirm existence.
Key observations:
Based on the procedures performed we did not identify any matters to indicate
that revenue recognition was inappropriate.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements. We consider materiality to be
the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the
financial statements as a whole and performance materiality as follows:
Group and Parent Company financial statements
2023 2022
£k £k
Materiality 74 85
Basis for determining materiality 0.5% of revenue 0.5% of revenue
Rationale for the benchmark applied We consider revenue to be the most appropriate benchmark as it is one of the We consider revenue to be the most appropriate benchmark as it is one of the
principal considerations for users of the financial statements in assessing principal considerations for users of the financial statements in assessing
the financial performance and development of the Group and Parent Company. the financial performance and development of the Group and Parent Company.
Performance materiality 55 64
Basis for determining performance materiality 75% of materiality - the threshold was selected to reflect the number of 75% of materiality - the threshold was selected to reflect the number of
balances subject to estimation, the amount of audit differences historically balances subject to estimation, the amount of audit differences historically
arising and the mainly substantive approach to the audit. arising and the mainly substantive approach to the audit.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual
audit differences in excess of £4k (2022: £4k). We also agreed to report
differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
The Listing Rules require us to review the Directors' statement in relation to
going concern, longer-term viability and that part of the Corporate Governance
Statement relating to the Parent Company's compliance with the provisions of
the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each
of the following elements of the Corporate Governance Statement is materially
consistent with the financial statements or our knowledge obtained during the
audit.
Going concern and longer-term viability · The Directors' statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material uncertainties
identified set out on page 19; and
· The Directors' explanation as to their assessment of the Group's
prospects, the period this assessment covers and why the period is appropriate
set out on page 8.
Other Code provisions · Directors' statement on fair, balanced and understandable set out
on page 17;
· Board's confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on page 6;
· The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set out on page
26; and
· The section describing the work of the audit committee set out on
page 25.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during
the course of the audit, we are required by the Companies Act 2006 and ISAs
(UK) to report on certain opinions and matters as described below.
Strategic report and Directors' report In our opinion, based on the work undertaken in the course of the audit:
· the information given in the Strategic report and the Directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the Strategic report and the Directors' report have been prepared
in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent
Company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the Directors'
report.
Directors' remuneration In our opinion, the part of the Directors' remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received from
branches not visited by us; or
· the Parent Company financial statements and the part of the
Directors' remuneration report to be audited are not in agreement with the
accounting records and returns; or
· certain disclosures of Directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors' responsibilities, the
Directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group's and the Parent Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to
liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on our understanding of the regulatory and legal framework applicable to
the Group and Parent Company and the industry in which it operates, we
considered the risk of acts by the Group and Parent Company which were
contrary to applicable laws and regulations, including fraud.
These included but were not limited to compliance with the applicable
accounting framework, Companies Act 2006, UK Corporate Governance Code, the UK
listing rules and UK tax legislation.
Our procedures in respect of the above included:
· agreement of the financial statement disclosures to underling
supporting documentation;
· review of any correspondence with regulators and legal advisors
for any instances of non-compliance with laws and regulations;
· review of minutes of meeting of those charged with governance for
any instances of non-compliance with laws and regulations;
· involvement of tax specialists in the audit;
· review of legal expenditure accounts to understand the nature of
expenditure incurred; and
· enquiries made of management and those charged with governance
regarding any instances of non-compliance with laws and regulations.
Fraud
We assessed the susceptibility of the financial statements to material
misstatement, including fraud. Our risk assessment procedures included:
· Enquiry with management and those charged with governance
regarding any known or suspected instances of fraud;
· Obtained an understanding of the Group's policies and procedures
relating to;
o Detecting and responding to the risks of fraud; and
o Internal controls established to mitigate risks related fraud;
· Review of minutes of meeting of those charged with governance for
any known or suspected instances of fraud; and
· Discussion amongst the engagement team as to how and where fraud
might occur in the financial statements.
Based on our risk assessment, we considered that fraud risks could arise in
the existence of revenue through fraudulent journal postings to revenue;
incorrect revenue recognition at year end; fictitious contractors or
customers; manipulation of contractor accruals; and manipulation of accrued
income as well as management override of controls. The audit procedures
performed in relation to revenue recognition are documented in the key audit
matter section of our audit report.
In response to the risk of management override of controls, we tested the
appropriateness of journal entries and other adjustments on a sample basis to
supporting documentation. We also assessed whether the judgements made in
making accounting estimates were indicative of a potential bias and evaluated
the business rationale of any significant transactions that were unusual or
outside the normal course of business.
We also communicated relevant identified laws and regulations and potential
fraud risks to all engagement team members who were all deemed to have
appropriate competence and capabilities and remained alert to any indications
of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through collusion.
There are inherent limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely we are
to become aware of it.
A further description of our responsibilities is available on the Financial
Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the Parent Company's members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the Parent Company's
members those matters we are required to state to them in an auditor's report
and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Parent Company and
the Parent Company's members as a body, for our audit work, for this report,
or for the opinions we have formed.
James Fearon
(Senior Statutory Auditor)
9 June 2023
For and on behalf of BDO LLP, Statutory Auditor
London, UK
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Statements of comprehensive income and expense
for the year ended 31 March 2023
Group and Company Note 2023 2022
£'000 £'000
Revenue 4 14,858 17,015
Cost of sales (11,354) (12,231)
Gross profit 3,504 4,784
Administrative expenses (3,469) (3,676)
Profit from operations 5 35 1,108
Finance income 13 17 10
Finance expense 6 (43) (37)
Profit before tax 9 1,081
Tax (Charge)/Credit 8 (53) 88
(Loss)/Profit for the year and total comprehensive income attributable to equity holders of the parent (44) 1,169
Basic (loss)/earnings per share 10 (0.27p) 7.16p
Diluted (loss)/earnings per share 10 (0.27p) 7.04p
All amounts relate to continuing activities.
The notes on pages 54 to 74 form part of the financial statements.
Statements of changes in equity for the year ended 31 March 2023
Group Share Capital Share premium account Capital redemption reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000
At 1 April 2021 160 666 104 4,353 5,283
Profit for the year and total comprehensive income - - - 1,169 1,169
Ordinary shares issued 5 214 - - 219
Dividend paid (note 9) - - - (653) (653)
Share-based payments - - - - -
At 1 April 2022 165 880 104 4,869 6,018
Loss for the year and total comprehensive income - - - (44) (44)
Ordinary shares issued 1 14 - - 15
Dividend paid (note 9) - - - (995) (995)
Share-based payments - - - 200 200
At 31 March 2023 166 894 104 4,030 5,194
Company Share Share premium account Capital redemption reserve Retained earnings Total
Capital
£'000 £'000 £'000 £'000 £'000
At 1 April 2021 160 666 104 4,348 5,278
Profit for the year and total comprehensive income - - - 1,169 1,169
Ordinary shares issued 5 214 - - 219
Dividend paid (note 9) - - - (653) (653)
Share-based payments - - - - -
At 1 April 2022 165 880 104 4,864 6,013
Loss for the year and total comprehensive income - - - (44) (44)
Ordinary shares issued 1 14 - - 15
Dividend paid (note 9) - - - (995) (995)
Share-based payments - - - 200 200
At 31 March 2023 166 894 104 4,025 5,189
Share capital represents the amount subscribed for share capital at nominal
value.
The share premium account represents the amount subscribed for share capital
in excess of the nominal value.
The capital redemption reserve represents the nominal value of the purchase
and cancellation of its own shares by the Company in 2002.
Retained earnings represents the cumulative net gains and losses recognised in
the statement of comprehensive income and expense.
The notes on pages 54 to 74 form part of the financial statements.
Statements of financial position at 31 March 2023
Registered number: 02285049
Group Company
Note 2023 2022 2023 2022
£'000 £'000 £'000 £'000
Non-current assets
Intangible assets 11 1 2 1 2
Property, plant and equipment 12 199 278 199 278
Right-of-use assets 13 572 345 572 345
Finance lease receivables 13 396 - 396 -
Trade and other receivables 15 - 130 - 130
Deferred tax 8 108 161 108 161
1,276 916 1,276 916
Current assets
Trade and other receivables 15 2,541 2,554 2,541 2,554
Finance lease receivables 13 94 84 94 84
Cash and cash equivalents 16 4,795 5,325 4,795 5,325
7,430 7,963 7,430 7,963
Total assets 8,706 8,879 8,706 8,879
Current liabilities
Trade and other payables 17 (2,269) (2,134) (2,274) (2,139)
Short term provisions 18 - (61) - (61)
Lease liabilities 13 (292) (269) (292) (269)
(2,561) (2,464) (2,566) (2,469)
Non-current liabilities
Trade and other payables 17 - (104) - (104)
Long term provisions 18 (197) (136) (197) (136)
Lease liabilities 13 (754) (157) (754) (157)
(951) (397) (951) (397)
Total liabilities (3,512) (2,861) (3,517) (2,866)
Net assets 5,194 6,018 5,189 6,013
Shareholders' equity
Share capital 19 166 165 166 165
Share premium account 894 880 894 880
Capital redemption reserve 104 104 104 104
Retained earnings 4,030 4,869 4,025 4,864
Total shareholders' equity 5,194 6,018 5,189 6,013
The financial statements on pages 50 to 75 were approved by the Board of
Directors and authorised for issue on 9 June 2023 and were signed on its
behalf by:
Adrian Leer James McDonald
Director Director
Triad Group Plc is registered in England and Wales with registered number
02285049
The notes on pages 54 to 74 form part of the financial statements.
Statements of cash flows for the year ended 31 March 2023
Group and company Note 2023 2022
£'000 £'000
Cash flows from operating activities
Profit for the year before taxation 9 1,081
Adjustments for:
Depreciation of property, plant and equipment 12 87 79
Amortisation of right of use assets 13 185 187
Amortisation of intangible assets 11 1 5
Interest received 13 (17) (10)
Finance expense 6 43 35
Share-based payment expense 200 -
Changes in working capital
Decrease/(Increase) in trade and other receivables 143 (169)
Increase/(Decrease) in trade and other payables 32 (11)
Cash generated by operations 683 1,197
Foreign exchange gain 1 1
Net cash inflow from operating activities 684 1,198
Investing activities
Finance lease interest received 13 17 10
Finance lease payments received 13 102 109
Purchase of intangible assets 11 - (1)
Purchase of property, plant and equipment 12 (9) (132)
Net cash used in investing activities 110 (14)
Financing activities
Proceeds of issue of shares 15 220
Lease liabilities principal payments 13 (300) (307)
Lease liabilities interest payments 13 (44) (37)
Dividends paid 9 (995) (653)
Net cash outflow from financing activities (1,324) (777)
Net (decrease)/increase in cash and cash equivalents (530) 407
Cash and cash equivalents at beginning of the period 5,325 4,918
Cash and cash equivalents at end of the period 16 4,795 5,325
The notes on pages 54 to 74 form part of the financial statements.
Notes to the financial statements for the year ended 31 March 2023
1. Principal accounting policies
Basis of preparation for Group and Company
The principal accounting policies adopted in the preparation of the financial
statements are set out below. The policies have been consistently applied to
all the years presented, unless otherwise stated.
These financial statements have been prepared in accordance with UK adopted
International Financial Reporting Standards (IFRSs) and the provisions of the
Companies Act 2006.
These financial statements have been prepared on a historical cost basis and
are presented in pounds sterling, generally rounded to the nearest thousand,
the presentational currency of the Group.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position, are set out in the Strategic
report. The financial position of the Group and Parent Company, its cash
flows, liquidity position and borrowing facilities are described in the
Strategic report. In addition, note 3 to the financial statements includes the
Group's objectives, policies and processes for managing its capital, its
financial risk management objectives, details of its financial instruments and
hedging activities, and its exposure to credit risk and liquidity risk. The
Group and Parent Company meets their day to day working capital requirements
through cash reserves and an invoice finance facility (which is currently
unutilised).
The Group and Parent Company operates an efficient low-cost and historically
cash generative model. The client base generally consists of large blue-chip
entities, particularly within the public sector, enjoying long-term and
productive client relationships. As such, debtor recovery has been reliable
and predictable with a low exposure to bad debts. For the year ended 31 March
2023, the Group and Parent Company have not utilised any external debt or the
current finance facility.
The going concern assessment considered a number of realistic scenarios
covering the period ending 30 September 2024, including the ability of future
client acquisition, and the impact of the reduction in services of key clients
upon future cash flows. In addition, in the most severe scenario possible, a
reverse stress test was modelled which included all current client contracts
discontinued at expiry with no extension or replacement and with no cost
mitigation. Even in the most extreme scenario, the Group and Parent Company
has enough liquidity and long-term contracts to support the business through
the going concern period. The Directors have concluded from these assessments
that the Group and Parent Company would have sufficient headroom in cash
balances to continue in operation.
Further information in relation to the Directors' consideration of the going
concern position of the Group is contained in the Viability statement on page
8.
After making enquiries, including a review of the wider economy including
Brexit, inflationary pressures and the Ukraine conflict, the Directors have a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and at least twelve months
from the date of approval of the financial statements. Accordingly, they
continue to adopt the going concern basis in preparing the annual report and
accounts.
Basis of consolidation
Where the Company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee and the ability of the investor to use its power to affect
those variable returns. The consolidated financial statements present the
results of the Company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between Group companies
are therefore eliminated in full.
Property, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated
depreciation and any impairment in value.
Depreciation is calculated as to write off the cost of assets, less their
estimated residual values, on a straight-line basis over the expected useful
economic lives of the assets concerned. Depreciation is charged to
administrative expenses in the statement of comprehensive income and expense.
The principal annual rates used for this purpose are:
%
Computer hardware 25-33
Fixtures and fittings 10-33
Motor vehicles 25-33
Leasehold improvements 10-33
Intangible assets
Intangible assets are stated at cost, net of accumulated amortisation and any
impairment in value. The cost of internally developed software is the
attributable salary costs and directly attributable overheads.
Amortisation is calculated to write off the cost of assets, less their
estimated residual values, on a straight-line basis over the expected useful
economic lives of the assets concerned. Amortisation is charged to
administration expenses in the statement of comprehensive income and expense.
The principal annual rates used for this purpose are:
%
Purchased computer software 25-33
Impairment of non-financial assets
Non-financial assets are subject to impairment tests whenever events or
changes in circumstances indicate that their carrying amount may not be
recoverable. Where the carrying value of an asset exceeds its recoverable
amount the asset is written down accordingly. Impairment is charged to
administration expenses in the statements of comprehensive income and expense.
Trade and other receivables
Trade and other receivables are initially recognised at fair value plus
transaction costs, and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
At each reporting date an amount of impairment is recognised as lifetime
expected credit losses (lifetime ECL's).
Lifetime ECL's are calculated using a provision matrix that groups trade
receivables according to the time past due, and at provision rates based on
historical observed default rates, adjusted for forward looking estimates. At
every reporting date, the historical observed default rates and
forward-looking estimates are updated.
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprises
cash held on demand with banks. The carrying amount of these assets is equal
to their fair value.
Trade and other payables
Trade and other payables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective interest method.
Leases
The Group as Lessee:
All leasing arrangements, where the Group is the lessee (defined as leases
that last more than one year or of a high value), are recognised as a lease
liability and corresponding right-of-use asset.
Lease liability:
The lease liability is calculated as the discounted total fixed payments for
the lease term, termination payments, exercise price of purchase options,
residual value guarantee and certain variable payments. An interest charge is
recognised in the statement of comprehensive income and expense on the lease
liability at an incremental borrowing rate. The lease liability is presented
across separate lines (current and non-current) in the statement of financial
position. The lease liability increases to reflect the interest charge on the
lease liability, at an incremental borrowing rate. The lease liability reduces
over the period of the lease as payments are made. The lease liability is
re-calculated if there is a modification, a change in the lease term, a change
in the lease payments or a change in the assessment to purchase the underlying
assets.
Right-of-use assets:
The right-of-use asset is calculated as the original lease liability, initial
direct costs and amounts paid upfront. The right of use asset is subsequently
measured at cost less accumulated amortisation. The amortisation is charged on
a straight-line basis over the life of the lease.
The Group as lessor:
For the year ended 31 March 2023 lessor arrangements follow the accounting
treatment 'IFRS 16 Leases'. Where the lease indicates a finance lease a lease
receivable is recognised. The lease receivable is calculated as the discounted
total lease receipts for the lease term.
Interest income is subsequently recognised in the statement of comprehensive
income and the payment received against the lease receivable. The balance
reduces over the lease term as receipts are received.
Foreign currencies
Assets and liabilities expressed in foreign currencies are translated into
sterling at the exchange rate ruling on the date of the statement of financial
position. Transactions in foreign currencies are recorded at the exchange rate
ruling as at the date of the transaction. All differences on exchange are
taken to the statement of comprehensive income and expense in the year in
which they arise.
Revenue
Revenue recognised in any financial period is based on the delivery of
performance obligations and an assessment of when control is transferred to
the customer. Revenue is either recognised at a 'point in time' when a
performance obligation has been performed, or 'over time' as control of the
performance obligation is transferred to the customer.
The majority of the Group's revenue is derived from the provision of services
under time and materials contracts. Performance obligations under such
contracts relate to the provision of staff to customers. The transaction price
of the performance obligation is determined by reference to charge-out rates
for supplied staff specified in the contract and any recoverable expenses.
Since the customer simultaneously receives and consumes the benefits of the
Group's performance obligations under such contracts, revenue is recognised
over time using the output method which uses a direct measurement of value to
the customer of the services transferred to date.
Where temporary workers are supplied to customers, the associated revenue is
recognised gross (inclusive of the cost of the temporary workers) since the
Group is acting as principal. Under IFRS 15, in order to be recognised as
principal, there must be a transfer of control between the vendor and the
customer. Where the Group provides temporary contractors, it is acting as
principal since it receives resourcing requirements directly from the
customer, has prime responsibility to find suitable candidates and negotiate
pay rates with them, and delivers the resources to the client including
acceptance that the service provided meets the client's expectations. Revenue
is therefore recognised as the gross amount invoiced to customers.
In relation to time and materials contracts, since it has a right to
consideration from a customer in an amount that corresponds directly with the
value to the customer of the Group's performance completed to date, the Group
recognises revenue in the amount to which it has a right to invoice.
Revenue from fixed price contracts, which may include software and product
development or support contracts, is determined by reference to those fixed
prices, agreed at inception of the contract. For fixed price contracts revenue
is recognised on an over time basis using the input (percentage completion)
method. Percentage completion is calculated as the total hours worked as at
the statement of financial position date divided by the total expected hours
to be worked to complete the project. Revenue for permanent recruitment
services is based on a percentage of a successful candidate's remuneration
package, as agreed with the customer at inception of the contract. Revenue is
recognised at a point in time when the performance obligation has been
satisfied at the time the candidate commences employment and subject to a
provision for clawback of fees for candidates that leave prior to the notice
period ending.
Revenue from licences is recognised net at the point of transaction. The Group
enters into a distinct contract with a client for the licences. The Group acts
as a reseller and the Client is bound by the terms and conditions of the end
user agreement of the licence provider. As control of the licences are
transferred to the client at contract agreement, the Group is acting as agent
which enables the recognition of revenue at the point of transaction.
The Company has taken advantage of the practical exemption not to disclose the
value of unfilled performance obligations as the contracts ongoing at the
period end are for less than 12 months.
Taxation
The charge for taxation is based on the profit or loss for the year as
adjusted for disallowable items. It is calculated using tax rates that have
been enacted or substantively enacted by the statement of financial position
date.
Full provision is made for deferred tax on all temporary differences resulting
from the difference between the carrying value of an asset or liability and
its tax base, and on tax losses carried forward indefinitely. Deferred tax
assets are recognised to the extent that it is probable that the deferred tax
asset will be recovered in the foreseeable future. Deferred tax is calculated
at the tax rates that are expected to apply to the period when the asset is
realised or liability is settled.
Pension costs
Contributions to defined contribution plans are charged to the statements of
comprehensive income and expense as the contributions accrue.
Share-based payments
Share-based incentive arrangements are provided to employees under the Group's
share option and conditional share incentive award scheme. Both awards granted
to employees are valued at the date of grant using an appropriate option
pricing model and are charged to operating profit over the performance or
vesting period of the scheme. The annual charge is modified to take account of
shares forfeited by employees who leave during the performance or vesting
period and, in the case of non-market related performance conditions, where it
becomes unlikely the option will vest.
Provisions
A provision is recognised when the Group has a 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. If the effect is
material, expected future cash flows are discounted using a current pre-tax
rate that reflects the risks specific to the liability. Calculations of these
provisions require judgements to be made. The Group has provided for property
dilapidation as detailed in note 18.
New standards and interpretations
Climate change accounting
In preparing the Consolidated financial statements management has considered
the impact of climate change, particularly in the context of the disclosures
included in the Strategic Report. These considerations did not have a material
impact on the financial reporting judgements and estimates.
A number of amendments to existing standards have been issued but which are
not yet mandatory, and have not been adopted by the Group in these financial
statements. The Directors do not anticipate that their adoption in future
periods will have a material impact on the financial statements of the Group.
2. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. The Group makes estimates
and assumptions concerning the future. The resulting accounting estimates
will, by definition, seldom equal the related actual results. The estimates
and assumptions that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial
year are discussed below.
Key judgements and sources of estimation uncertainty
................................
IFRS 16 leases
A right-of-use asset of £0.6m (2022: £0.3m), a total lease liability of
£1.0m (2022: £0.4m) and a finance lease receivable of £0.5m (2022: £0.1m)
have been recognised in accordance with the accounting policies on page 56
with respect to IFRS 16 'Leases'. During the year, a lease break option was
not enacted on a property lease, which resulted in an increase to the right of
use asset (£412k), the lease liability (£920k) and the finance lease
receivable (£508k). The Directors have made the following critical accounting
estimates and judgements in relation to these balances:
· Lease term: The Directors are of the opinion that property lease assets
and liabilities should generally be calculated with relation to the first
available break date as the expectation is that the lease break may be
taken. During the lease break review period, trading and market conditions
will be taken into account and assets and liabilities will be calculated.
· Incremental borrowing rate (IBR): The Directors have calculated the IBR
at 5%, based upon readily available credit facilities and Bank of England base
rate, covering a time frame commensurate with the time to the first available
break date.
Dilapidation provisions:
The Directors have recognised a dilapidation provision for both the leases
held totalling £197,000 (2022: £197,000). The provision is required to
recognise the costs of restoring the properties to their original state at the
end of the lease period. The provision has been calculated based upon industry
accepted averages on floor space by price per square meter and the Directors'
experience with the landlords, as well as experience in similar negotiations.
Deferred taxation:
The Directors have recognised a deferred tax asset of £108k (2022: £161k).
This asset is to recognise the expectation that corporation tax losses brought
forward will be utilised against future taxable profits. The Directors' have
based this upon a conservative estimation of the level of taxable profits in
the medium-term.
3. Financial risk management
The Group uses financial instruments that are necessary to facilitate its
ordinary purchase and sale activities, namely cash, bank borrowings in the
form of a receivables finance facility and trade payables and receivables: the
resultant risks are foreign exchange risk, interest rate risk, credit risk and
liquidity risk. The Group does not use financial derivatives in its management
of these risks.
The Board reviews and agrees policies for managing these risks and they are
summarised below. These policies are consistent with last year.
3.1 Financial risk factors
Foreign exchange risk
There are a small number of routine trading contracts with both suppliers and
clients in euros. In all such circumstances the contracts with supplier and
client will be in the same currency thereby mitigating the Group's exposure to
movements in exchange rates. Payments and receipts are made through a bank
account in the currency of the contract therefore balances held in any foreign
currency are to facilitate day to day transactions. With the trading Company's
functional currency of sterling there are the following foreign currency net
assets:
Group and company Note 2023 2022
£'000 £'000
Currency: Euros
Cash and cash equivalents 16 18 86
Trade and other receivables 15 - (10)
18 76
Any change in currency rates would have no significant effect on results.
Interest rate risk
The Group has access to a financing facility with a major UK bank. At the
balance sheet date in the current or prior year this facility has not been
utilised. The facility borrowing rate is 1.75% above base rate and so when
required to be utilised, this represents an interest rate risk.
Cash balances are held in short-term interest-bearing accounts, repayable on
demand: these attract interest rates which fluctuate in relation to movements
in bank base rate. This maintains liquidity and does not commit the Group to
long term deposits at fixed rates of interest.
There were no borrowings, aside from lease liabilities arising from the
application of IFRS 16, during the year.
Credit risk
The Group is mainly exposed to credit risk from credit sales. It is Group
policy to assess the credit risk of new customers before entering into
contracts. Each new customer is assessed, using external ratings and relevant
information in the public domain before any credit limit is granted. In
addition, trade receivables balances are monitored on a regular basis to
minimise exposure to credit losses. The amount credited to the income
statement during the year in respect of expected credit losses was £9,000
(2022: credited to the income statement £5,000).
The Group is also exposed to credit risk from contract assets, being revenue
earned but not yet invoiced (note 15).
The Group also has credit risk from cash deposits with banks (note 16).
The Group's maximum exposure to credit risk is:
Group and company Note 2023 2022
£'000 £'000
Finance lease receivable 13 490 84
Trade and other receivables 15 2,001 2,113
Contract assets 15 225 212
Other debtors 15 - 208
Cash and cash equivalents 16 4,795 5,325
7,511 7,942
Liquidity risk
The Group's liquidity risk arises from its management of working capital. The
Group has a facility to borrow an amount up to 90% of approved trade debtors
subject to a maximum limit of £2.6m. The facility may be terminated by the
bank and Group with one and three month's written notice respectively. The
Board receives regular cash flow and working capital projections to enable it
to monitor its available headroom under this facility. At the statement of
financial position these projections indicated that the Group expected to have
sufficient liquid resources to meet its reasonably expected obligations.
Maturity of financial liabilities is set out in note 17.
Capital risk management
The Group's capital comprises of shareholders' equity. Its objectives when
managing capital are to safeguard the Group's ability to continue as a going
concern in order to maximise shareholder value. To maintain or adjust the
capital structure the Group may adjust the dividend payment to shareholders,
return capital to shareholders, issue new shares or alter the level of
borrowings.
3.2 Fair value estimation
The carrying value of financial assets and liabilities approximate their fair
values.
4. Revenue
The Group operates solely in the UK. All material revenues are generated in
the UK.
The largest single customer contributed 32% of Group revenue (2022: 35%) and
was in the public sector. Four other customers contributed more than 10% of
Group revenue (2022: two).
Disaggregation of revenue
In accordance with IFRS 15, the Group disaggregates revenue by contract type
as management believe this best depicts how the nature, timing and uncertainty
of the Group's revenue and cash flows are affected by economic factors.
Accordingly, the following table disaggregates the Group's revenue by contract
type:
Group and company 2023 2022
£'000 £'000
Time and materials 14,386 16,593
Fixed price 442 118
Permanent recruitment fees 18 211
Licences 12 93
14,858 17,015
The Group also disaggregates revenue by operating sector reflecting the
different commercial risks (e.g. credit risk) associated with each.
Group and company 2023 2022
£'000 £'000
Public sector 11,597 11,090
Private sector 3,261 5,925
14,858 17,015
Contract balances
For all contracts, the Group recognises a contract liability to the extent
that payments made are greater than the revenue recognised at the period end
date. When payments are made less than the revenue recognised at the period
end date, the Group recognises a contract asset for the difference.
Contract assets and contract liabilities are included within 'trade and other
receivables' and 'trade and other payables' respectively on the face of the
statement of financial position.
Contract assets Contract liabilities
Group and Company 2023 2022 2023 2022
£'000 £'000 £'000 £'000
At 1 April 471 170 (116) (256)
Transfers in the period from contract assets to trade receivables (471) (170) - -
Excess of revenue recognised over cash (or right to cash) being recognised in 375 471 - -
the period
Amounts included in contract liabilities that was recognised as revenue in the - - 116 256
period
Cash received in advance of performance and not recognised as revenue in the - - (37) (116)
period
At 31 March 375 471 (37) (116)
There is no expectation of a material expected lifetime credit loss arising in
relation to contract assets.
5. Profit from operations
2023 2022
£'000 £'000
Profit from operations is stated after charging:
Depreciation of owned assets (note 12) 87 79
Amortisation of right of use assets (note 13) 185 187
Amortisation of intangible assets (note 11) 1 5
Auditor remuneration:
Audit of financial statements: Group and Company 94 66
Non-audit services - 2
6. Finance expense
2023 2022
£'000 £'000
Interest expense on lease liability 44 37
Net foreign exchange gain (1) -
Total finance expense 43 37
7. Employees and Directors
Group and Company 2023 2022
Number Number
Average number of persons (including Directors) employed
Senior management 9 10
Fee earners 93 77
Sales 8 8
Administration and finance 5 9
115 104
The number of permanent fee earners as at 31 March 2023 was 96 (2022: 95).
Staff costs for the above persons (including Directors) 2023 2022
£'000 £'000
Wages and salaries 7,907 6,995
Social security costs 981 827
Defined contribution pension costs 940 798
Equity settled share-based payments 200 -
10,028 8,620
2023 2022
Directors £'000 £'000
Emoluments 648 894
Benefits in kind 21 20
Money purchase pension contributions 74 65
Total remuneration 743 979
Social security costs 85 115
828 1,094
Three Directors (2022: 3) had retirement benefits accruing under money
purchase pension schemes. Key management personnel are considered to be the
Directors. Further information on Director's remuneration can be found on page
29.
8. Tax charge/(credit)
2023 2022
£'000 £'000
Current tax
Current tax on profits for the year - -
Deferred tax
Decrease/(Increase) in recognised deferred tax asset 40 (85)
Change in tax rate 13 (3)
Total tax charge/(credit) for the year 53 (88)
The differences between the actual tax charge for the year and the standard
rate of corporation tax in the UK applied to profits for the year are as
follows:
2023 2022
£'000 £'000
Profit before tax 9 1,081
Profit before tax multiplied by standard rate of corporation tax in the UK of 2 205
19% (2022: 19%)
Expenses not deductible for tax purposes 4 8
Allowances recognised (13) (91)
Derecognition/(Recognition) of deferred tax on losses 58 (220)
Change in tax rate 13 (3)
Prior year adjustments (11) 13
Tax charge/(credit) for the year 53 (88)
2023 2022
£'000 £'000
Deferred tax asset
The movement in deferred tax is as follows:
At beginning of the year 161 73
Reversal of previously (recognised)/unrecognised deferred tax on losses (40) 85
Tax rate changes (13) 3
At end of the year 108 161
Deferred tax assets have been recognised in respect of tax losses where the
Directors believe it is probable that the assets will be recovered. This
expectation of recovery is calculated by modelling estimates of future taxable
profits that can be offset with historic trading losses brought forward. A
deferred tax asset amounting to £484,000 (2022: £473,000) has not been
recognised in respect of trading losses of £1,934,000 (2022: £1,892,000),
which can be carried forward indefinitely.
Deferred tax assets have not been recognised for potential temporary
differences arising from unexercised share options and Restricted stock
options of £130k (2022: £22k) and general provisions of £21k (2022: £42k)
as the Directors believe it is not certain these assets will be recovered.
The UK Budget on 3 March 2021 announced an increase in the UK corporation tax
rate from 19% to 25% with effect from 1 April 2023. The effect of the rate
increase is reflected in the consolidated financial statements as has been
substantively enacted at the balance sheet date.
9. Dividends
2023 2022
£'000 £'000
Final dividend for the year ended 31 March 2022 - 4p (2021: 2p) per share 663 323
(declared and paid in the following year)
Interim dividend for the year ended 31 March 2023 - 2p (2022: 2p) per share 332 330
Total dividend paid 995 653
The Directors propose a final dividend of 4p per share (2022: 4p per share),
bringing the total dividend to 6p for the financial year (2022: 6p per share).
10. Earnings per ordinary share
Earnings per share have been calculated on the profit for the year divided by
the weighted average number of shares in issue during the period based on the
following:
2023 2022
(Loss)/Profit for the year (£44,000) £1,169,000
Average number of shares in issue 16,565,870 16,325,415
Effect of dilutive options - 288,934
Average number of shares in issue plus dilutive options 16,565,870 16,614,349
Basic (loss)/earnings per share (0.27p) 7.16p
Diluted (loss)/earnings per share (0.27p) 7.04p
11. Intangible assets
Group and company Purchased software
£'000
Cost
At 31 March 2021 127
Additions 1
Disposals -
At 31 March 2022 128
Additions -
Disposals -
At 31 March 2023 128
Accumulated amortisation/impairment
At 31 March 2021 121
Charge for the year 5
Disposals -
At 31 March 2022 126
Charge for the year 1
Disposals -
At 31 March 2023 127
Net book value
At 31 March 2023 1
At 31 March 2022 2
12. Property, plant and equipment
Group and company Computer Fixtures Motor Total
hardware & fittings vehicles
£'000 £'000 £'000 £'000
Cost
At 31 March 2021 219 509 4 732
Additions 43 89 - 132
Disposals (26) (8) - (34)
At 31 March 2022 236 590 4 830
Additions 7 2 - 9
Disposals (2) - - (2)
At 31 March 2023 241 592 4 837
Accumulated depreciation
At 31 March 2021 162 341 4 507
Charge for the year 28 51 - 79
Disposals (26) (8) - (34)
At 31 March 2022 164 384 4 552
Charge for the year 30 57 - 87
Disposals (1) - - (1)
At 31 March 2023 193 441 4 638
Net book value
At 31 March 2023 48 151 - 199
At 31 March 2022 72 206 - 278
13. Leases
The Group as a lessee:
The Group has lease contracts for its office premises with terms remaining
ranging from 1 to 5 years. The lease liability has been calculated on the
basis of the termination option being taken. There are no other future cash
outflows in relation to the lease to which the Group is potentially exposed.
Each lease is represented on the balance sheet as a right of use asset and a
lease liability. Short-term leases are not recognised and expensed to the
profit and loss statement.
Right-of-use assets
During the year, a lease break option on one lease was not enacted, and the
lease now continues until 27th March 2028. As of this date, the total asset
value has been increased by £412,000.
The carrying amounts of the right-of-use assets are as follows:
Land and buildings Total
£'000 £'000
At 31 March 2021
Opening position 532 532
Amortisation (187) (187)
At 31 March 2022 345 345
Change in lease term 412 412
Amortisation (185) (185)
At 31 March 2023 572 572
Lease liabilities
During the year, the lease break option on one lease was not enacted, and the
lease now continues until 27(th) March 2028. As of this date, the total
lease liability has increased by £920,000.
The carrying amount of the lease liabilities recognised are as follows:
Land and buildings Total
£'000 £'000
At 31 March 2021
Opening position 733 733
Interest expense 37 37
Lease payments (344) (344)
At 31 March 2022 426 426
Change in lease term 920 920
Interest expense 44 44
Lease payments (344) (344)
At 31 March 2023 1,046 1,046
At the balance sheet date, the Group had outstanding commitments for future
lease payments as follows:
At 31 March 2022 Up to 3 months Between 3 and 12 months Between 1 and 2 years Between 2 and 5 years
£'000 £'000 £'000 £'000
Discounted lease liabilities 81 188 121 36
Undiscounted lease liabilities 86 204 129 38
At 31 March 2023 Up to 3 months Between 3 and 12 months Between 1 and 2 years Between 2 and 5 years
£'000 £'000 £'000 £'000
Discounted lease liabilities 72 220 215 539
Undiscounted lease liabilities 86 258 253 591
The Group as a lessor:
Finance lease receivables
The Group has entered into a lease arrangement considered to be a finance
lease, representing rentals payable to the Group for a rental of a proportion
of a leased property.
During the year, a lease break option on one lease was not enacted by a
tenant, and the lease now continues until 23(rd) March 2028. As of this date,
the total finance lease receivable has increased by £508,000.
The carrying amounts of the lease receivable asset are as follows:
Land and buildings Total
£'000 £'000
At 31 March 2021
Opening position 193 193
Interest income 10 10
Payments received (119) (119)
At 31 March 2022 84 84
Change in lease term 508 508
Interest income 17 17
Payments received (119) (119)
At 31 March 2023 490 490
At the balance sheet date, the Group had future lease receivables as follows:
At 31 March 2022 Up to 3 months Between 3 and 12 months
£'000 £'000
Discounted lease receivables 28 56
Undiscounted lease receivables 30 59
At 31 March 2023 Up to 3 months Between 3 and 12 months Between 1 and 2 years Between 2 and 5 years
£'000 £'000 £'000 £'000
Discounted lease receivables 23 71 99 297
Undiscounted lease receivables 30 89 119 326
The total lease receivable of £490k (2022: £84k) is disclosed as non-current
assets of £396k (2022: £nil) and current assets of £94k (2022: £84k).
14. Investments
Company
Investments are:
(a) Generic Software Consultants Limited ("Generic"), a 100% subsidiary
undertaking, in respect of both voting rights and issued shares, which is
registered in England and Wales and has an issued share capital of 5,610 US$1
ordinary shares. The investment is stated in the Company's books at £440.
Up to 31 March 2009 Generic acted as an agent for the business, but did not
enter into any transactions in its own right: its business was included within
the figures reported by the Company. On 1 April 2009 the agency agreement was
terminated and all business is now conducted directly by the parent company
including its Generic business.
(b) Triad Special Systems Limited, Generic Online Limited, Zubed Geospatial
Limited, Zubed Sales Limited, are all 100% subsidiaries which are registered
in England and Wales. They are dormant companies, which have never traded.
Each has a share capital of £1.
The registered office of Triad Special Systems is Huxley House, Weyside Park,
Catteshall Lane, Godalming, Surrey GU7 1XE. The registered office of the other
subsidiaries is 3 Caldecotte Lake Business Park, Caldecotte Lake Drive,
Caldecotte, Milton Keynes MK7 8LF.
15. Trade and other receivables
Group and company 2023 2022
£'000 £'000
Trade receivables 2,006 1,868
Less: provision for expected credit losses (5) (14)
Trade receivables-net 2,001 1,854
Contract assets 225 212
Unbilled income 150 259
Other debtors - 208
Trade and other receivables 2,376 2,533
Prepayments 165 151
2,541 2,684
Analysed as:
Non-current asset: unbilled income - 130
Current asset 2,541 2,554
Total 2,541 2,684
Other debtors of £nil (2022: £208k) is with respect to legal costs
recoverable and accrued interest thereon with a shareholder who holds more
than 20% of the company's issued share capital. The fair value of trade and
other receivables approximates closely to their book value.
Unbilled income is in respect to the billing profile of a licence agreement.
The lifetime expected credit losses on trade receivables as at 31 March 2023
is calculated as follows:
Group and company Expected default rate Gross carrying amount Credit loss allowance
(A) (B) (A x B)
% £'000 £'000
Current 0.25 1,988 5
Up to 30 days past due - 14 -
Up to 60 days past due - 2 -
Over 60 days past due 5.0 2 -
2,006 5
No provision has been recognised for contract assets and other debtors as they
are expected to be fully recovered.
The lifetime expected credit losses on trade receivables as at 31 March 2022
were calculated as follows:
Group and company Expected default rate Gross carrying amount Credit loss allowance
(A) (B) (A x B)
% £'000 £'000
Current 0.75 1,856 13
Up to 30 days past due 5.0 12 1
1,868 14
Movements on the provision for expected credit loss are as follows:
Group and company 2023 2022
£'000 £'000
At beginning of the year 14 19
Credited to income statement (9) (5)
At end of the year (credit loss allowance) 5 14
The carrying amount of the Group's trade and other receivables are denominated
in the following currencies:
Group and company 2023 2022
£'000 £'000
Sterling 2,376 2,543
Euros - (10)
2,376 2,533
16. Cash and cash equivalents
Group and company 2023 2022
£'000 £'000
Cash available on demand 4,795 5,325
The fair value of cash and cash equivalents approximates closely to their book
value.
The carrying amount of the Group's cash and cash equivalents is denominated in
the following currencies:
Group and company 2023 2022
£'000 £'000
Sterling 4,777 5,239
Euros 18 86
4,795 5,325
For the purpose of the consolidated cash flow statement, cash and cash
equivalents consist of cash, as detailed above.
The Group has access to a financing facility with a major UK bank. At the
balance sheet date in the current or prior year this facility has not been
utilised. The facility borrowing rate is 1.75% above base rate.
17. Trade and other payables
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Trade payables 666 667 666 667
Accruals 335 525 335 525
Owed to subsidiary - - 5 5
1,001 1,192 1,006 1,197
Contract liabilities 37 116 37 116
Other taxation and social security 1,231 930 1,231 930
2,269 2,238 2,274 2,243
Analysed as:
Current liability 2,269 2,134 2,274 2,139
Non-current liability: accruals - 104 - 104
Total 2,269 2,238 2,274 2,243
The majority of trade and other payables are settled within three months from
the year end.
The fair value of trade and other payables approximates closely to their book
value.
The carrying amount of trade and other payables is denominated in the
following currencies:
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Sterling 1,001 1,192 1,006 1,197
1,001 1,192 1,006 1,197
18. Provisions
Group and company Provision for property dilapidations
£'000
At 1 April 2022 197
Additions -
Charged to income statement -
Utilised in year -
At 31 March 2023 197
The maturity profile of the present value of provisions is as follows:
Group and company 2023 2022
£'000 £'000
Current
Provision for property dilapidation - 61
Non-current
Provision for property dilapidation 197 136
The provision for property dilapidation covers the estimated future costs
required to meet obligations under property leases to redecorate and repair
property.
19. Share capital 2023 2022
Ordinary shares of 1p each
Issued, called up and fully paid:
Number 16,582,663 16,539,579
Nominal value £165,827 £165,396
During the year 43,084 1p ordinary shares were issued as a result of the
exercise by employees of share options:
Number Option price Increase in share capital Increase in share premium
20,000 11.0p £200 £2,000
23,084 53.5p £231 £12,119
43,084 £431 £14,119
20. Share-based payments
At 31 March 2023, 184,916 options granted under employee share option schemes
remain outstanding:
Date option granted Number Exercise price Period options exercisable
18 September 2014 50,000 11.0p 18 September 2017 to 18 September 2024
9 March 2018 134,916 53.5p 1 April 2021 to 9 March 2028
Under the terms of the scheme, options vest after a period of three years
continued employment and are subject to the following performance conditions:
For options granted on 9 March 2018: 100% of the shares granted under an
option will vest if the Company's share price at 31 March 2021 has increased
by 30% or more from the share price as at the date of grant. 50% of shares
granted under an option will vest if the Company's share price at 31 March
2021 has increased by 15% from the share price as at the date of grant.
Between these upper and lower thresholds, awards vest on a straight-line
basis. These options vested on 31 March 2021.
For options granted on 18 September 2014: in at least one financial year after
the date of grant, the Company shall have achieved a positive basic earnings
per share (subject to adjustment to exclude identified exceptional items), as
reported in its audited annual accounts. These options vested on 17 September
2017.
Options have been valued using the Black-Scholes option-pricing model. No
performance conditions were included in the fair value calculations.
No options were granted during the year (2022: nil).
In March 2022 a number of restricted stock units (RSUs) were granted under the
new Triad Employee Share Incentive Plan, and remain outstanding as follows:
Date award made Number Performance condition Vesting date
30 March 2022 750,000 135.0p 30 March 2025
The Award will vest following 3 years continuous employment and if the Board
determines that the Market Value of a Share on the third anniversary of the
Award Date is equal to or greater than the Market Value of a Share on the
Award Date. The market value at the Award Date is 135.0p.
The RSUs have been valued using the Monte Carlo pricing model. No performance
conditions were included in the fair value calculations.
The total expense recognised in the year is £200,128 (2022: £476).
No RSUs were granted during the year (2022: 750,000).
A reconciliation of the total share award movements over the year to 31 March
2023 is shown below:
2023 2022
Number of options Weighted average exercise price Number of options Weighted average exercise price
Pence Pence
Outstanding at start of year 978,000 10.2 739,000 42.2
Granted - - 750,000 1.0
Exercised (43,084) 33.8 (511,000) 43.0
Forfeited - - - -
Outstanding at end of year 934,916 9.4 978,000 10.2
Exercisable at end of year 184,916 42.0 228,000 40.5
There were 43,084 share options exercised during the year. In the
reconciliation above, there are no share options and a total of 180,000
restricted stock units (RSUs) held by Directors. Transactions with Directors
are set out in the Directors' remuneration report on page 29.
The options exercisable of 184,916 relate to the 2014 and 2018 grants which
have all vested (2022: 228,000 all vested).
The weighted average share price at the date of exercise for share options
exercised during the period was 113.5p (2022: 118.2p). The options outstanding
as at 31 March 2023 had an exercise price of 11.0p or 53.5p, and with respect
to the RSUs, 135.0p. The weighted average remaining contractual life of 2.4
years (2022: 3.4 years).
The inputs into the share-based payments model to calculate the RSU awards
were as follows:
Expected volatility 77%
Expected life 3 years
Risk-free rate 1.4%
Exercise price 1p
Valuation 135p
Dividend Yield 4.4%
21. Related party transactions and ultimate control
The Group and Company rents one of its offices under a lease with a sub-tenant
in occupation on one floor. During the year, the Group did not take advantage
of a lease break and the lease now expires in March 2028. The current annual
rent of £215,000 was fixed, by independent valuation, at the last rent review
in 2008. J C Rigg, a Director, has notified the Board that he has a 50%
beneficial interest in this contract. The balance owed at the year-end was
£nil (2022: £nil). There is no ultimate controlling party.
Five year record
For the accounting period commencing 1 April 2019 changes were made due to the
introduction of IFRS 16. Therefore the accounting policies over the period
detailed below will vary and be inconsistent.
Consolidated income statement
Years ended 31 March 2023 2022 2021 2020 2019
£'000 £'000 £'000 £'000 £'000
Revenue 14,858 17,015 17,815 19,354 22,713
Gross profit 3,504 4,784 3,810 2,854 4,376
Profit/(Loss) before tax 9 1,081 644 (602) 1,017
Tax (charge)/credit (53) 88 41 (159) (132)
(Loss)/Profit after tax (44) 1,169 685 (761) 885
Retained (loss)/profit for the financial year (44) 1,169 685 (761) 885
Basic (loss)/earnings per share (pence) (0.27) 7.16 4.28 (4.76) 5.60
Balance sheet
As at 31 March 2023 2022 2021 2020 2019
£'000 £'000 £'000 £'000 £'000
Non-current assets 1,276 916 921 1,236 411
Current assets 7,430 7,963 7,540 6,581 7,937
Current liabilities (2,561) (2,464) (2,555) (2,399) (2,483)
Non-current liabilities (951) (397) (623) (863) (99)
Net assets 5,194 6,018 5,283 4,555 5,766
Share capital 166 165 160 160 160
Share premium account 894 880 666 660 659
Capital redemption reserve 104 104 104 104 104
Retained earnings 4,030 4,869 4,353 3,631 4,843
Equity shareholders' funds 5,194 6,018 5,283 4,555 5,766
Shareholders' information and financial calendar
Share register
EQ maintain the register of members of the Company. If you have any questions
about your personal holding of the Company's shares, please contact:
EQ
Highdown House
Yeoman Way
Worthing
West Sussex
BN99 3HH
Telephone: 0371 384 2486
If you change your name or address or if the details on the envelope enclosing
the report, including your postcode, are incorrect or incomplete, please
notify the registrar in writing.
Shareholders' enquiries
If you have an enquiry about the Group's business, or about something
affecting you as a shareholder (other than queries that are dealt with by the
registrar) you should contact the Company Secretary, by letter or telephone at
the Company's registered office.
Company Secretary and registered office:
James McDonald
Triad Group Plc
Weyside Park
Catteshall Lane
Godalming
Surrey
GU7 1XE
Telephone: 01908 278450
Email: investors@triad.co.uk
Website: www.triad.co.uk
Financial calendar
Annual General Meeting The date of the AGM is to be confirmed.
Financial year ended 31 March 2024: expected announcement of results
Half-year November 2023
Full-year June 2024
Corporate information
Executive Directors
John Rigg, Chairman
Charlotte Rigg, Deputy Executive Chairman
Adrian Leer, Managing Director
Tim Eckes, Client Services Director
James McDonald, Finance Director
Non-Executive Directors
Alistair Fulton
Chris Duckworth
Alison Lander
Secretary and registered office
James McDonald
Triad Group Plc
Weyside Park
Catteshall Lane
Godalming
Surrey
GU7 1XE
Telephone: 01908 278450
Email: investors@triad.co.uk
Website: www.triad.co.uk
Country of incorporation and domicile of parent company
United Kingdom
Legal form
Public limited company
Company number
02285049
Registered Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Brokers
Zeus Capital Ltd
125 Old Broad Street
London
EC2N 1AR
Solicitors
Freeths
Davy Avenue
Knowlhill
Milton Keynes
MK5 8HJ
Bankers
Lloyds Bank plc
City Office
11-15 Monument Street
London
EC3V 9JA
Registrars
EQ
Highdown House
Yeoman Way
Worthing
West Sussex
BN99 3HH
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