Half-year Report
20/12/2019 07:00
RNS Number : 5562X Triad Group Plc 20 December 2019 Legal Entity Identifier (LEI) No. 213800MDNBFVEQEN1G84 Triad Group Plc Half year results for the six months ended 30 September 2019 Chairman's Statement Financial Highlights · Revenue for the six months ended 30 September 2019: £9.03m (2018: £11.85m) · Loss before tax: £0.30m (2018: Profit: £0.52m) · Loss after tax: £0.41m (2018: Profit £0.48m) · Gross profit as a percentage of revenue: 14.6% (2018: 18.5%) · Cash as at 30 September 2019: £2.96m (2018: £3.85m) Business Review For the period ended 30 September 2019 the Group reports revenue of £9.03m (2018: £11.85m) and a loss before tax of £0.30m (2018: profit of £0.52m). Gross profit as a percentage of revenue has decreased to 14.6% (2018: 18.5%). Cash as 30 September 2019 is £2.96m (at 31 March 2019: £4.60m). The decrease during the period is due, approximately, to the operating loss for the period of £0.3m, the dividend paid during the period of £0.3m and the impact of overdue debts of £1.0m as at the period end, all of which have now been cleared. Although our trading results have declined somewhat since the previous year, I emphasise my pride in the performance of the Group during the period. We have been obliged to deal with the damaging uncertainties and delays arising from political, financial and commercial conditions beyond our control. It is a mark of the robustness and resilience of the Group that we have succeeded in delivering the results we have, and we continue to work tirelessly to develop new opportunities that will replace concluded projects. On behalf of the Board I would like to thank staff for their continued hard work and dedication. We look forward to fundamental improvements in the conditions which we face, especially owing to recent events at a national level. The Group has been focused on building our consultancy capacity to tackle the opportunities which lie ahead. Our healthy cash position has enabled us to maintain our recruitment targets while absorbing lower consultant utilisation. We have strengthened our service proposition in some key domains, and our capabilities have been bolstered by the introduction of new consultants bringing with them expertise in some exciting areas, providing a basis for stable growth. The Group has been developing relationships with several global consultancy practices to provide them with specialist delivery mechanisms. Discussions have been positive and promising, with commercial arrangements in place with four such organisations and with assignments starting to materialise. These relationships play to our strengths as a partner for large organisations needing reliable and dynamic consultants at short notice to solve complex problems. In addition to these relationships, we will be announcing partnerships in the Robotic Process Automation arena and the Blockchain sector. Our service capabilities have been significantly enhanced with a refined offering developed around our management consultancy credentials. Early signs are encouraging, with new prospects taking advantage of our high-intensity workshop format. We have also invested significantly in developing an intelligent automation practice led by a new recruit with proven industry expertise. Our business analyst practice continues to support the work of the Crime programme at Ministry of Justice and we have a significant team of production specialists also providing support to MOJ. The Motor Fuel Greenhouse Gas Emissions Reporting system built for the Department for Transport was launched following a successful assessment against the Government Digital Service standard. Our work continued at Dalcour Maclaren, where we have deployed a bespoke work management platform that is integral to their business. Several assignments have involved work within renewable energy, including for a global oil company and for one of the country's leading windfarm installation businesses. The Group was awarded supplier status on the g-cloud 11 framework and in September was awarded a place on the Digital Outcomes and Specialists framework. In September we were accredited as a Google Cloud partner alongside our multiple gold Microsoft competencies. Our Microsoft specialists presented at the World Power Platform tour, an event which generated a number of exciting prospects. Board During the period Steven Sanderson (Non-Executive Director), who retired by rotation, decided not to apply for re-election. Nick Burrows (Finance Director and Company Secretary) tendered his resignation. The process of replacing them is well underway with announcements expected in due course. Outlook A number of exciting projects are due to start in the new calendar year including the Group's first Intelligent Automation engagement, the first stage of a potential multi-year engagement with a global sustainability organisation, and the delayed start to a significant programme for a top technology distribution company. The Group is well prepared for the introduction of the off-payroll working in the Private sector legislation in April 2020. We are advising clients as to their readiness for the new legislation and ensuring that transition to the new rules is as seamless as possible in respect of contractors supplied to clients and those used on client projects. Dividend The Board has declared an interim dividend of 1p (2018: 1p). See note 4. John Rigg Chairman 19 December 2019 Unaudited condensed consolidated statement of comprehensive income and expense
| Note | Unaudited Six months ended 30 September 2019 £'000 | Unaudited Six months ended 30 September 2018 £'000 | Audited Year ended 31 March 2019 £'000 | |
| Revenue | 9,027 | 11,849 | 22,713 | |
| Cost of sales | (7,709) | (9,655) | (18,337) | |
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| Gross profit | 1,318 | 2,194 | 4,376 | |
| Administrative expenses | (1,592) | (1,678) | (3,357) | |
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| (Loss)/profit from operations | (274) | 516 | 1,019 | |
| Finance expense | 5 | (31) | (1) | (2) |
| Finance income | 3 | - | - | |
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| (Loss)/profit before tax | (302) | 515 | 1,017 | |
| Tax (charge)/credit | 6 | (106) | (36) | (132) |
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| (Loss)/profit for the period and total comprehensive income attributable to equity holders of the parent | (408) | 479 | 885 | |
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| Basic (loss)/earnings per share | 7 | (2.55p) | 3.05p | 5.60p |
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| Diluted (loss)/earnings per share | 7 | (2.49p) | 2.92p | 5.44p |
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| Share Capital | Share premium account | Capital redemption reserve | Retained earnings | Total | |||
| £'000 | £'000 | £'000 | £'000 | £'000 | |||
| 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 2019 | 160 | 659 | 104 | 4,843 | 5,766 | ||
| Loss for the period and total comprehensive income | - | - | - | (408) | (408) | ||
| Dividend paid | - | - | - | (319) | (319) | ||
| Issue of shares | - | - | - | - | - | ||
| Share-based payments | - | - | - | 13 | 13 | ||
| -------- | -------- | -------- | -------- | -------- | |||
| At 30 September 2019 | 160 | 659 | 104 | 4,129 | 5,052 | ||
| --------- | --------- | --------- | --------- | --------- | |||
| At 1 April 2018 | 156 | 619 | 104 | 4,246 | 5,125 | ||
| Profit for the year and total comprehensive income | - | - | - | 885 | 885 | ||
| Dividend paid | - | - | - | (316) | (316) | ||
| Issue of shares | 4 | 40 | - | - | 44 | ||
| Share-based payments | - | - | - | 28 | 28 | ||
| -------- | -------- | -------- | -------- | -------- | |||
| At 31 March 2019 | 160 | 659 | 104 | 4,843 | 5,766 | ||
| --------- | --------- | --------- | --------- | --------- | |||
| Note | Unaudited 30 September 2019 £'000 | Unaudited 30 September 2018 £'000 | Audited 31 March 2019 £'000 | |
| Non-current assets | ||||
| Intangible assets | 12 | 19 | 15 | |
| Property, plant and equipment Right of use assets | 198 1,244 | 123 - | 205 - | |
| Deferred tax | 85 | 287 | 191 | |
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| 1,539 | 429 | 411 | ||
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| Current assets | ||||
| Trade and other receivables | 3,811 | 3,336 | 3,333 | |
| Cash and cash equivalents | 2,955 | 3,848 | 4,604 | |
| -------------- | -------------- | -------------- | ||
| 6,766 | 7,184 | 7,937 | ||
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| Total assets | 8,305 | 7,613 | 8,348 | |
| Current liabilities | ||||
| Trade and other payables | (1,944) | (2,035) | (2,480) | |
| Financial liabilities | (4) | (3) | (3) | |
| Short term provisions Short term lease liabilities | - (312) | - - | - - | |
| -------------- | -------------- | -------------- | ||
| (2,260) | (2,038) | (2,483) | ||
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| Non-current liabilities | ||||
| Financial liabilities | (15) | (18) | (17) | |
| Long term provisions Long term lease liabilities | (197) (781) | (72) - | (82) - | |
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| (993) | (90) | (99) | ||
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| Total liabilities | (3,253) | (2,128) | (2,582) | |
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| Net assets | 5,052 | 5,485 | 5,766 | |
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| Shareholders' equity | ||||
| Share capital | 160 | 158 | 160 | |
| Share premium account | 659 | 642 | 659 | |
| Capital redemption reserve | 104 | 104 | 104 | |
| Retained earnings | 4,129 | 4,581 | 4,843 | |
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| Total shareholders' equity | 5,052 | 5,485 | 5,766 | |
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| Note | Unaudited Six months ended 30 September 2019 £'000 | Unaudited Six months ended 30 September 2018 £'000 | Audited Year ended 31 March 2019 £'000 | |
| Loss for the period before taxation | (302) | 515 | 1,017 | |
| Adjustments for: | ||||
| Depreciation of property, plant and equipment Depreciation of right of use assets | 38 154 | 32 - | 65 - | |
| Amortisation of intangible assets | 3 | 3 | 6 | |
| Interest expense Unwinding of discount on provisions | (3) 31 | 1 - | 2 - | |
| Share-based payment expense | 13 | 14 | 28 | |
| Changes in working capital | ||||
| (Increase)/decrease in trade and other receivables | (558) | 649 | 652 | |
| Decrease in trade and other payables | (537) | (860) | (415) | |
| Increasein provisions | - | (84) | (74) | |
| -------------- | -------------- | -------------- | ||
| Cash (consumed)/generated by operations | (1,161) | 270 | 1,281 | |
| Interest paid Finance gain | (31) 3 | (1) - | (2) - | |
| -------------- | -------------- | -------------- | ||
| Net cash flows from operating activities | (1,189) | 269 | 1,279 | |
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| Cash flows used in investing activities | ||||
| Purchase of intangible assets | - | (18) | (17) | |
| Purchase of property, plant and equipment | (31) | (19) | (134) | |
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| Net cash used in investing activities | (31) | (37) | (151) | |
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| Cash flows from financing activities | ||||
| Finance lease principal payments | (1) | (2) | (3) | |
| Repayment of lease liabilities | (109) | - | - | |
| Proceeds of issue of shares | - | 25 | 44 | |
| Dividend paid | 4 | (319) | (158) | (316) |
| -------------- | -------------- | -------------- | ||
| Net cash flows from investing activities | (429) | (135) | (275) | |
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| Net (decrease)/increase in cash and cash equivalents | (1,649) | 97 | 853 | |
| Cash and cash equivalents at beginning of the period | 4,604 | 3,751 | 3,751 | |
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| Cash and cash equivalents at end of the period | 2,955 | 3,848 | 4,604 | |
| -------------- | -------------- | -------------- | ||
| £'000 | |
| Initial recognition of right of use assets | 1,398 |
| Initial recognition of lease liabilities | (1,202) |
| Reduction of prepayments, included in right of use assets | (81) |
| Increase in provisions, included in right of use assets | (115) |
| -------------- | |
| Impact on retained earnings | - |
| -------------- |
| £'000 | |
| Operating lease commitments at 31 March 2019 as disclosed in the Financial Statements | 1,459 |
| Operating lease payments included in prepayments as at 31 March 2019 | (81) |
| Impact of discounting on leases | (176) |
| -------------- | |
| Lease liabilities recognised at 1 April 2019 | 1,202 |
| -------------- |
| Unaudited Six months ended 30 September 2019 £'000 | Unaudited Six months ended 30 September 2018 £'000 | Audited Year ended 31 March 2019 £'000 | |
| Bank interest expense | - | 1 | - |
| Other interest expense | - | - | 1 |
| -------------- | -------------- | -------------- | |
| Total interest expense | - | 1 | 1 |
| Unwinding of discount on lease liabilities Net foreign exchange loss | 31 - | - - | - 1 |
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| Total finance expense | 31 | 1 | 2 |
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| Unaudited Six months ended 30 September 2019 £'000 | Unaudited Six months ended 30 September 2018 £'000 | Audited Year ended 31 March 2019 £'000 | |
| Current tax | |||
| Current tax on profits for the period | - | - | - |
| Deferred tax | |||
| Decrease in recognised deferred tax asset | 106 | 36 | 132 |
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| Total tax charge for the period | 106 | 36 | 132 |
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| Unaudited Six months ended 30 September 2019 £'000 | Unaudited Six months ended 30 September 2018 £'000 | Audited Year ended 31 March 2019 £'000 | |
| (Loss)/Profit before tax | (302) | 515 | 1,017 |
| Profit before tax multiplied by standard rate of corporation tax in the UK of 19% | (57) | 98 | 193 |
| Expenses not deductible for tax purposes | 8 | (20) | (44) |
| Increase in unrecognised deferred tax asset | 155 | - | - |
| Recognition of previously unrecognised deferred tax asset | - | (42) | (17) |
| -------- | -------- | -------- | |
| Tax charge for the period | 106 | 36 | 132 |
| --------- | --------- | --------- | |
| Deferred tax asset | |||
| Unaudited Six months ended 30 September 2019 £'000 | Unaudited Six months ended 30 September 2018 £'000 | Audited Year ended 31 March 2019 £'000 | |
| The movement is deferred tax is as follows: | |||
| At beginning of period | 191 | 323 | 323 |
| Utilisation against taxable profits | - | (78) | (149) |
| (Derecognition)/recognition of previously unrecognised deferred tax asset on losses | (116) | 31 | 47 |
| Increase/(decrease) in relation to timing difference | 10 | 11 | (30) |
| -------- | -------- | -------- | |
| At end of period | 85 | 287 | 191 |
| --------- | --------- | --------- | |
| Unaudited 30 September 2019 | Unaudited 30 September 2018 | Audited 31 March 2019 | |
| (Loss)/Profit for the period | (£408,000) | £479,000 | £885,000 |
| -------------- | -------------- | -------------- | |
| Average number of shares in issue | 15,968,979 | 15,729,405 | 15,798,113 |
| Effect of dilutive options | 390,278 | 655,751 | 481,416 |
| -------------- | -------------- | -------------- | |
| Average number of shares in issue plus dilutive options | 16,359,257 | 16,385,156 | 16,279,529 |
| -------------- | -------------- | -------------- | |
| Basic (loss)/earnings per share | (2.55p) | 3.05p | 5.60p |
| -------------- | -------------- | -------------- | |
| Diluted (loss)/earnings per share | (2.49p) | 2.92p | 5.44p |
| -------------- | -------------- | -------------- |
| Unaudited Six months ended 30 September 2019 £'000 | Unaudited Six months ended 30 September 2018 £'000 | Audited Year ended 31 March 2019 £'000 | |
| Current | |||
| Finance lease obligations | 4 | 3 | 3 |
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| Non-Current | |||
| Finance lease obligations | 15 | 18 | 17 |
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