Interim Results
Triad Group Plc
23 November 2007
Triad Group Plc
Half year results for the six months ended 30 September 2007
Chairman's statement
Financial Highlights
• Revenue is £17.1m for the six months ended 30 September 2007 (H1 2006/07:
£17.8m)
• Gross profit as a percentage of revenue 17.1% (H1 2006/07: 15.7%)
• Operating loss after exceptional items £0.50m (H1 2006/07: £1.68m loss)
• Loss before tax £0.6m (H1 2006/07: £1.72m loss)
• Operating loss before exceptional items £0.25m (H1 2006/07: £0.30m loss)
• The pre tax losses are after charging net exceptional administrative
expenses of £250,000 (H1 2006/07: £1,377,000); see note 5 to the
Consolidated Income Statement below.
Business Review
In my Interim Management Statement dated 14 August 2007, I referred to slow
decision making on the part of certain clients which is usual during the summer
months. As a result of the turmoil in financial markets which has occurred
since then, a number of financial institutions with whom we were already working
or expecting to start work in the short term have further delayed or cancelled
plans for IT development. This is likely to affect our utilisation levels in
the second half of the year although it is too early to estimate the impact. We
are of course vigorously developing work in other market sectors.
The Company continues to trade comfortably within the financial facilities
available to it, and the Board continues to be confident about the Company's
prospects.
The financial impact of the reduction in low margin resourcing business has led
to gross margin as a percentage of turnover increasing to 17.1% (H1 2006/07:
15.7%). Revenue for the period has decreased to £17.1m (H1 2006/07: £17.8m).
This is mainly due to a reduction in the level of activity in the government
sector.
Pre-exceptional administrative expenses have increased slightly in the period to
£3.2m (H1 2006/07: £3.1m). A detailed cost review exercise across all areas of
the business is currently underway.
Included in exceptional administrative expenses in the period is a charge of
£250,000 (H1 2006/07: credit of £173,000) arising from an increase in the vacant
property provision resulting from the abolition of empty property rates relief
(see note 5).
The deterioration of 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 Company by its former Chief Executive Mira Makar.
These costs had been accrued and provided for in the accounts for the year ended
31 March 2007 thus explaining the movement in the period in trade and other
payables and short term provisions.
The resourcing business continues to build on its niche expertises and is
strengthening its position within the already defined markets. New niche areas
include Radio Frequency Identification (RFID), Service Oriented Architecture
(SOA) and Data Mining.
The retail and terminal systems business continues its growth and penetration
into the UK market. Significant opportunities are now well within our scope of
capabilities.
We continue to provide IT consultancy and systems development capability in the
financial services, government, telecoms and transportation sectors. During the
period we have had new engagements across all of these sectors and have
successfully delivered systems for which we are now providing long term support.
We are currently generating areas of expertise in new Microsoft products and are
seeing promising levels of interest expressed by potential clients in these
areas.
Utilisation in the IT systems and consultancy business has been high during the
period but, as explained above, is under pressure. Market pressures in all our
service sectors are keeping fee rates static. Staff attrition remains very low
and morale high.
Recruitment of highly qualified permanent staff continues. One new area for
which we are currently recruiting specialists is that of Business Intelligence,
a market where we believe there to be considerable opportunity for growth.
Risks
The key risks and uncertainties facing the Group in the second half of the
current financial year have not changed from those outlined in the Annual Report
for the year ended 31 March 2007.
Dividends
No interim dividend has been declared or paid (2006/07 interim - 0.00p).
John Rigg
Chairman
22 November 2007
Condensed consolidated income statement
Note Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2007 2006 2007
£'000 £'000 £'000
Revenue 17,063 17,779 36,081
Cost of sales (14,153) (14,992) (29,791)
-------------- -------------- --------------
Gross profit 2,910 2,787 6,290
Administrative expenses (3,406) (4,467) (7,163)
Operating (loss)/profit pre exceptional
(expense)/credit (246) (303) 32
Exceptional administrative expense: legal
and professional fees 5 - (1,550) (1,223)
Exceptional administrative (expense)/ 5 (250) 173 318
credit: change in surplus property
provision
Operating loss 5 (496) (1,680) (873)
Finance income 2 16 18
Finance costs 6 (107) (56) (140)
-------------- -------------- --------------
Loss before tax (601) (1,720) (995)
Tax expense - (206) (206)
-------------- -------------- --------------
Loss for the period attributable to
equity shareholders of the parent (601) (1,926) (1,201)
-------------- -------------- --------------
Basic loss per share 8 (3.97)p (12.71)p (7.93)p
--------- --------- ---------
Diluted loss per share 8 (3.97)p (12.71)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.
Condensed consolidated balance sheet
Note Unaudited Unaudited Audited
30 September 2007 30 September 31 March
£'000 2006 2007
£'000 £'000
Non-current assets
Intangible assets 170 71 53
Property, plant and equipment 746 707 684
-------------- -------------- --------------
916 778 737
-------------- -------------- --------------
Current assets
Trade and other receivables 7,984 8,739 8,314
Cash and cash equivalents - 392 1,019
-------------- -------------- --------------
7,984 9,131 9,333
-------------- -------------- --------------
Total assets 8,900 9,909 10,070
Current liabilities
Trade and other payables (4,268) (5,435) (6,191)
Financial liabilities 7 (1,158) (20) (21)
Short term provisions (236) (1,322) (205)
-------------- -------------- --------------
(5,662) (6,777) (6,417)
-------------- -------------- --------------
Non-current liabilities
Financial liabilities 7 (7) (16) (17)
Long term provisions (1,436) (1,487) (1,254)
-------------- -------------- --------------
(1,443) (1,503) (1,271)
-------------- -------------- --------------
Total liabilities (7,105) (8,280) (7,688)
-------------- -------------- --------------
Net assets 1,795 1,629 2,382
-------------- -------------- --------------
Shareholders' equity
Share capital 151 151 151
Share premium account 562 562 562
Capital redemption reserve 104 104 104
Retained earnings 978 812 1,565
-------------- -------------- --------------
Total shareholders' equity 1,795 1,629 2,382
-------------- -------------- --------------
Condensed consolidated cash flow statement
Note Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2007 2006 2007
£'000 £'000 £'000
Net loss (601) (1,926) (1,201)
Adjustments for:
Tax - 206 206
Depreciation of property, plant and equipment 188 185 370
Profit on disposal of property, plant and
equipment (3) (6) (12)
Amortisation of intangible assets 20 26 48
Interest income (2) (16) (18)
Interest expense 38 2 32
Share-based payment expense 14 - 28
Changes in working capital
Decrease/(increase) in trade and other
receivables 330 (403) 22
(Decrease)/increase in trade and other
payables (1,923) (196) 560
Increase/(decrease) in provisions 213 879 (471)
-------------- -------------- --------------
Cash generated from operations (1,726) (1,249) (436)
Interest paid (38) (2) (32)
Interest received 2 16 18
-------------- -------------- --------------
Net cash flows from operating activities (1,762) (1,235) (450)
-------------- -------------- --------------
Cash flows from investing activities
Purchase of intangible assets (137) (25) (36)
Purchase of property, plant and equipment (316) (158) (348)
Proceeds from sale of property plant and
equipment
69 50 106
-------------- -------------- --------------
Net cash flows from investing activities (384) (133) (278)
-------------- -------------- --------------
Cash flows from financing activities
Finance lease principal payments (8) (7) (20)
-------------- -------------- --------------
Net cash from financing activities (8) (7) (20)
-------------- -------------- --------------
Net decrease in cash and cash equivalents (2,154) (1,375) (748)
Cash and cash equivalents at beginning of the
period 1,019 1,767 1,767
-------------- -------------- --------------
Cash and cash equivalents at end of the period (1,135) 392 1,019
-------------- -------------- --------------
Condensed consolidated statement of changes in equity
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended ended
30 September 30 September 31 March
2007 2006 2007
£'000 £'000 £'000
Opening shareholders' equity 2,382 3,555 3,555
Loss for the period (601) (1,926) (1,201)
Share-based payments 14 - 28
-------------- -------------- --------------
Closing shareholders' equity 1,795 1,629 2,382
-------------- -------------- --------------
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 22 November 2007.
2. Basis of preparation
The comparative figures for the year ended 31 March 2007 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 237 (2) or (3) of the
Companies Act 1985.
These financial statements have been prepared using accounting policies
consistent with International Financial Reporting Standards (IFRS) and in
accordance with the requirements of IAS34, Interim Financial Reporting, and with
the accounting policies set out in the statutory accounts of Triad Group Plc for
the year ended 31 March 2007.
3. Segmental reporting
Based on risks and returns the Directors consider that the primary reporting
format is by business segment. The Directors consider that there is only one
business segment being business consultancy, software and systems delivery and
only one geographical location, being the UK. Therefore the disclosures for the
primary segment have already been given in these financial statements.
IFRS8 'Operating Segments', which comes into effect not later than accounting
periods beginning on 1 January 2009, requires identification and reporting of
operating segments on the basis of internal reports that are regularly reviewed
by the Board in order to allocate resources to the segment and assess its
performance. The Company assessed the impact of IFRS8 and concluded that it will
not be material.
4. Dividend
No interim dividend has been declared or paid (2006/07: 0.00p)
5. Operating Loss
The operating loss is after charging exceptional administrative expenses of
£250,000 to increase the vacant property provision, resulting from the abolition
of empty property business rates relief; in 2006/07 there were exceptional
administrative expenses totalling £1,550,000, being legal and professional fees
relating to the situation regarding Mira Makar and an exceptional administrative
credit of £173,000 resulting from a change in the discount rate used in the
calculation of the provision relating to the vacant property.
6. Finance costs
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended ended
30 September 30 September 31 March
2007 2006 2007
£'000 £'000 £'000
Bank interest payable (37) - (29)
Finance lease interest (1) (2) (3)
Unwinding of discount on provision (69) (54) (108)
-------------- -------------- --------------
(107) (56) (140)
-------------- -------------- --------------
7. Financial liabilities
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended ended
30 September 30 September 31 March
2007 2006 2007
£'000 £'000 £'000
Present value of finance lease obligations (30) (36) (38)
Bank borrowings (1,135) - -
-------------- -------------- --------------
(1,165) (36) (38)
-------------- -------------- --------------
The maturity profile of the present value of financial liabilities is as
follows:
Current (1,158) (20) (21)
Non-current (7) (16) (17)
-------------- -------------- --------------
(1,165) (36) (38)
-------------- -------------- --------------
8. Earnings per share
Earnings per share have been calculated on the loss 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
2007 2006 2007
Loss for the period £(601,000) £(1,926,000) £(1,201,000)
-------------- -------------- --------------
Average number of shares in issue 15,149,579 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 15,149,579
-------------- -------------- --------------
Basic loss per share (3.97)p (12.71)p (7.93)p
--------- --------- ---------
Diluted loss per share (3.97)p (12.71)p (7.93)p
--------- --------- ---------
The share options have no dilutive effect in any of these periods.
9. Related party transactions
The group rents offices under contracts expiring in 2018. The current annual
rents of £395,000 were fixed, by independent valuation, for a five year period
at the last rent review in 2003. JC Rigg, a Director, has notified the Board
that he has a 50% beneficial interest in these contracts. The balance owed at
the period end was £nil (H1 2006/07: £nil).
10. Statement of the directors' responsibilities
The Board confirms to the best of their knowledge;
• that the consolidated half year financial statements for the six months to
30 September 2007 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 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.
Names of the current Board of Directors can be found on the company website at
www.triad.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 2 hours ago SSP Group
- 2 hours ago Real Estate Investors
- 2 hours ago WPP
- 2 hours ago Spectris
- 3 hours ago Clarkson