TIDMTRD
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: GBP11.85m (2017: GBP14.24m)
-- Profit after tax: GBP0.48m (2017: GBP0.76m)
-- Profit from operations: GBP0.52m (2017: GBP0.74m)
-- Earnings before interest, tax, amortisation and depreciation: GBP0.55m (2017: GBP0.77m)
-- Gross profit as a percentage of revenue: 18.5% (2017: 16.8%)
-- Cash as at 30 September 2018: GBP3.85m (2017: GBP2.00m)
Business Review
Challenging market conditions have seen revenue for the first
six months of the financial year decrease to GBP11.85m (2017:
GBP14.24m). 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 GBP3.85m (2017: GBP2.00m).
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 Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
GBP'000 GBP'000 GBP'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 Share premium Capital Retained Total
Capital account redemption earnings
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 Unaudited Audited
30 September 30 September 31 March
2018 2017 2018
GBP'000 GBP'000 GBP'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 Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
GBP'000 GBP'000 GBP'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 1 2 4
Unwinding of discount on
provisions - - 13
Profit on disposal of tangible
assets - - (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, (18) - -
plant and equipment - - 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 GBP158,000 was paid.
5. Finance expense
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
GBP'000 GBP'000 GBP'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 Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
GBP'000 GBP'000 GBP'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 Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
GBP'000 GBP'000 GBP'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 Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
GBP'000 GBP'000 GBP'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 GBP458,000
(2017: GBP565,000) 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 Unaudited Audited
30 September 30 September 31 March
2018 2017 2018
Profit for the period GBP479,000 GBP755,000 GBP1,624,000
-------------- -------------- --------------
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 Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
GBP'000 GBP'000 GBP'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
GBP215,000 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
GBPnil (2017: GBPnil).
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
IR UNANRWSAAUAA
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