Final Results

RNS Number : 8334W

Triad Group Plc

17 June 2008

 

Triad Group Plc 

Preliminary announcement of audited results for year ended 31 March 2008

Chairman's statement

Business Review

Financial Highlights

• Revenue for the year ended 31 March 2008: £33.3m (2007: £36.1m)

• Operating loss after exceptional items: £0.48m (2007: £0.87m loss)

• Loss before tax: £0.70m (2007: £0.99m loss)

• Operating loss before exceptional items: £0.23m (2007: £0.03m profit)

• Gross profit as a percentage of revenue: 18.3% (2007: 17.4%)

Business Performance

It was a year of consolidation for the resourcing business, with growth in niche markets continuing to offset the decline in public sector business. This strategy of developing niche markets and its associated move up the value chain will continue to be pursued.

The demand for our IT consultancy services remains strong, particularly in analysing clients' business needs for IT support and managing IT related projects.  In addition to winning new assignments in our key markets we have also been successful in other markets including utilities. 

We have successfully delivered a number of high profile systems to clients and continue to win systems development and integration projects across sectors.  A concentration on using mainly Microsoft technologies has helped to focus the efforts in this area. The relationship with Microsoft is developing well and is particularly focused on some of their newer releases of technologies such as Microsoft Office SharePoint Server 2007. 

We have been actively recruiting high-quality permanent staff across many areas, particularly business analysts and Microsoft designers/developers. Recruitment has been necessary as utilisation in the IT systems and consultancy business continues to remain high. Average fee rates have shown improvement in the second half of the year and I am confident we can continue this trend into the new financial year.

The market for IT consultancy and systems development remains very competitive.

Board Appointment

On 5 September 2007 I announced the appointment of Ian Haynes as Chief Executive Officer. Since February 2005 I had held the role of Acting Chief Executive. I am confident Ian will continue to build on his previous successes as an executive director of the Group. I continue in my role as Executive Chairman. 

  Financial Review

For the year ended 31 March 2008 the Group reports an operating loss before exceptional items of £226,000 (2007: profit of £32,000). Operating loss after exceptional items of £478,000 (2007: £873,000 loss) and a loss before tax of £698,000 (2007: £995,000 loss) are both stated after deducting exceptional administrative expenses of £252,000 (2007: £905,000).

In the 6 months to 30 September 2007 the Group reported an operating loss of before exceptional items of £246,000 (6 months to 30 September 2006: loss of £303,000). For the second 6 months of the year the Group is reporting an operating profit of before exceptional items of £20,000 (6 months to 31 March 2007: profit of £335,000).

Revenue has decreased to £33.3m (2007: £36.1m) following a reduction in resourcing activity, particularly in the government sector. Consultancy revenues have improved following increase in headcount and high utilisation levels achieved. 

Gross profit as a percentage of revenue has increased to 18.3% (2007: 17.4%). This increase is due to improved utilisation in the consultancy business and the move away from lower margin activity in the contracting business, the effect of which is now fully realised. 

Pre-exceptional administrative expenses have increased slightly by 0.7% to £6.30m (2007: £6.26m). Included in exceptional administrative expenses for the year is a charge of £252,000 arising from an increase in the vacant property provision following the abolition of empty property rates relief (see note 3). 

During the year we have capitalised £248,000 of expenditure, being the costs of developing a family of web-based sales and resource management services which will provide significant improvements in the process of sales prospecting, talent acquisition and talent management by our clients. Work on this project has incorporated semantic processing in wider areas of web search, in relation to which a number of patents have been applied for. Originally an internal project, designed to replace the Company's current internal CRM and resource management system, we are now moving to a phase of generating external income from this service which will operate on the SaaS principle (Software as a Service). We have recently started to market these services to our client base and third parties under the brand name 'Zubed', and a number of large corporates have signed up to early trials. Further details regarding these services can be found at www.zubed.com.

Cash reserves at the year end were £0.14m (2007: £1.02m). As explained in my half year statement, the deterioration in cash balances since 31 March 2007 is largely due to the payment of legal and other professional costs relating to the settlement of the claim brought against the Group by its former Chief Executive Mira Makar. Cash control remains a priority and we continue to trade comfortably within the facilities available to us. 

Debtor days at the year end were 56 days (2007: 54 days). 

Employees

On behalf of the Board I would like to thank staff for their efforts during the past year.

John Rigg

Chairman

16 June 2008

Consolidated income statement

for the year ended 31 March 2008

	Note	2008 £'000	2007 £'000
Revenue		33,294	36,081
Cost of sales		(27,216)	(29,791)
		--------------	--------------
Gross profit		6,078	6,290
Administrative expenses	3	( 6,556)	(7,163)
		--------------	--------------
Operating (loss)/profit pre exceptional (expense)/credit		(226)	32
Exceptional administrative expense: legal and professional fees		-	(1,223)
Exceptional administrative (expense)/ credit: change in surplus property provision	3	(252)	318
		--------------	--------------
Operating loss		( 478)	(873)
Operating loss		(478)	(873)
Finance income		19	18
Finance expense		( 239)	(140)
		--------------	--------------
Loss before tax		(698)	(995)
Tax expense	6	-	(206)
		--------------	--------------
Loss for the year attributable to equity holders of the parent company		(698)	(1,201)
		--------------	--------------
Basic earnings per share	4	(4.61)p	(7.93)p
		--------------	--------------
Diluted earnings per share	4	(4.61)p	(7.93)p
		--------------	--------------

There is no recognised income or expense except for the loss for the periods stated above therefore no separate statement of recognised income and expense has been prepared.

  Consolidated balance sheet

as at 31 March 2008

		2008 £'000	2007 £'000
Non-current assets
Intangible assets		296	53
Property, plant and equipment		775	684
		--------------	--------------
		1,071	737
		--------------	--------------
Current assets
Trade and other receivables		7,435	8,314
Cash and cash equivalents		136	1,019
		--------------	--------------
		7,571	9,333
		--------------	--------------
Total assets		8,642	10,070
		--------------	--------------
Current liabilities
Trade and other payables		(4,006)	(6,191)
Bank and other borrowings		(1,268)	(21)
Short term provisions		(238)	(205)
		--------------	--------------
		(5,512)	(6,417)
		--------------	--------------
Non-current liabilities
Bank and other borrowings		(5)	(17)
Long term provisions		(1,413)	(1,254)
		--------------	--------------
		(1,418)	(1,271)
		--------------	--------------
Total liabilities		(6,930)	(7,688)
		--------------	--------------
Net assets		1,712	2,382
		--------------	--------------
Shareholders' equity
Share capital		151	151
Share premium account		562	562
Capital redemption reserve		104	104
Retained earnings		895	1,565
		--------------	--------------
Total shareholders' equity		1,712	2,382
		--------------	--------------

  Consolidated cash flow statement

for the year ended 31 March 2008

		2008 £'000	2007 £'000
Loss for the year		(698)	(1,201)
Adjustments for:
Tax		-	206
Depreciation of property, plant and equipment		385	370
Profit on disposal of property, plant and equipment		(18)	(12)
Amortisation of intangible assets		36	48
Finance income		(19)	(18)
Interest expense		100	32
Share-based payment expense		28	28
Changes in working capital
Decrease in trade and other receivables		879	22
(Decrease)/increase in trade and other payables		(2,185)	560
Increase/(decrease)  in provisions		192	(471)
		--------------	--------------
Cash consumed by operations		(1,300)	(436)
Interest expense		(100)	(32)
Finance income		19	18
Tax paid		-	-
		--------------	--------------
Net cash flows from operating activities		(1,381)	(450)
		--------------	--------------
Cash flows from investing activities
Purchase of intangible assets		(279)	(36)
Purchase of property, plant and equipment		(590)	(348)
Proceeds from sale of property, plant and equipment		132	106
		--------------	--------------
Net cash flows from investing activities		(737)	(278)
		--------------	--------------
Cash flows from financing activities
Finance lease principal payments		(22)	(20)
		--------------	--------------
Net cash flows from financing activities		(22)	(20)
		--------------	--------------
Net decrease in cash and cash equivalents		(2,140)	(748)
Cash and cash equivalents at beginning of the period		1,019	1,767
		--------------	--------------
Cash and cash equivalents at end of the period		(1,121)	1,019
		--------------	--------------

NOTES TO THE PRELIMINARY RESULTS

1. Basis of preparation

The preliminary announcement has been prepared using accounting policies consistent with those set out in the financial statements for the year ended 31 March 2007.

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS and IFRIC interpretations), as adopted by the European Union (EU), issued by the International Accounting Standards Board (IASB) with those parts of the Companies Act 1985 applicable to companies preparing their accounts under IFRS.

These financial statements have been prepared on an historic cost basis.

2. Preliminary announcement

The board approved the preliminary announcement on 16 June 2008. 

The financial information set out in the announcement does not constitute the Group's statutory accounts for the years ended 31 March 2008 or 31 March 2007. Statutory accounts for 2007 have been delivered to the Registrar of Companies. The statutory accounts for 2008 will be delivered to the Registrar of Companies following the Company’s annual general meeting. The auditors have reported on the 2008 and 2007 accounts; their reports were 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 a statement under section 237(2) or (3) of the Companies Act 1985.

3. Administrative expenses

There is an exceptional administrative charge of £252,000 to increase the vacant property provision, resulting from the abolition of empty property business rates relief. 

There was an exceptional administrative credit in 2007 of £318,000 resulting from a change in the discount rate used in the calculation of the provision relating to the vacant property. The discount rate applied in the calculation of the provision was changed from an interest based rate of 5.75% to the Company's weighted average cost of capital of 9.71%.

There was an exceptional administrative charge in 2007 of £1,223,000, being legal and professional fees relating to the situation regarding Mira Makar.

		2008	2007
		£'000	£'000
Administrative expenses		6,304	6,258
Exceptional administrative charge/(credit): change in surplus property provision		252	(318)
Exceptional administrative expenses: legal and professional fees		-	1,223
		--------------	--------------
Total administrative expenses		6,556	7,163
		--------------	--------------

4. Earnings per ordinary share

Earnings per share has been calculated on the loss for the year divided by the weighted average number of shares in issue during the period based on the following:

	2008	2007
Loss for the year	£(698,000)	£(1,201,000)
	--------------	--------------
Average number of shares in issue	15,149,579	15,149,579
Effect of dilutive options *	-	-
	--------------	--------------
Average number of shares in issue plus dilutive options	15,149,579	15,149,579
	--------------	--------------
Basic earnings per share	(4.61)p	(7.93)p
	--------------	--------------
Diluted earnings per share	(4.61)p	(7.93)p
	--------------	--------------

* The share options have no dilutive effect in either the current or previous years.

5. Dividends

No dividends have been paid or proposed for year ended 31 March 2008 (2007: nil).

6. Tax expense

	2008	2007
Analysis of charge in the year	£'000	£'000
Current tax:
UK corporation tax on losses of the year at 30% (2007: 30%)	-	-
Adjustments in respect of previous years	-	-
	--------------	--------------
Total current tax	-	-
Deferred taxation	-	206
	--------------	--------------
Tax expense in income statement	-	206
	--------------	--------------

The tax expense for the year differs from the standard rate of corporation tax in the UK (30%). The differences are explained below.

	2008	2007
	£'000	£'000
Loss before tax	(698)	(995)
Loss before tax multiplied by standard rate of corporation tax in the UK of 30% (2007: 30%)	(209)	(298)
Effects of:
Expenses not deductible for tax purposes	29	37
Adjustments in respect of previous periods	(8)	-
Movement in unrecognised deferred tax asset in respect of operating losses	209	302
Movement in unrecognised deferred tax asset in respect of temporary differences	(21)	(41)
Unrecognised deferred tax asset in respect of temporary differences at the start of the year	-	206
	--------------	--------------
Total tax charge for the year	-	206
	--------------	--------------

A deferred tax asset of £2,522,000 (2007: £2,334,000) has not been recognised because of the uncertainty of the timing of future profits. The unrecognised deferred tax asset may result in any future profits being charged to tax below the standard rate. 

 

END

 

 

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