REG - Triad Group Plc - Half-year Report
01/12/2022 07:00
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RNS Number : 9727H Triad Group Plc 01 December 2022
Legal Entity Identifier (LEI) No. 213800MDNBFVEQEN1G84
Triad Group Plc
Half year results for the six months ended 30 September 2022
Financial highlights
Six months to Six months to Change
30 September 2022
30 September 2021
Revenue £7.12m £8.58m -£1.46m
Gross profit £1.38m £2.30m -£0.92m
Gross profit % 19.3% 26.8% -7.5%
(Loss)/Profit before tax (£0.41m) £0.67m -£1.08m
(Loss)/Profit after tax (£0.41m) £0.85m -£1.26m
Cash reserves £4.37m £5.34m -£0.97m
Basic earnings per share (2.48p) 5.24p -7.72p
Interim dividend 2p 2p -
Chairman's statement
Dr John Rigg
Financial headlines
For the period ended 30 September 2022 the Group reports revenue of £7.12m
(2021: £8.58m). The loss before tax was £0.41m (2021: profit £0.67m), gross
profit has reduced by 40% to £1.38m (2021: £2.3m) and gross profit as a
percentage of revenue has reduced to 19.3% (2021: 26.8%).
Cash reserves have remained robust at £4.37m (2021: 5.34m), the reduction in
the period reflecting mainly the final dividend paid for the year ended 31
March 2022 of 4p per share. During the period, the Group did not need to
utilise the existing lending facility or other external debt.
Overview of results
Although the results for the first half are obviously disappointing, I must
emphasise that they are entirely due to external factors beyond our control.
There is little point in rehearsing at length an unprecedented set of
circumstances including war, effects of Covid 19, and a near paralysis in some
areas of government procurement as a result of political turmoil. These
factors have caused extraordinary delays in awarding new contracts and
processing the associated paperwork.
This being said, I am delighted to report that our underlying progress in
regaining our traditional culture as a consultant led, high quality, boutique
operation based on our established principles of excellent management and
staff, robust cash position, and prudent board direction, continues apace.
Our years of heavy reliance on operating on high volume, low margin principles
are now over, although we do retain the valued services of a small number of
excellent self-employed specialists, with most of whom we have had a long
relationship.
Business highlights
We are continuing to recruit in a very selective way and the operational
improvements, in terms of agility and quick decision making, have resulted in
a marked increase in billable consultancy days. It is a pleasure to reflect on
the level of customer appreciation and repeat business that we are now seeing.
We were pleased to extend our portfolio of frameworks to include the National
Highways IT Commercial framework, with renewals for DOS and G-Cloud as
expected. We also benefited from some interesting opportunities on the new
Digital Specialists and Programmes framework, which operates across a much
narrower spread of suppliers than DOS and G-Cloud.
Outstanding service was well exemplified at the Ministry of Justice, where we
led or participated in over 40 projects, as well as work for His Majesty's
Courts and Tribunals Service. Our support for the criminal justice system
extended to work in law enforcement, with our large team of digital delivery
professionals providing a range of services to the Metropolitan Police. Our
active membership of the Home Office's Accelerated Capability Environment
(ACE) framework is adding more weight to our homeland security credentials and
it is pleasing to be part of a public/private sector partnership that
specialises in the rapid introduction of new ideas into the public sector.
Beyond criminal justice, we are witnessing ongoing demand for technology
support under the general heading of decarbonisation and cleaner fuels. Work
on the management of greenhouse gases at the Department for Transport
continues, as does crucial work for the Energy Support Scheme at the
Department for Business, Energy and Industrial Strategy (BEIS). Clients value
Triad's ability to translate legislation into efficient digital services that
work for operational users and support policy needs. Within the wider clean
energy ecosystem, work continued in the private sector with leading global
organisations such as RES (Renewable Energy Systems).
Our activities at BEIS extended beyond clean energy and we were proud to play
a substantial role as part of the group that won the Information and Records
Management Society (IRMS) team of the year award. We also made a successful
start within their Office of Product Safety and Standards, where we have been
supporting the development and roll-out of case management capabilities.
Outlook
The vital signs of the Company, including cash, margins and control of
overheads, continue to be extremely robust. The quality of our technological
expertise is constantly improving and our business is based upon the reality
of delivering working effective systems and advice to meet real client needs
and policy demands. As a result, the level of internal morale, client
confidence and accumulated goodwill also continues to strengthen. Our staff
turnover is very low.
I am also delighted to say that the beginning of our second half year has seen
a strong upturn in levels of new business wins and bidding activity.
Dividend
As a mark of the Board's strong confidence in the Company's ability to execute
the strategy and drive forward as a technology consultancy of choice, the
interim dividend will be maintained at the same level as last year at 2p.
Employees
I would like to thank all the staff, both our long serving employees and
superb recent recruitees, who have performed excellently despite some of the
most challenging external circumstances the Company has experienced in its 34
year history.
Dr John Rigg
Executive Chairman
30 November 2022
Unaudited condensed consolidated statement of comprehensive income and expense for the six months ended 30 September 2022
Group and Company Note Unaudited Unaudited Audited year ended 31 March
2022 2021 2022
£'000 £'000 £'000
Revenue 2 7,123 8,576 17,015
Cost of sales (5,745) (6,278) (12,231)
Gross profit 1,378 2,298 4,784
Administrative expenses (1,783) (1,613) (3,676)
(Loss)/Profit from operations (405) 685 1,108
Finance income 2 5 10
Finance expense 3 (10) (17) (37)
(Loss)/Profit before tax (413) 673 1,081
Tax credit 4 2 174 88
(Loss)/Profit for the period and total comprehensive income attributable to equity holders of the parent (411) 847 1,169
Basic (loss)/earnings per share 6 (2.48p) 5.24p 7.16p
Diluted (loss)/earnings per share 6 (2.48p) 5.18p 7.04p
All amounts relate to continuing activities.
Unaudited condensed consolidated statement of changes in equity for the six months ended 30 September 2022
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 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 2022 165 880 104 4,869 6,018
Loss for the period and total comprehensive income - - - (411) (411)
Dividend paid - - - (663) (663)
Ordinary shares issued 1 6 - - 7
Share-based payments - - - 117 117
At 30 September 2022 (unaudited) 166 886 104 3,912 5,068
At 1 April 2021 160 666 104 4,353 5,283
Profit for the year and total comprehensive income - - - 1,169 1,169
Dividend paid - - - (653) (653)
Ordinary shares issued 5 214 - - 219
Share-based payments - - - - -
At 31 March 2022 165 880 104 4,869 6,018
Unaudited condensed consolidated statement of financial position as at 30 September 2022
Note Unaudited 2022 Unaudited 2021 Audited year ended 31 March
2022
£'000 £'000 £'000
Non-current assets
Intangible assets 1 5 2
Property, plant and equipment 238 212 278
Right-of-use assets 7 251 438 345
Finance lease receivables 7 - 27 -
Trade and other receivables 8 - - 130
Deferred tax 4 163 247 161
653 929 916
Current assets
Trade and other receivables 8 2,294 2,572 2,554
Finance lease receivables 7 29 112 84
Cash and cash equivalents 4,369 5,338 5,325
6,692 8,022 7,963
Total assets 7,345 8,951 8,879
Current liabilities
Trade and other payables 9 (1,815) (2,270) (2,134)
Short term provisions (61) - (61)
Lease liabilities 7 (168) (315) (269)
(2,044) (2,585) (2,464)
Non-current liabilities
Trade and other payables 9 - - (104)
Long term provisions (136) (197) (136)
Lease liabilities 7 (97) (264) (157)
(233) (461) (397)
Total liabilities (2,277) (3,046) (2,861)
Net assets 5,068 5,905 6,018
Shareholders' equity
Share capital 166 163 165
Share premium account 886 762 880
Capital redemption reserve 104 104 104
Retained earnings 3,912 4,876 4,869
Total shareholders' equity 5,068 5,905 6,018
Unaudited condensed consolidated statement of cash flows
for the six months ended 30 September 2022
Note Unaudited 2022 Audited year ended 31 March
£'000 Unaudited 2021 2022
£'000 £'000
Cash flows from operating activities
(Loss)/Profit for the period before taxation (413) 673 1,081
Adjustments for:
Depreciation of property, plant and equipment 44 40 79
Amortisation of right of use assets 94 94 187
Amortisation/impairment of intangible assets 1 2 5
Interest received (2) (5) (10)
Finance expense 11 21 35
Share-based payment expense 117 - -
Changes in working capital
Decrease/(Increase) in trade and other receivables 391 (59) (169)
(Decrease)/Increase in trade and other payables (422) 22 (11)
Cash (consumed)/generated by operations (179) 788 1,197
Foreign exchange (loss)/gain - (2) 1
Net cash (outflow)/inflow from operating activities (179) 786 1,198
Investing activities
Finance lease interest received 2 5 10
Finance lease payments received 55 54 109
Purchase of intangible assets - (1) (1)
Purchase of property, plant and equipment (5) (27) (132)
Net cash used in investing activities 52 31 (14)
Financing activities
Proceeds of issue of shares 6 99 220
Lease liabilities principal payments (161) (154) (307)
Lease liabilities interest payments (11) (18) (37)
Dividends paid 5 (663) (324) (653)
Net cash outflow from financing activities (829) (397) (777)
Net (decrease)/increase in cash and cash equivalents (956) 420 407
Cash and cash equivalents at beginning of the period 5,325 4,918 4,918
Cash and cash equivalents at end of the period 4,369 5,338 5,325
Notes to the financial statements for the six months ended
30 September 2022
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 international
accounting standards in conformity with the requirements of the Companies Act
2006 and with UK adopted International Financial Reporting Standards (IFRSs).
The comparative financial information for the year ended 31 March 2022
included within this report does not constitute the full statutory accounts
for that period. The statutory Annual Report and Financial Statements for 2022
have been filed with the Registrar of Companies. The Independent Auditors'
Report on the Annual Report and Financial Statements for 2022 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 2022 and 30
September 2021 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 pounds sterling, generally rounded to the nearest thousand,
the functional currency of the Company.
Going Concern
The Group continues to operate an efficient low-cost and cash generative
model. For the six months ended 30 September 2022, the Group has not utilised
any external debt or lending facilities (2021: nil) with no exposure to bad
debts in the period. Cash balances have reduced to £4.4m at the balance sheet
date (2021: £5.3m), which reflects a total dividend paid in the 6 months
period of £0.7m. The future cash position remains strong.
The going concern assessment made at the year ended 31 March 2022 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 most extreme scenario possible 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 2022.
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 Unaudited six months ended 30 September Audited year ended
30 September 2021 31 March
2022 2022
£'000 £'000 £'000
Time and materials 7,043 8,246 16,593
Fixed price 62 69 118
Licencing - 82 93
Percentage fee based 18 179 211
7,123 8,576 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 Unaudited six months ended Unaudited six months ended 30 September Audited year ended
30 September 2021 31 March
2022 2022
£'000 £'000 £'000
Public sector 5,594 5,098 11,090
Private sector 1,529 3,478 5,925
7,123 8,576 17,015
3. Finance expense
Unaudited six months ended Unaudited six months ended 30 September Audited year ended
30 September 2021 31 March
2022 2022
£'000 £'000 £'000
Interest expense on lease liability 10 18 37
Net foreign exchange gain - (1) -
Total finance expense 10 17 37
4. Tax (credit)/charge
Unaudited six months ended 30 September 2022 Unaudited six months ended 30 September Audited year ended
2021 31 March
2022
£'000 £'000 £'000
Current tax
Current tax on profits for the period - - -
Deferred tax
Increase in recognised deferred tax asset (2) (174) (85)
Change in tax rate - - (3)
Total tax credit for the period (2) (174) (88)
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 2022 Unaudited six months ended 30 September 2021 Audited year ended
31 March
2022
£'000 £'000 £'000
(Loss)/Profit before tax (413) 673 1,081
(Loss)/Profit before tax multiplied by standard rate of corporation tax in the (103) 128 205
UK of 25% (2021: 19%)
Expenses not deductible for tax purposes 44 1 8
Allowances recognised (7) - (91)
Recognition of deferred tax on losses 66 (303) (220)
Change in tax rate (3) - (3)
Prior year adjustments 1 - 13
Tax credit for the period (2) (174) (88)
Unaudited six months ended 30 September 2022 Unaudited six months ended 30 September 2021 Audited year ended
31 March
2022
£'000 £'000 £'000
Deferred tax asset
The movement in deferred tax is as follows:
At beginning of the period 161 73 73
Utilisation against taxable profits - - -
Reversal of previously unrecognised deferred tax on losses (1) 174 85
Increase in relation to timing differences 3 - -
Tax rate changes - - 3
At end of the period 163 247 161
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 conservative estimates of
future taxable profits that can be offset with historic trading losses brought
forward. A deferred tax asset amounting to £530,000 (2021: £244,000) has not
been recognised in respect of trading losses of £2,125,000 (2021:
£1,284,000) 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 25% has been reflected in the
calculation of the deferred tax.
5. Dividends
The Directors propose an interim dividend for the period to 30 September 2022
of 2p per share (2021 interim dividend: 2p per share).
The Company will pay the dividend on 13 January 2023 to all shareholders on
the register of members of the Company at the close of business on 16 December
2022. The ex-dividend date will be on 15 December 2022.
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 2022 Unaudited 30 September 2021 Audited 31 March
2022
(Loss)/Profit for the period (£411,000) £847,000 £1,169,000
Average number of shares in issue 16,554,727 16,177,584 16,325,415
Effect of dilutive options - 172,420 288,934
Average number of shares in issue plus dilutive options 16,554,727 16,350,004 16,614,349
Basic (loss)/earnings per share (2.48p) 5.24p 7.16p
Diluted (loss)/earnings per share (2.48p) 5.18p 7.04p
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 2021
Opening position 532 532
Amortisation (94) (94)
At 30 September 2021 438 438
At 31 March 2022
Opening position 345 345
Amortisation (94) (94)
At 30 September 2022 251 251
As at 6(th) October 2022, 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 asset value has been increased by £412,000.
Lease Liabilities
The carrying amounts of the lease liabilities recognised are as follows:
Land and buildings Total
£'000 £'000
At 31 March 2021
Opening position 733 733
Interest expense 18 18
Lease payments (172) (172)
At 30 September 2021 579 579
At 31 March 2022
Opening position 426 426
Interest expense 11 11
Lease payments (172) (172)
At 30 September 2022 265 265
As at 6(th) October 2022, the lease break option on one premises 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.
At the balance sheet date, the Group had outstanding commitments for future
lease payments as follows:
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
At 30 September 2022 Up to 3 months Between 3 and 12 months Between 1 and 2 years
£'000 £'000 £'000
Discounted lease liabilities 79 89 97
Undiscounted lease liabilities 86 97 102
Finance lease receivables
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 received 5 5
Payments received (59) (59)
At 30 September 2021 139 139
At 31 March 2022
Opening position 84 84
Interest received 2 2
Payments received (57) (57)
At 30 September 2022 29 29
As at 2(nd) October 2022, the lease break option on one premises was not
enacted by the 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.
At the balance sheet date, the Group had future lease receivables as follows:
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
At 30 September 2022 Up to 3 months
£'000
Discounted lease receivables 29
Undiscounted lease receivables 30
8. Trade and other receivables
Unaudited six months ended 30 September 2022 Unaudited six months ended 30 September 2021 Audited year ended
31 March
2022
£'000 £'000 £'000
Trade receivables 1,241 1,474 1,868
Less: provision for expected credit losses (14) (17) (14)
Trade receivables-net 1,227 1,457 1,854
Contract assets 548 650 212
Unbilled income 141 - 259
Other debtors 160 242 208
Trade and other receivables 2,076 2,349 2,533
Prepayments 218 223 151
2,294 2,572 2,684
Analysed as:
Non-current asset: unbilled income - - 130
Current asset 2,294 2,572 2,554
Total 2,294 2,572 2,684
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.
Movements on the provision for expected credit loss are as follows:
Unaudited six months ended 30 September 2022 Unaudited six months ended 30 September 2021 Audited year ended
31 March
2022
£'000 £'000 £'000
At beginning of the period 14 19 19
Charged to income statement - 3 -
Credited to income statement - (5) (5)
At end of the period (credit loss allowance) 14 17 14
The carrying amount of the Group's trade and other receivables are denominated
in the following currencies:
Unaudited six months ended 30 September 2022 Unaudited six months ended 30 September 2021 Audited year ended
31 March
2022
£'000 £'000 £'000
Sterling 2,076 2,346 2,543
Euros - 3 (10)
2,076 2,349 2,533
9. Trade and other payables
Unaudited six months ended 30 September 2022 Unaudited six months ended 30 September 2021 Audited year ended
31 March
2022
£'000 £'000 £'000
Trade payables 524 773 667
Accruals 301 520 525
825 1,293 1,192
Contract liabilities 81 155 116
Other taxation and social security 909 822 930
1,815 2,270 2,238
Analysed as:
Current liability 1,815 2,270 2,134
Non-current liability: accruals - - 104
Total 1,815 2,270 2,238
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 2022 Unaudited six months ended 30 September 2021 Audited year ended
31 March
2022
£'000 £'000 £'000
Sterling 825 1,277 1,192
Euros - 16 -
825 1,293 1,192
10. Related party transactions and ultimate control
The Group and Company rents one of its offices under a lease expiring in 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 period end was £nil (2021: £nil). There is no ultimate controlling
party.
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 2022 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
30 November 2022
Names of the current Board of Directors can be found on the Company website at
www.triad.co.uk (http://www.triad.co.uk) .
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