REG - Triad Group Plc - Half-year Report
20/12/2023 07:00
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RNS Number : 3222X Triad Group Plc 20 December 2023
Legal Entity Identifier (LEI) No. 213800MDNBFVEQEN1G84
Triad Group Plc
Half year results for the six months ended 30 September 2023
Financial highlights
Six months to Six months to Change Audited year ended
30 September 2023
30 September 2022
31 March 2023
Revenue £6.39m £7.12m -£0.73m £14.9m
Gross profit £0.95m £1.38m -£0.43m £3.5m
Gross profit % 14.9% 19.3% -4.4% 23.6%
(Loss)/Profit before tax (£0.99m) (£0.41m) -£0.58m £0.0m
Loss after tax (£1.00m) (£0.41m) -£0.59m (£0.0m)
Cash reserves £2.62m £4.37m -£1.75m £4.8m
Basic loss per share (6.03p) (2.48p) -3.55p (0.27p)
Interim/final dividend payable 2p 2p - 4p
Chairman's statement
Dr John Rigg
Overview of results
In my Chairman's statement accompanying the first half year results for the
previous year, I explained that a weak first half had been entirely the result
of "external factors beyond our control". I also said that we were expecting
a strong upturn in the second half, and this in fact proved to be the case.
The disappointing results announced above are the result of similar
circumstances and influences as those we experienced during the first half of
last year but significantly worse. We had expected this would not be the case,
but unfortunately, once again due to factors entirely outside our control,
this has not proved to be so.
Now to the excellent news. During the last two months, we have succeeded in
winning four new longer-term lines of business, with prestigious clients in
the public sector. All four have now been formally awarded. One major result
of this will be that the cliff edge which we have experienced, particularly in
the last two years at March 31st will not affect us in future as we will be
able to continue working seamlessly through that period. This should transform
our second half results for the current year, and in particular the full year
results for the next financial year and going forward. I personally have never
felt so confident and enthusiastic about the state and prospects of the
Company for more than 20 years.
Unlike many firms in our sector who have sought to lay off staff, the Company
held its nerve and used its strong position to maintain staffing levels in
line with those established over the last two years. Without doing so, our
successful efforts to secure the long-term pipeline would have been severely
undermined. We are now vigorously pursuing the recruitment of a substantial
number of the very best professional staff.
The model of the business reflects a commitment to the use of permanent staff
to produce the very best outcomes for our clients. Steps were taken during the
period to improve and increase our work-winning rate to sustain higher
headcount levels and the associated risk of bench costs arising from the
model.
Our strategy concentrates on providing outstanding digital consultancy
services to Central Government clients and their agencies. In addition, we are
continuing to develop our footprint in the UK's law enforcement arena
including both national bodies and local forces. Whilst we have other clients
within the portfolio, our work-winning efforts have been focused on these two
important sectors where our track record and strength in depth allows us to
make a real impact on society.
I believe that we are at the beginning of a period of increasing major success
and growth. I have no doubt that other significant client wins will follow in
due course.
Outlook
I can do no better than to repeat and confirm what I said last year that "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."
Underlying this impressive level of success is the superb quality of our
people at every level.
Business highlights
The first half saw several projects concluding successfully, including two
separate engagements around the implementation of legislation within policing,
the completion of development on a major project at DfT, and the successful
handover of a discovery project to an existing team at our OPSS client.
Our consultants on the MoJ project management service continued to deliver
outcomes in areas as diverse as prisons expansion, legacy justice systems
replacements, and deployment of Wi-Fi across the probation estate.
Within law enforcement, we delivered a common user interface template for a
national policing organisation and completed the fit out of regional
operations room capabilities. We also started work to introduce a new records
management system into a pioneering police force. Our policing footprint
expanded as we took on Kent and Essex police forces, helping them to develop
their contact management strategy.
For DEZNZ, we successfully moved the digital service for the Clean Heat Market
Mechanism (CHMM) from alpha to beta, passing the GDS assessment in record
time.
The recent significant contract wins involve providing digital expertise
across domains including programme and project management, business
architecture and business analysis, and full-spectrum digital delivery
capabilities (including the implementation of AI co-pilots within corporate
functions) to support ongoing pipelines of work at our new clients.
In November, at the highly prestigious BCS UK IT Industry Awards ceremony
attended by many of the best known names in our industry, our work in two
separate projects was rewarded when we received two top prizes: for Digital
Transformation Project of the Year with MoJ, and for User Experience (UX)
Project of the Year with DfT. We were also delighted to see one of our staff
recognised as the Rising Star of the Year at the same award ceremony. No other
company at the ceremony received as many as three awards.
Dividend
The Board now have the confidence to maintain the interim dividend at the same
level as last year at 2p.
Employees
I would like to thank all our staff, both our long serving employees and first
rate recent recruitees, who have performed excellently despite some of the
most challenging external circumstances the Company has experienced in its 35
year history.
Dr John Rigg
Executive Chairman
19 December 2023
Unaudited condensed consolidated statement of comprehensive income and expense for the six months ended 30 September 2023
Group and Company Note Unaudited Unaudited Audited year ended 31 March
2023 2022 2023
£'000 £'000 £'000
Revenue 2 6,393 7,123 14,858
Cost of sales (5,442) (5,745) (11,354)
Gross profit 951 1,378 3,504
Administrative expenses (1,932) (1,783) (3,469)
(Loss)/Profit from operations (981) (405) 35
Finance income 14 2 17
Finance expense 3 (27) (10) (43)
(Loss)/Profit before tax (994) (413) 9
Tax (charge)/credit 4 (5) 2 (53)
Loss for the period and total comprehensive income attributable to equity holders of the parent (999) (411) (44)
Basic loss per share 6 (6.03p) (2.48p) (0.27p)
Diluted loss per share 6 (6.03p) (2.48p) (0.27p)
All amounts relate to continuing activities.
Unaudited condensed consolidated statement of changes in equity for the six months ended 30 September 2023
Group Share Capital Share premium account Capital redemption reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000
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 2023 166 894 104 4,030 5,194
Loss for the period and total comprehensive income - - - (999) (999)
Dividend paid - - - (664) (664)
Ordinary shares issued - 7 - - 7
Share-based payments - - - 110 110
At 30 September 2023 (unaudited) 166 901 104 2,477 3,648
At 1 April 2022 165 880 104 4,869 6,018
Loss for the year and total comprehensive income - - - (44) (44)
Dividend paid - - - (995) (995)
Ordinary shares issued 1 14 - - 15
Share-based payments - - - 200 200
At 31 March 2023 166 894 104 4,030 5,194
Unaudited condensed consolidated statement of financial position as at 30 September 2023
Note Unaudited 2023 Unaudited 2022 Audited year ended 31 March
2023
£'000 £'000 £'000
Non-current assets
Intangible assets 1 1 1
Property, plant and equipment 177 238 199
Right-of-use assets 7 481 251 572
Finance lease receivables 7 348 - 396
Deferred tax 4 103 163 108
1,110 653 1,276
Current assets
Trade and other receivables 8 2,529 2,294 2,541
Finance lease receivables 7 96 29 94
Cash and cash equivalents 2,621 4,369 4,795
5,246 6,692 7,430
Total assets 6,356 7,345 8,706
Current liabilities
Trade and other payables 9 (1,610) (1,815) (2,269)
Short term provisions - (61) -
Lease liabilities 7 (271) (168) (292)
(1,881) (2,044) (2,561)
Non-current liabilities
Long term provisions (197) (136) (197)
Lease liabilities 7 (630) (97) (754)
(827) (233) (951)
Total liabilities (2,708) (2,277) (3,512)
Net assets 3,648 5,068 5,194
Shareholders' equity
Share capital 166 166 166
Share premium account 901 886 894
Capital redemption reserve 104 104 104
Retained earnings 2,477 3,912 4,030
Total shareholders' equity 3,648 5,068 5,194
Unaudited condensed consolidated statement of cash flows for the six months ended 30 September 2023
Note Unaudited 2023 Audited year ended 31 March
£'000 Unaudited 2022 2023
£'000 £'000
Cash flows from operating activities
(Loss)/Profit for the period before taxation (994) (413) 9
Adjustments for:
Depreciation of property, plant and equipment 33 44 87
Amortisation of right of use assets 91 94 185
Amortisation/impairment of intangible assets - 1 1
Interest received (14) (2) (17)
Finance expense 27 11 43
Share-based payment expense 110 117 200
Changes in working capital
Decrease in trade and other receivables 12 391 143
(Decrease)/Increase in trade and other payables (660) (422) 32
Cash (consumed)/generated by operations (1,395) (179) 683
Foreign exchange gain - - 1
Net cash (outflow)/inflow from operating activities (1,395) (179) 684
Investing activities
Finance lease interest received 14 2 17
Finance lease payments received 45 55 102
Purchase of property, plant and equipment (8) (5) (9)
Net cash used in investing activities 51 52 110
Financing activities
Proceeds of issue of shares 6 6 15
Lease liabilities principal payments (145) (161) (300)
Lease liabilities interest payments (27) (11) (44)
Dividends paid 5 (664) (663) (995)
Net cash outflow from financing activities (830) (829) (1,324)
Net decrease in cash and cash equivalents (2,174) (956) (530)
Cash and cash equivalents at beginning of the period 4,795 5,325 5,325
Cash and cash equivalents at end of the period 2,621 4,369 4,795
Notes to the financial statements for the six months ended 30 September 2023
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 Financial Reporting Standards (IFRSs) and the provisions of the
Companies Act 2006.
The comparative financial information for the year ended 31 March 2023
included within this report does not constitute the full statutory accounts
for that period. The statutory Annual Report and Financial Statements for 2023
have been filed with the Registrar of Companies. The Independent Auditor's
Report on the Annual Report and Financial Statements for 2023 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 2023 and 30
September 2022 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 2023, the Group has not utilised
any external debt or lending facilities (2022: nil) with no exposure to bad
debts in the period. Cash balances have reduced to £2.6m at the balance sheet
date (2022: £4.4m), which reflects a total dividend paid in the 6 months
period of £0.7m (2022 £0.7m). The future cash position remains robust.
The going concern assessment made at the year ended 31 March 2023 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 2023.
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 2022 31 March
2023 2023
£'000 £'000 £'000
Time and materials 6,161 7,043 14,386
Fixed price 234 62 442
Licencing (2) - 12
Permanent recruitment fees - 18 18
6,393 7,123 14,858
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 2022 31 March
2023 2023
£'000 £'000 £'000
Public sector 4,994 5,594 11,597
Private sector 1,399 1,529 3,261
6,393 7,123 14,858
3. Finance expense
Unaudited six months ended Unaudited six months ended 30 September Audited year ended
30 September 2022 31 March
2023 2023
£'000 £'000 £'000
Interest expense on lease liability 27 10 44
Net foreign exchange gain - - (1)
Total finance expense 27 10 43
4. Tax charge/(credit)
Unaudited six months ended 30 September 2023 Unaudited six months ended 30 September Audited year ended
2022 31 March
2023
£'000 £'000 £'000
Current tax
Current tax on profits for the period - - -
Deferred tax
Decrease/(increase) in recognised deferred tax asset 5 (2) 40
Change in tax rate - - 13
Total tax charge/(credit) for the period 5 (2) 53
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 2023 Unaudited six months ended 30 September 2022 Audited year ended
31 March
2023
£'000 £'000 £'000
(Loss)/Profit before tax (994) (413) 9
(Loss)/Profit before tax multiplied by standard rate of corporation tax in the (249) (103) 2
UK of 25% (2022:19%)
Expenses not deductible for tax purposes 6 44 4
Allowances recognised (3) (7) (13)
Derecognition of deferred tax on losses 251 66 58
Change in tax rate - (3) 13
Prior year adjustments - 1 (11)
Tax charge/(credit) for the period 5 (2) 53
Unaudited six months ended 30 September 2023 Unaudited six months ended 30 September 2022 Audited year ended
31 March
2023
£'000 £'000 £'000
Deferred tax asset
The movement in deferred tax is as follows:
At beginning of the period 108 161 161
Reversal of previously recognised deferred tax on losses (5) (1) (40)
Increase in relation to timing differences - 3 -
Tax rate changes - - (13)
At end of the period 103 163 108
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 £689,022 (2022: £530,000) has not been
recognised in respect of trading losses of £2,756,089 (2022: £2,125,000),
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 units
of £114k (2022: £107k) and general provisions of £27k (2022: £24k) 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.
5. Dividends
The Directors propose an interim dividend for the period to 30 September 2023
of 2p per share (2022 interim dividend: 2p per share).
The Company will pay the dividend on 31 January 2024 to all shareholders on
the register of members of the Company at the close of business on 5 January
2024. The ex-dividend date will be on 4 January 2024.
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 2023 Unaudited 30 September 2022 Audited 31 March
2023
Loss for the period (£999,000) (£411,000) (£44,000)
Average number of shares in issue 16,571,366 16,554,727 16,565,870
Effect of dilutive options - - -
Average number of shares in issue plus dilutive options 16,571,366 16,554,727 16,565,870
Basic loss per share (6.03p) (2.48p) (0.27p)
Diluted loss per share (6.03p) (2.48p) (0.27p)
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 2022
Opening position 345 345
Amortisation (94) (94)
At 30 September 2022 251 251
At 31 March 2023
Opening position 572 572
Amortisation (91) (91)
At 30 September 2023 481 481
As of 6th October 2022, the lease break option on one lease was not enacted,
and the lease continues until 27th March 2028. As of this date, the total
asset value was 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 2022
Opening position 426 426
Interest expense 11 11
Lease payments (172) (172)
At 30 September 2022 265 265
At 31 March 2023
Opening position 1,046 1,046
Interest expense 27 27
Lease payments (172) (172)
At 30 September 2023 901 901
As of 6th October 2022, the lease break option on one premises was not
enacted, and the lease continues until 27th March 2028. As of this date, the
total lease liability was increased by £920,000.
At the balance sheet date, the Group had outstanding commitments for future
lease payments as follows:
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
At 30 September 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 74 197 184 446
Undiscounted lease liabilities 86 231 215 484
Finance lease receivables
The carrying amounts of the lease receivable asset are as follows:
Land and buildings Total
£'000 £'000
At 31 March 2022
Opening position 84 84
Interest received 2 2
Payments received (57) (57)
At 30 September 2022 29 29
At 31 March 2023
Opening position 490 490
Interest received 13 13
Payments received (59) (59)
At 30 September 2023 444 444
As of 2nd October 2022, the lease break option on one premises was not enacted
by the tenant, and the lease continues until 23rd March 2028. As of this date,
the total finance lease receivable was increased by £508,000.
At the balance sheet date, the Group had future lease receivables as follows:
At 30 September 2022 Up to 3 months
£'000
Discounted lease receivables 29
Undiscounted lease receivables 30
At 30 September 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 24 72 101 247
Undiscounted lease receivables 30 89 119 267
8. Trade and other receivables
Unaudited six months ended 30 September 2023 Unaudited six months ended 30 September 2022 Audited year ended
31 March
2023
£'000 £'000 £'000
Trade receivables 1,643 1,241 2,006
Less: provision for expected credit losses (5) (14) (5)
Trade receivables-net 1,638 1,227 2,001
Contract assets 603 548 225
Unbilled income 1 141 150
Other debtors 5 160 -
Trade and other receivables 2,247 2,076 2,376
Prepayments 282 218 165
2,529 2,294 2,541
Analysed as:
Current asset 2,529 2,294 2,541
Total 2,529 2,294 2,541
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 2023 Unaudited six months ended 30 September 2022 Audited year ended
31 March
2023
£'000 £'000 £'000
At beginning of the period 5 14 14
Credited to income statement - - (9)
At end of the period (credit loss allowance) 5 14 5
The carrying amount of the Group's trade and other receivables are denominated
in the following currencies:
Unaudited six months ended 30 September 2023 Unaudited six months ended 30 September 2022 Audited year ended
31 March
2023
£'000 £'000 £'000
Sterling 2,222 2,076 2,376
Euros 25 - -
2,247 2,076 2,376
9. Trade and other payables
Unaudited six months ended 30 September 2023 Unaudited six months ended 30 September 2022 Audited year ended
31 March
2023
£'000 £'000 £'000
Trade payables 606 524 666
Accruals 165 301 335
771 825 1,001
Contract liabilities 33 81 37
Other taxation and social security 806 909 1,231
1,610 1,815 2,269
Analysed as:
Current liability 1,610 1,815 2,269
Total 1,610 1,815 2,269
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 2023 Unaudited six months ended 30 September 2022 Audited year ended
31 March
2023
£'000 £'000 £'000
Sterling 641 825 1,001
Euros 130 - -
771 825 1,001
10. 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. 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 (2022: £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 2023 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
19 December 2023
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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