REG - Triad Group Plc - Half-year Report

TriadAnnouncement

27/11/2018 07:05

RNS Number : 5335I
Triad Group Plc
27 November 2018
 


Legal Entity Identifier (LEI) No. 213800MDNBFVEQEN1G84
 
 
Triad Group Plc
Half year results for the six months ended 30 September 2018
 
Chairman's Statement
Financial Highlights
·    Revenue for the six months ended 30 September 2018: £11.85m (2017: £14.24m)
·    Profit after tax: £0.48m (2017: £0.76m)
·    Profit from operations: £0.52m (2017: £0.74m)
·    Earnings before interest, tax, amortisation and depreciation: £0.55m (2017: £0.77m)
·    Gross profit as a percentage of revenue: 18.5% (2017: 16.8%) 
·    Cash as at 30 September 2018: £3.85m (2017: £2.00m)              
Business Review
Challenging market conditions have seen revenue for the first six months of the financial year decrease to £11.85m (2017: £14.24m). Despite this the Group continues to make steady progress strengthening the underlying performance of the business.
 
Encouragingly, gross margin as a percentage of revenue has increased to 18.5% (2017: 16.8%) as a result of improved utilisation of our permanent consultants and the continued reduction in a low margin, high revenue, staffing contract with a retail bank that has been converting its contractor staff to permanent staff to pre-empt the forthcoming off-payroll reforms in the private sector.
 
Revenue has also decreased across several public sector accounts as a result of re-procurements. Additionally, revenue has been impacted by the decision of one of our largest clients to reduce their requirements for GIS technical services during the period due to reduced demand from their end client.
 
The Group's cash position remains extremely healthy. As at 30 September 2018 cash has increased to £3.85m (2017: £2.00m).
 
Triad teams have continued to be engaged in significant programmes of work at Ministry of Justice, Department for Transport, Home Office, Ofgem, Highways England and the Police. Our GIS team continues to provide expertise to a number of private sector clients.  Many of our assignments involve the translation of complex business logic into accessible digital services, and our skill in this domain is becoming widely recognised, particularly in the public sector.
 
The Group has made good progress with a number of business development activities aimed at strengthening our profile and increasing our client base across the public and private sectors. 
Significant work is underway to develop new opportunities through engagement on new public sector frameworks and targeted campaigns in the private sector.  Initiatives around the digital skills shortage, Microsoft's cloud strategy and the effect of legacy systems on digital transformation plans have resulted in very encouraging conversations with technology leaders in the private and not-for-profit sectors. During the period Triad has been successful in being awarded a place on the G-Cloud 10 and DOS 3 frameworks
 
The launch of our new website has been well received by clients and prospects, providing a platform for the dissemination of valuable content from Triad consultants and other contributors.  Our first round table event in London was launched, and received extremely positive reviews from the audience of senior technology executives involved.
 
Consultant headcount has risen steadily during the period and the Group continues to search for and recruit quality individuals. All of our newly-recruited consultants have been deployed on longer-term engagements, which should flow through into further margin improvements.
Our business development team has also been strengthened and, in conjunction with improved lead generation activities, is making improvements to the quality of the sales pipeline.
 
Outlook
The market remains intensely competitive and, against a backdrop of political and economic uncertainty, the Group remains focused on generating profit and cash.  The transition from a business heavily dependent on contractors to one which is consultant-led continues.  The plan is to recruit more permanent consultants and to maintain high levels of utilisation and to use our integrated resourcing capabilities to augment our teams with carefully selected associates and contractors.
 
Some uncertainty has been removed, to an extent, following the Government's recent budget announcement, confirming that the widely expected off-payroll reforms in the private sector would not be introduced until April 2020. 
 
 
The Company is aware of numerous unfounded comments from a major shareholder appearing on social media, relating to its officers and professional advisers. The Company is taking this matter extremely seriously and has sought appropriate legal advice.
 
Dividend
The Board has declared an interim dividend of 1p (2017: 0.5p). See note 4.
Employees
On behalf of the Board I would like to thank staff for their continued hard work and dedication.
 
John Rigg
Chairman
26 November 2018




Unaudited condensed consolidated statement of comprehensive income and expense
 
 







Note


Unaudited
Six months
ended
30 September
2018
£'000


Unaudited
Six months
ended
30 September
2017
£'000


Audited
Year
ended
31 March
 2018
£'000


























Revenue






11,849


14,237


27,819


























Cost of sales






(9,655)


(11,839)


(23,095)












--------------


--------------


--------------




Gross profit






2,194


2,398


4,724


























Administrative expenses






(1,678)


(1,653)


(3,045)












--------------


--------------


--------------


























Profit from operations






516


745


1,679


























Finance expense


5


(1)


(9)


(17)


























Finance income






-


1


-


































--------------


--------------


--------------




Profit before tax






515


737


1,662


























Tax (charge)/credit


6


(36)


18


(38)


































--------------


--------------


--------------




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






 
 
479


 
 
755


 
 
1,624












--------------


--------------


--------------
















































Basic earnings per share


7


3.05p


4.87p


10.45p












--------------


--------------


--------------




 
 




















Diluted earnings per share


7


2.92p


4.67p


10.02p












--------------


--------------


--------------

























 
 
All amounts relate to continuing activities.




Unaudited condensed consolidated statement of changes in equity
 
 

























Share
Capital


Share premium account


Capital redemption reserve


Retained earnings


Total








£'000


£'000


£'000


£'000


£'000






























At 1 April 2017


155


605


104


2,775


3,639






























Profit for the period and total comprehensive income


 
-


 
-


 
-


 
755


 
755




 
Dividend paid
 


 
-


 
-


 
-


 
(77)


 
(77)




Issue of shares


-


6


-


-


6






























Share-based payments


-


-


-


2


2








--------


--------


--------


--------


--------




At 30 September 2017


155


611


104


3,455


4,325








---------


---------


---------


---------


---------
























































At 1 April 2018


156


619


104


4,246


5,125






























Profit for the period and total comprehensive income


 
-


 
-


 
-


 
479


 
479






























Dividend paid


-


-


-


(158)


(158)






























Issue of shares


2


23


-


-


25






























Share-based payments


-


-


-


14


14








--------


--------


--------


--------


--------




At 30 September 2018


158


642


104


4,581


5,485








---------


---------


---------


---------


---------
























































At 1 April 2017


155


605


104


2,775


3,639






























Profit for the year and total comprehensive income


 
-


 
-


 
-


 
1,624


 
1,624




 
Dividend paid
 


 
-


 
-


 
-


 
(155)


 
(155)




Issue of shares


1


14


-


-


15






























Share-based payments


-


-


-


2


2


































--------


--------


--------


--------


--------




At 31 March 2018


156


619


104


4,246


5,125








---------


---------


---------


---------


---------











































Unaudited condensed consolidated statement of financial position
 
 







Note


Unaudited
30 September
 2018
£'000


Unaudited
30 September
 2017
£'000


Audited
31 March
 2018
£'000


























Non-current assets










































Intangible assets






19


6


4




Property, plant and equipment






123


105


136




Deferred tax






287


379


323












--------------


--------------


--------------












429


490


463












--------------


--------------


--------------


























Current assets










































Trade and other receivables






3,336


5,164


3,985




Cash and cash equivalents






3,848


2,001


3,751












--------------


--------------


--------------












7,184


7,165


7,736












--------------


--------------


--------------


























Total assets






7,613


7,655


8,199


























Current liabilities










































Trade and other payables






(2,035)


(2,994)


(2,895)




Financial liabilities






(3)


-


(3)




Short term provisions






-


(285)


(99)












--------------


--------------


--------------












(2,038)


(3,279)


(2,997)












--------------


--------------


--------------


























Non-current liabilities










































Financial liabilities






(18)


-


(20)




Long term provisions






(72)


(51)


(57)












--------------


--------------


--------------












(90)


(51)


(77)












--------------


--------------


--------------


























Total liabilities






(2,128)


(3,330)


(3,074)


































--------------


--------------


--------------




Net assets






5,485


4,325


5,125












--------------


--------------


--------------


























Shareholders' equity










































Share capital






158


155


156




Share premium account






642


611


619




Capital redemption reserve






104


104


104




Retained earnings






4,581


3,455


4,246












--------------


--------------


--------------




Total shareholders' equity






5,485


4,325


5,125












--------------


--------------


--------------



 




Unaudited condensed consolidated statement of cash flows
 
 



Note


Unaudited
Six months
ended
30 September
 2018
£'000


Unaudited
Six months
ended
30 September
 2017
£'000


Audited
Year
ended
31 March
 2018
£'000


























Profit for the period before taxation






515


737


1,662


























Adjustments for:




















Depreciation of property, plant and equipment






32


31


62




Amortisation of intangible assets






3


2


4




Interest expense
Unwinding of discount on provisions
Profit on disposal of tangible assets






1
-
-


2
-
-


4
13
(11)




Share-based payment expense






14


2


2


























Changes in working capital










































Decrease/(Increase) in trade and other receivables






649


(113)


1,066




Decrease in trade and other payables






(860)


(708)


(807)




Decrease in provisions






(84)


(114)


(294)












--------------


--------------


--------------




Cash generated/(consumed) by operations






270


(161)


1,701


























Interest paid






(1)


(2)


(17)




Tax received






-


-


-












--------------


--------------


--------------




Net cash flows from operating activities






269


(163)


1,684












--------------


--------------


--------------


























Cash flows used in investing activities










































Purchase of intangible assets
Proceeds from sale of property, plant and equipment






(18)
-


-
-


-
11




Purchase of property, plant and equipment






(19)


(2)


(29)












--------------


--------------


--------------




Net cash used in investing activities






(37)


(2)


(18)












--------------


--------------


--------------




Cash flows from financing activities










































Finance lease principal payments






(2)


(11)


(23)




Proceeds of issue of shares






25


6


15




Dividend paid


4


(158)


(77)


(155)












--------------


--------------


--------------




Net cash flows from investing activities






(135)


(82)


(163)












--------------


--------------


--------------


























Net increase/(decrease) in cash and cash equivalents






 
97


 
(247)


 
1,503


























Cash and cash equivalents at beginning of the period






 
3,751


 
2,248


 
2,248












--------------


--------------


--------------




Cash and cash equivalents at end of the period






 
3,848


 
2,001


 
3,751












--------------


--------------


--------------







Notes to the interim report
 
 
1. General information
 
The interim financial information set out above and overleaf does not constitute statutory accounts and has neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board. It has been approved by the Board of Directors on 26 November 2018.
 
 
2. Basis of preparation
 
The comparative figures for the year ended 31 March 2018 are not the Group's statutory accounts for the financial year. Those accounts have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.
 
These financial statements have been prepared using accounting policies the Group expects to be applicable at 31 March 2019, in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with the Disclosure and Transparency Rules of the Financial Services Authority, and in accordance with the requirements of IAS 34, Interim Financial Reporting, and with the accounting policies set out in the statutory accounts of Triad Group Plc for the year ended 31 March 2018. These financial statements reflect the new accounting standard IFRS 15 (Revenue from Contracts with Customers) and Amendments to IFRS 9 Financial Instruments) which became effective from 1 April 2018, and have been applied retrospectively.
 
The estimates and assumptions applied in the interim financial information were the same as those applied in the last Group statutory accounts for the year ended 31 March 2018.
 
 
3. Going Concern
 
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half year results.
 
 
4. Dividend
 
The Board has declared a dividend of 1p for the period to 30 September 2018 (2017: 0.5p). 
 
The Company will pay the dividend on 11 January 2019 to all shareholders on the register of members of the Company at the close of business on 7 December 2018. The ex-dividend date will be on 6 December 2018.
 
During the period a final dividend for the year ended 31 March 2018 of £158,000 was paid.
 




5. Finance expense
 







Unaudited
Six months
ended
30 September
2018
£'000


Unaudited
Six months
ended
30 September
 2017
£'000


Audited
Year
ended
31 March
 2018
£'000




 
 
Bank interest expense


 
 
1


 
 
2


 
 
3






















Other interest expense


-


-


1








--------------


--------------


--------------






















Total interest expense


1


2


4






















Unwinding of discount on provisions


-


7


13








--------------


--------------


--------------




Total finance expense


1


9


17








--------------


--------------


--------------



 
 
 
 
 
6. Tax credit
 







Unaudited
Six months
ended
30 September
2018
£'000


Unaudited
Six months
ended
30 September
 2017
£'000


Audited
Year
ended
31 March
 2018
£'000




Current tax
















Current tax on profits for the period


-


-


-






















 
Deferred tax


































Decrease/(increase) in recognised deferred tax asset


 
36


 
(18)


 
38








--------------


--------------


--------------




Total tax charge (credit) for the period


36


(18)


38








--------------


--------------


--------------





 
 




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







Unaudited
Six months
ended
30 September
2018
£'000


Unaudited
Six months
ended
30 September
 2017
£'000


Audited
Year
ended
31 March
 2018
£'000






















Profit before tax
 


515


737


1,662






















Profit before tax multiplied by standard rate of corporation tax in the UK of 19%


 
98


 
140


 
316








































Expenses not deductible for tax purposes


(20)


3


(12)






















Recognition of previously unrecognised deferred tax asset


 
(42)


 
(161)


 
(266)








--------


--------


--------




Tax charge/(credit) for the period


36


(18)


38








---------


---------


---------






















 
Deferred tax asset
 




















Unaudited
Six months
ended
30 September
2018
£'000


Unaudited
Six months
ended
30 September
 2017
£'000


Audited
Year
ended
31 March
 2018
£'000




The movement is deferred tax is as follows:
 
















At beginning of period


323


361


361






















Utilisation against taxable profits


(78)


(143)


(304)






















Recognition of previously unrecognised deferred tax asset on losses


 
31


 
160


 
276






















Increase/(decrease) in relation to timing difference


11


1


(10)


























--------


--------


--------




At end of period


287


379


323








---------


---------


---------





















Deferred tax assets have been recognised in respect of tax losses where the Directors believe it is probable that the assets will be recovered. A deferred tax asset amounting to £458,000 (2017: £565,000) has not been recognised in respect of trading losses, which can be carried forward indefinitely.




7. Earnings per ordinary share
 
 
Earnings per share have been calculated on the profit for the period divided by the weighted average number of shares in issue during the period based on the following:
 
 
 







 
Unaudited
30 September
 2018


 
Unaudited
30 September
2017


 
Audited
31 March
2018






















 
Profit for the period


 
£479,000


 
£755,000


 
£1,624,000








--------------


--------------


--------------






















Average number of shares in issue


15,729,405


15,507,586


15,541,786






















Effect of dilutive options


655,751


656,019


669,503








--------------


--------------


--------------




Average number of shares in issue plus dilutive options


 
16,385,156


 
16,163,605


 
16,211,289




 
 


--------------


--------------


--------------






















Basic earnings per share


3.05p


4.87p


10.45p








--------------


--------------


--------------






















Diluted earnings per share


2.92p


4.67p


10.02p








--------------


--------------


--------------



 




8. Financial liabilities
 







Unaudited
Six months
ended
30 September
 2018
£'000


Unaudited
Six months
ended
30 September
 2017
£'000


Audited
Year
ended
31 March
 2018
£'000




 
Current


































Finance lease obligations


3


-


3








--------------


--------------


--------------



 



 
Non-Current


































Finance lease obligations


18


-


20








--------------


--------------


--------------



 
 
 
 
9. Related party transactions
 
The Group rents one of its offices under contracts expiring in 2028 (with a break clause in 2023). The current annual rents of £215,000 were fixed by independent valuation. 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 (2017: £nil).
 
10. 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 2018 have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU; 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
 
 
NE Burrows
Company Secretary
26 November 2018
 
Names of the current Board of Directors can be found on the company website at www.triad.co.uk.
 
 




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END
 
 
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