REG - Triad Group Plc - Half-year Report

TriadAnnouncement

02/11/2021 07:00

RNS Number : 9419Q
  
Triad Group Plc
  
02 November 2021
  
 

Legal Entity Identifier (LEI) No. 213800MDNBFVEQEN1G84
 
Triad Group Plc
Half year results for the six months ended 30 September 2021
 
Financial highlights







Six months to

30 September 2021


Six months to

30 September 2020


Change




Revenue


£8.58m


£8.73m


-£0.15m




Gross profit


£2.30m


£1.49m


+£0.81m




Gross profit %


26.8%


17.1%


+9.7%




Profit before tax


£0.67m


£1k


+£0.67m




Profit after tax


£0.85m


£0.05m


+£0.80m




Cash reserves


£5.34m


£4.08m


+£1.26m




Basic earnings per share


5.24p


0.31p


+4.93p




Interim dividend


2p


nil


+2p



 
Chairman's statement
Dr John Rigg
 
For the period ended 30 September 2021 the Group reports revenue of £8.58m (2020: £8.73m). The profit before tax was £0.67m (2020: £1k), gross profit has increased by 54% to £2.30m (2020: £1.49m) and gross profit as a percentage of revenue has increased to 26.8% (2020: 17.1%).  
 
This has been a very strong first half, building on the progress made during last year. The Group continued to recruit more permanent staff, with 34 consultants joining in the period. The increase in headcount, taking the Group total to over 100 during the period, contributed significantly to improved gross profit without diluting utilisation levels. Gross profit as a percentage of sales also increased significantly versus the same time last year, as well as improving on the second half of last year.
 
These results are a direct consequence of the strategy to concentrate our efforts on consulting services and reflect the reduction in emphasis on our IT contractor resourcing activities. The reduction in emphasis on contractor resourcing combined with our ability to increase fully payrolled services, also reduced significantly the Group's exposure to risk associated with IR35 legislation, with no material impact arising from the legislative changes introduced at the beginning of the period.
 
The Group continued to deal effectively with the circumstances brought about by the Covid-19 situation. Full service was maintained throughout the period, albeit with the majority of our staff continuing to work remotely. Indeed, out of the Covid adversity the Group seized the opportunity to widen its recruitment net using remote working practices to enable the hiring of staff from beyond the normal catchment areas. Thankfully, none of our staff was taken seriously ill by the virus. The Group chose not to furlough any of its staff.
 
Cash reserves have increased by 31% to £5.34m (2020: £4.08m) and reflects both the improved profitability and strong cash collection processes. During the period, the Group did not need to utilise the existing lending facility, other external debt or take advantage of the financial assistance schemes offered by the Government due to the pandemic. Further consideration of the impact of Covid-19 is set out in the going concern statement.
 
Business Highlights
 
Work continued on the Ministry of Justice's Crime Programme as our teams provided the Business Analysis services to this major national programme. Elsewhere within the Ministry of Justice, we were very pleased to secure the Project Management Delivery service and have significantly increased the number of project management and programme management resources to support an array of initiatives including the implementation of "Nightingale courts" and supporting the modernisation of the prison estate. We also successfully handed over operation of the Production Services contract to the new incumbent. 
 
Our teams at Department for Business, Energy and Industrial Strategy have increased our footprint and are now engaged across a number of workstreams as they deal with significant workloads that have been increased by the pressures of Covid response and post-Brexit requirements.
 
Our delivery team helped Department for Transport (DfT) to secure a successful "alpha" assessment from Government Digital Services in respect of the ROS platform under development, and the team continues to progress through the "beta" stage.
 
A successful working prototype was delivered to the Marine Stewardship Council (MSC) by a Triad team in another project closely associated with sustainability. Other work in the renewable energy sector, alongside MSC, DfT and Ofgem, is helping to reinforce the Group's credentials as a significant player in the delivery of digital capability to those organisations in the energy/renewables/sustainability arenas.
 
Two of our clients within the renewable energy sector are using Workpoint technology to complement their Microsoft platforms. With Triad now a Workpoint partner, this has opened up opportunities for recurring revenue connected with Workpoint licences the first of which were recognised towards the end of the reporting period.
 
Work at the leading technology distributor, Westcoast, continued during the period as Triad teams worked with Westcoast personnel and other partners to deliver API-driven services into Westcoast's legacy architecture.  
 
The Group was pleased to win a place on the Technology Services (3) framework, an important commercial route into public sector opportunities. The Group also gained acceptance on to the Fortrus framework providing an additional commercial route into the law enforcement sector.
 
The Group was extremely proud to win the award for "Tech company of the year" in the medium category at the Global Business Tech awards. Our work at Department for Transport has also seen the Group short-listed for the best public sector project of the year at the British Computer Society (The Chartered Institute for IT) awards. On the other side of the award process, the Group is proud to be supporting the forthcoming blockchain hackathon run by our technology partner Stratis.
 
It was rewarding to see a hardy bunch of Triad volunteers raise money for the Action for Children charity during the Summer by participating in the "Boycott your Bed" event.
 
Outlook
 
The second half of the year should see a continuation of high utilisation levels and increases in consultant headcount, in response to persistent demand anticipated within the Group's key accounts. 
 
Work will continue to unwind the remaining lower-margin contractor accounts and to replace them with margin-enriching consultancy engagements, following a clear direction in terms of new business development.
 
Recruitment remains a challenge across the industry, but with a dedicated in-house resourcing team the Group believes it has the wherewithal and the proposition to attract the best affordable talent into the company.
 
With the Group's sharp focus on its consultancy credentials, and with a business model that is extremely well-suited to the needs of the market, I am optimistic about the prospects.
 
Dividend
 
The Group believes that dividend payments play a vital role in demonstrating the health of the business.  Given the strong performance over the period combined with the positive outlook an interim dividend of 2p is proposed (2020 interim dividend: nil).
 
Employees
 
On behalf of the Board of Directors I would like to thank our staff for their hard work and for their continued efforts in dealing so positively with the challenges caused by the ongoing Covid situation.
 
Dr John Rigg
Executive Chairman
1 November 2021
 
Unaudited condensed consolidated statement of comprehensive income and expense
for the six months ended 30 September 2021
 
 



Group and Company


Note


Unaudited
2021


Unaudited
2020


Audited year ended 31 March
2021












£'000


£'000


£'000




Revenue


2


8,576


8,727


17,815




Cost of sales






(6,278)


(7,237)


(14,005)




Gross profit






2,298


1,490


3,810




Administrative expenses






(1,613)


(1,477)


(3,124)




Profit from operations






685


13


686




Finance income






5


7


15




Finance expense


3


(17)


(19)


(57)




Profit before tax






673


1


644




Tax credit


4


174


49


41




Profit for the period and total comprehensive income attributable to equity holders of the parent 






847


50


685




Basic earnings per share


6


5.24p


0.31p


4.28p




Diluted earnings per share


6


5.18p


0.31p


4.24p



 
All amounts relate to continuing activities.
 
Unaudited condensed consolidated statement of changes in equity
for the six months ended 30 September 2021
 
 



Group


Share Capital


Share premium account


Capital redemption reserve


Retained earnings


Total 








£'000


£'000


£'000


£'000


£'000




At 1 April 2020


160


660


104


3,631


4,555




Profit for the period and total comprehensive income


-


-


-


50


50




Dividend paid


-


-


-


-


-




Ordinary shares issued


-


1


-


-


1




Share-based payments


-


-


-


14


14




At 30 September 2020 (unaudited)


160


661


104


3,695


4,620






























At 1 April 2021


160


666


104


4,353


5,283




Profit for the period and total comprehensive income


-


-


-


847


847




Dividend paid


-


-


-


(324)


(324)




Ordinary shares issued


3


96


-


-


99




Share-based payments


-


-


-


-


-




At 30 September 2021 (unaudited)


163


762


104


4,876


5,905






























At 1 April 2020


160


660


104


3,631


4,555




Profit for the year and total comprehensive income


-


-


-


685


685




Dividend paid


-


-


-


-


-




Ordinary shares issued


-


6


-


-


6




Share-based payments


-


-


-


37


37




At 31 March 2021


160


666


104


4,353


5,283



 
Unaudited condensed consolidated statement of financial position
as at 30 September 2021
 
 







Note


Unaudited 2021


Unaudited 2020


Audited year ended 31 March
 2021












£'000


£'000


£'000




Non-current assets




















Intangible assets






5


8


6




Property, plant and equipment






212


245


225




Right-of-use assets


7


438


539


532




Finance lease receivables 


7


27


245


85




Deferred tax


4


247


81


73












929


1,118


921




Current assets




















Trade and other receivables


8


2,572


2,193


2,514




Finance lease receivables


7


112


-


108




Cash and cash equivalents






5,338


4,081


4,918












8,022


6,274


7,540




Total assets






8,951


7,392


8,461




Current liabilities




















Trade and other payables


9


(2,270)


(1,770)


(2,248)




Lease liabilities


7


(315)


(281)


(307)












(2,585)


(2,051)


(2,555)




Non-current liabilities




















Long term provisions






(197)


(197)


(197)




Lease liabilities


7


(264)


(524)


(426)












(461)


(721)


(623)




Total liabilities






(3,046)


(2,772)


(3,178)




Net assets






5,905


4,620


5,283




Shareholders' equity




















Share capital






163


160


160




Share premium account






762


661


666




Capital redemption reserve






104


104


104




Retained earnings






4,876


3,695


4,353




Total shareholders' equity






5,905


4,620


5,283



 
Unaudited condensed consolidated statement of cash flows
for the six months ended 30 September 2021
 
 







Note


Unaudited 2021
£'000


 
 Unaudited 2020
£'000


Audited year ended 31 March 
2021
£'000




Cash flows from operating activities




















Profit for the period before taxation 






673


1


644




Adjustments for:




















Profit on sale of asset






-


-


(7)




Depreciation of property, plant and equipment






40


44


80




Amortisation of right of use assets






94


83


173




Amortisation/impairment of intangible assets






2


2


5




Interest received






(5)


(7)


(15)




Finance expense






21


26


45




Share-based payment expense






-


14


37




Changes in working capital




















(Increase)/Decrease in trade and other receivables






(59)


548


226




Increase/(Decrease) in trade and other payables






22


(357)


121




Cash generated by operations






788


354


1,309




Finance expense






(2)


(3)


6




Net cash inflow from operating activities






786


351


1,315




Investing activities




















Finance lease interest received






5


7


15




Finance lease payments received






54


52


104




Proceeds from sale of asset






-


-


15




Purchase of intangible assets






(1)


-


(1)




Purchase of property, plant and equipment






(27)


(13)


(38)




Net cash used in investing activities






31


46


95




Financing activities




















Proceeds of issue of shares






99


-


6




Lease liabilities principal payments






(154)


(133)


(287)




Lease liabilities interest payments






(18)


(23)


(51)




Dividends paid


5


(324)


-


-




Net cash outflow from financing activities






(397)


(156)


(332)




Net increase in cash and cash equivalents






420


241


1,078




Cash and cash equivalents at beginning of the period






4,918


3,840


3,840




Cash and cash equivalents at end of the period






5,338


4,081


4,918



 
Notes to the financial statements
for the six months ended 30 September 2021
 
1.    Principal accounting policies
 
Basis of preparation


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 periods presented, unless otherwise stated.
 
These financial statements have been prepared in accordance with UK adopted international accounting standards.
 
The comparative financial information for the year ended 31 March 2021 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2021 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for 2021 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
 
The financial information for the half years ended 30 September 2021 and 30 September 2020 does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006 and has been neither audited nor reviewed pursuant to guidance issued by the Auditing Practices Board.
 
These financial statements have been prepared on a going concern basis.
 
These financial statements have been prepared on a historical cost basis and are presented in sterling, the functional currency of the Company.
 
Going Concern
 
Despite the continued negative effects of the Covid-19 pandemic upon the UK economy, the Group has continued to improve trading during the period. All key ratios and profitability have improved, and the Group continues to build cash reserves without the requirement for any external funding or take advantage of Government support schemes. 
 
The Group continues to operate an efficient low-cost and cash generative model.  For the six months ended 30 September 2021, the Group has not utilised any external debt or lending facilities (2020: nil) with no exposure to bad debts in the period. Cash balances have grown to £5.34m at the balance sheet date (2020: £4.08m) and the future cash position remains strong.
 
The going concern assessment made at the year ended 31 March 2021 is still relevant to both current and future trading expectations. This going concern assessment included in particular a reverse stress test model which included the effects of any future Covid-19 pandemic issues, with all current client contracts discontinued at expiry, with no extension or replacement and with no cost mitigation. Following a review of these assessments in light of current trading performance and cash flow forecasts for the next 12 months, the Directors have concluded that the Group would have sufficient headroom and cash balances to continue in operation.
 
After making enquiries, 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 half year accounts. 
 
New standards, interpretations and amendments
 
The accounting policies applied in these financial statements are as applied in the annual report and accounts for the year ended 31 March 2021 with the addition that revenue earned on the reselling of licences where the company is acting as agent rather than principal is recognised in full on inception of the licence.  
 
2.    Revenue
 
The Group operates solely in the UK. All material revenues are generated in the UK.
 
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


Unaudited six months ended 
30 September
2021


Unaudited six months ended 30 September
2020


Audited year ended 
31 March
2021








£'000


£'000


£'000




Time and materials


8,246


8,383


17,344




Fixed price


69


48


175




Licencing


82


-


-




Percentage fee based


179


296


296








8,576


8,727


17,815



 
The Group also disaggregates revenue by operating sector reflecting the different commercial risks (e.g. credit risk) associated with each. 
 



Group and company


Unaudited six months ended 
30 September
2021


Unaudited six months ended 30 September
2020


Audited year ended 
31 March
2021








£'000


£'000


£'000




Public sector


5,098


5,342


11,357




Private sector


3,478


3,385


6,458








8,576


8,727


17,815



 
3.    Finance expense
 







 Unaudited six months ended 
30 September
2021


Unaudited six months ended 30 September
2020


Audited year ended 
31 March
2021








£'000


£'000


£'000




Interest expense on lease liability


18


23


51




Net foreign exchange (gain)/loss


(1)


(4)


6




Total finance expense


17


19


57



 
4.    Tax (credit)/charge
 







Unaudited six months ended 30 September 2021


Unaudited six months ended 30 September
2020


Audited year ended
31 March
2021








£'000


£'000


£'000




Current tax
















Current tax on profits for the period


-


-


-




Deferred tax
















Increase in recognised deferred tax asset


(174)


(49)


(41)




Total tax credit for the period


(174)


(49)


(41)



 
The differences between the actual tax charge for the period and the standard rate of corporation tax in the UK applied to profits for the period are as follows:
 







Unaudited six months ended 30 September 2021


Unaudited six months ended 30 September 2020


Audited year ended
 31 March
 2021








£'000


£'000


£'000




Profit before tax


673


1


644




Profit before tax multiplied by standard rate of corporation tax in the UK of 19% (2020: 19%)


128


-


122




Expenses not deductible for tax purposes


1


10


2




Recognition of deferred tax on losses


(303)


(59)


(165)




Tax credit for the period


(174)


(49)


(41)



 







Unaudited six months ended 30 September 2021


Unaudited six months ended 30 September 2020


Audited year ended 
31 March
 2021








£'000


£'000


£'000




Deferred tax asset
















The movement in deferred tax is as follows:
















At beginning of the period


73


32


32




Utilisation against taxable profits


-


-


-




Reversal of previously unrecognised deferred tax on losses 


174


48


41




Increase in relation to timing differences


-


1


-




At end of the period


247


81


73



 
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 conservative estimates of future taxable profits that can be offset with historic trading losses brought forward. A deferred tax asset amounting to £244,000 (2020: £662,000) has not been recognised in respect of trading losses which can be carried forward indefinitely.
 
The main rate of UK corporation tax is to increase on 1 April 2023 from 19% to 25%. The prevailing corporation tax rate of 19% has been reflected in the calculation of the deferred tax.
 
5.    Dividends
 
The Directors propose an interim dividend for the period to 30 September 2021 of 2p per share (2020 interim dividend: nil per share).
 
The Company will pay the dividend on 24 December 2021 to all shareholders on the register of members of the Company at the close of business on 3 December 2021. The ex-dividend date will be on 2 December 2021.
 
6.    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:
 







            Unaudited 30 September 2021


            Unaudited 30 September 2020


            Audited 31 March
2021




Profit for the period


£847,000


£50,000


£685,000




Average number of shares in issue 


16,177,584


15,981,400


15,994,082




Effect of dilutive options


172,420


281,274


176,113




Average number of shares in issue plus dilutive options


16,350,004


16,262,674


16,170,195




Basic earnings per share


5.24p


0.31p


4.28p




Diluted earnings per share


5.18p


0.31p


4.24p



 
7.    Leases
 
Right-of-use Assets
 
The carrying amounts of the right-of-use assets recognised and the movements during the period are outlined below:
 







Land and buildings


Total








£'000


£'000




At 31 March 2020












Opening position


622


622




Amortisation


(83)


(83)




At 30 September 2020


539


539




At 31 March 2021












Opening position


532


532




Amortisation


(94)


(94)




At 30 September 2021


438


438



 
Lease Liabilities
 
The carrying amounts of the lease liabilities recognised are as follows:
 







Land and buildings


Total








£'000


£'000




At 31 March 2020












Opening position


938


938




Interest expense


23


23




Lease payments


(156)


(156)




At 30 September 2020


805


805




At 31 March 2021












Opening position


733


733




Interest expense


18


18




Lease payments


(172)


(172)




At 30 September 2021


579


579



 
At the balance sheet date, the Group had outstanding commitments for future lease payments as follows:
 



At 30 September 2020


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


69


212


295


229




Undiscounted lease liabilities 


80


241


322


245



 



At 30 September 2021


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


77


238


168


96




Undiscounted lease liabilities


86


258


182


102



 
Finance lease receivables
 
The carrying amounts of the lease receivable asset are as follows:
 







Land and buildings


Total








£'000


£'000




At 31 March 2020












Opening position


297


297




Interest received


7


7




Payments received


(59)


(59)




At 30 September 2020


245


245




At 31 March 2021












Opening position


193


193




Interest received


5


5




Payments received


(59)


(59)




At 30 September 2021


139


139



 
At the balance sheet date, the Group had future lease receivables as follows:
 



At 30 September 2020


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


26


80


111


28




Undiscounted lease receivables 


30


89


119


30



 



At 30 September 2021


Up to 3 months


Between 3 and 12 months


Between 1 and 2 years








£'000


£'000


£'000




Discounted lease receivables 


27


85


27




Undiscounted lease receivables 


30


89


30



 
8.    Trade and other receivables
 







Unaudited six months ended 30 September 2021


Unaudited six months ended 30 September 2020


Audited year ended 
31 March
 2021








£'000


£'000


£'000




Trade receivables


1,474


1,660


2,015




Less: provision for expected credit losses


(17)


(17)


(19)




Trade receivables-net


1,457


1,643


1,996




Contract assets


650


192


170




Other debtors


242


201


229




Trade and other receivables


2,349


2,036


2,395




Prepayments


223


157


119








2,572


2,193


2,514



 
The fair value of trade and other receivables approximates closely to their book value.
 
Movements on the provision for expected credit loss are as follows:
 







Unaudited six months ended 30 September 2021


Unaudited six months ended 30 September 2020


Audited year ended 
31 March
 2021








£'000


£'000


£'000




At beginning of the period


19


26


26




Charged to income statement


3


-


-




Credited to income statement


(5)


(4)


(7)




Written-back during the period


-


(5)


-




At end of the period (credit loss allowance)


17


17


19



 
The carrying amount of the Group's trade and other receivables are denominated in the following currencies:
 







Unaudited six months ended 30 September 2021


Unaudited six months ended 30 September 2020


Audited year ended 
31 March
 2021








£'000


£'000


£'000




Sterling


2,346


2,036


2,395




Euros


3


-


-








2,349


2,036


2,395



 
9.    Trade and other payables
 







Unaudited six months ended 30 September 2021


Unaudited six months ended 30 September 2020


Audited year ended 
31 March
 2021








£'000


£'000


£'000




Trade payables


773


865


923




Accruals 


520


402


324








1,293


1,267


1,247




Contract liabilities


155


39


256




Other taxation and social security


822


464


745








2,270


1,770


2,248



 
The majority of trade and other payables are settled within three months from the period 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:
 







Unaudited six months ended 30 September 2021


Unaudited six months ended 30 September 2020


Audited year ended 
31 March
 2021








£'000


£'000


£'000




Sterling


1,277


1,257


1,237




Euros


16


10


10








1,293


1,267


1,247



 
10.  Related party transactions
 
The Group and Company rents one of its offices under a lease expiring in 2028, with a break clause in 2023. The current annual rent of £215,000 was fixed, by independent valuation, at the last rent review in 2008. JC Rigg, a Director, has notified the Board that he has a 50% beneficial interest in this contract. The balance owed at the period end was £nil (2020: £nil).
 
11.  Statement of the directors' responsibilities
 
The Board confirms to the best of their knowledge;
 
·    that the condensed consolidated half year financial statements for the six months to 30 September 2021 have been prepared in accordance with IAS 34 'Interim Financial Reporting' as per UK adopted international accounting standards; and
 
·    that the Half Year Report includes a fair review of the information required by sections 4.2.7R and 4.2.8R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the period and their impact on the condensed consolidated half year financial statements; a description of the principal risks and uncertainties for the remainder of the current financial year; and the disclosure requirements in respect of material related party transactions.
 
By order of the Board
 
James McDonald
Company Secretary
1 November 2021
 
Names of the current Board of Directors can be found on the company website at www.triad.co.uk.

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