Triad Regulatory News (TRD)

15 Jun 2007 07:00

Triad Group Plc15 June 2007 Triad Group Plc Preliminary announcement of audited results for year ended 31 March 2007 Chairman's statement Business Review Financial Highlights • Revenue for the year ended 31 March 2007: £36.1m (2006: £42.7m)• Operating loss after exceptional items: £0.87m (2006: £0.64m loss)• Loss before tax: £0.99m (2006: £0.79m loss)• Operating profit before exceptional items: £0.03m (2006: £0.25m loss)• Gross profit as a percentage of revenue 17.4% (2006: 15.7%)• Year end cash reserves £1.02m (2006: £1.77m) Financial Review This year has produced a very creditable performance with the Company reportinga small operating profit before exceptional items of £32,000 (2006: loss of£249,000). Operating loss after exceptional items of £873,000 (2006: £640,000loss) and a loss before tax of £995,000 (2006: £791,000 loss) are both statedafter deducting exceptional administrative expenses of £905,000 (2006:£391,000). In the 6 months to 30 September 2006 the Company reported an operating loss of£303,000 before exceptional items (6 months to 30 September 2005: loss of£101,000). For the second 6 months of the year the Company is reporting anoperating profit of £335,000 before exceptional items (6 months to 31 March 2006: loss of £148,000). Revenue has decreased to £36.1m (2006: £42.7m) largely as a result of areduction in the volume of low margin resourcing business. However, gross profitas a percentage of revenue has increased to 17.4%. This is the fourth successivepercentage rise in as many years, reflecting the continuing move away from lowermargin activity, as I explain below. Pre-exceptional administrative expenses have decreased by 10% to £6.26m (2006:£6.97m) primarily as a result of a decrease in staff costs. As previously reported, on 4 November 2006, a full and final settlement wasreached of the claim brought against the Company by its former Chief Executive,Mira Makar. Costs relating to the claim totalling £1,223,000 are included withinexceptional items in the operating loss for the year (see note 3). Also included in exceptional administrative expenses for the year is a credit of£318,000 (2006: £nil) resulting from a change in the discount rate used in thecalculation of the provision relating to vacant property (see note 3). Cash reserves at the year end were £1.02m. While a significant amount of legalcosts was still outstanding for payment at the year end, as at the date of thisstatement all outstanding bills in relation to the settlement referred to abovehave been paid, and the cash situation remains healthy. Cash control continuesto be a priority. There have been no material bad debts in the year and debtor days at the yearend were 54 days (2006: 48 days). Business Performance The dependence of the resourcing business on low margin activities is nowlargely behind us. The originally identified niche markets such as retail system rollouts, retailsystem support, GIS, storage and billing systems now form the key basis of ourtechnology specific coverage of niche sectors. The success of this approach hasled to our development into over 20 separate specialist niche sectors, whichhave been identified for their potential for considerable growth over the comingdecade. Growth in these sectors is a key business objective, followed closely byidentification and penetration of new niche markets. Charge rates and average margins have increased, and show the potential toimprove still further as we develop our business as a supplier in our chosenniche markets. As anticipated we have seen growth in the demand for strategic IT consultancy,particularly around service-oriented architecture and security. Our developmentand integration projects continue to focus on the delivery of business criticalsystems involving web portals, business process management, databases andelectronic forms processing. We continue to provide high-quality services within the public sector and havebeen awarded new consultancy and systems development contracts. Our presence inother sectors has increased with new engagements in both financial services andtelecommunications markets. Utilisation in the IT systems and consultancy business remains high and we havecontinued to recruit high-quality permanent staff including project managers,architects, analysts and developers. Achievable rates have remained static dueto competitive pressures in the market place. Staff morale remains high andstaff attrition very low. In recognition of our successful delivery of a number of Microsoft basedsolutions Triad has attained Microsoft Gold Partner status. This has required usto prove our capability to deliver solutions using Microsoft technologiesthrough references from satisfied clients and demonstrating our staffs'technical expertise through the achievement of Microsoft professionalcertifications. Employees On behalf of the Board I would like to thank staff for their efforts during thepast year. John Rigg,Chairman14 June 2007 Consolidated income statementfor the year ended 31 March 2007 Note 2007 2006 £'000 £'000 Revenue 36,081 42,725 Cost of sales (29,791) (36,007) -------------- -------------- Gross profit 6,290 6,718 Administrative expenses 3 (7,163) (7,358) -------------- -------------- Operating profit/(loss) pre exceptionalexpense/(credit) 32 (249)Exceptional administrative expense: legal andprofessional fees (1,223) (391)Exceptional administrative credit: change insurplus property provision 318 - -------------- -------------- Operating loss (873) (640) Operating loss (873) (640) Finance income 18 43 Finance expense (32) ( 49) Other finance losses (108) ( 145) -------------- -------------- Loss before tax (995) (791) Tax expense 6 (206) (16) -------------- --------------Loss for the year (1,201) (807) -------------- -------------- Basic earnings per share 4 (7.93)p (5.33)p --------- --------- Diluted earnings per share 4 (7.93)p (5.33)p --------- --------- There is no recognised income or expense except for the loss for the periodsstated above therefore no separate statement of recognised income and expensehas been prepared. Consolidated balance sheetas at 31 March 2007 2007 2006 £'000 £'000Non-current assets Intangible assets 53 65Property, plant and equipment 684 778Deferred tax - 206 ---------- ---------- 737 1,049 ---------- ----------Current assets Trade and other receivables 8,314 8,336Cash and cash equivalents 1,019 1,767 ---------- ---------- 9,333 10,103 ---------- ----------Total assets 10,070 11,152 ---------- ----------Current liabilitiesTrade and other payables (6,191) (5,631)Financial liabilities (21) (18)Short term provisions (205) (229) ----------- ---------- (6,417) (5,878) ---------- ----------Non-current liabilitiesFinancial liabilities (17) (18)Long term provisions (1,254) (1,701) ----------- ---------- (1,271) (1,719) ----------- ----------Total liabilities (7,688) (7,597) ----------- ----------Net assets 2,382 3,555 ----------- ---------- Shareholders' equityShare capital 151 151Share premium account 562 562Capital redemption reserve 104 104Retained earnings 1,565 2,738 ---------- ----------Total shareholders' equity 2,382 3,555 ---------- ---------- Consolidated cash flow statementfor the year ended 31 March 2007 2007 2006 £'000 £'000 Net loss (1,201) (807) Adjustments for:Tax 206 16Depreciation of property, plant and equipment 370 396Profit on disposal of property, plant and equipment (12) (20)Amortisation of intangible assets 48 50Interest income (18) (43)Interest expense 32 49Share-based payment expense 28 4 Changes in working capitalDecrease in trade and other receivables 22 3,666Increase/(decrease) in trade and other payables 560 (1,232)Decrease in provisions (471) (76) -------------- -------------- Cash (consumed by) / generated from operations (436) 2,003Interest paid (32) (49)Interest received 18 43Tax paid - (9) -------------- -------------- Net cash flows from operating activities (450) 1,988 -------------- -------------- Cash flows from investing activitiesPurchase of intangible assets (36) (27)Purchase of property, plant and equipment (348) (443)Proceeds from sale of property plant and equipment 106 169 -------------- --------------Net cash flows from investing activities (278) (301) -------------- -------------- Cash flows from financing activitiesFinance lease principal payments (20) (24) -------------- --------------Net cash flows from financing activities (20) (24) -------------- -------------- Net (decrease)/increase in cash and cashequivalents (748) 1,663 Cash and cash equivalents at beginning of the 1,767 104period -------------- --------------Cash and cash equivalents at end of the period 1,019 1,767 -------------- -------------- NOTES TO THE PRELIMINARY RESULTS 1. Basis of preparation The preliminary announcement has been prepared using accounting policiesconsistent with those set out in the financial statements for the year ended 31March 2006. These financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS and IFRIC interpretations), as adopted bythe European Union (EU), issued by the International Accounting Standards Board(IASB) with those parts of the Companies Act 1985 applicable to companiespreparing their accounts under IFRS. 2. Preliminary announcement The board approved the preliminary announcement on 14 June 2007. The financial information set out in the announcement does not constitute theGroup's statutory accounts for the years ended 31 March 2007 or 31 March 2006.Statutory accounts for 2006 have been delivered to the Registrar of Companies.The statutory accounts for 2007 will be delivered to the Registrar of Companiesfollowing the Company's annual general meeting. The auditors have reported onthe 2007 and 2006 accounts; their reports were unqualified, did not includereferences to any matters to which the auditors drew attention by way ofemphasis without qualifying their reports and did not contain a statement undersection 237(2) or (3) of the Companies Act 1985. 3. Administrative expenses Administrative expenses include a charge of £1,223,000 (2006: £391,000) forexceptional administrative expenses in respect of legal and professional feeswhich the group has been obliged to incur as a result of the situation regardingMira Makar, which has now been finalised, and a contribution to costs incurredby Ms Makar in connection with the discharge of her duties as a director andemployee of the Company. There is also an exceptional administrative credit of £318,000 (2006: nil)resulting from a change in the discount rate used in the calculation of theprovision relating to the vacant property. The Directors have exercised theirjudgement in respect of the change to the discount rate applied in thecalculation of the provision from an interest based rate of 5.75% to theCompany's weighted average cost of capital of 9.71%. 2007 2006 £'000 £'000 Administrative expenses 6,258 6,967Exceptional administrative expenses: legal and professional fees 1,223 391Exceptional administrative credit: change in surplus propertyprovision (318) - ---------- ---------Total administrative expenses 7,163 7,358 ---------- --------- 4. Earnings per ordinary share Earnings per share has been calculated on the loss for the year divided by theweighted average number of shares in issue during the period based on thefollowing: 2007 2006 Loss for the year £(1,201,000) £(807,000) -------------- -------------- 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 (7.93)p (5.33)p --------- --------- Diluted earnings per share (7.93)p (5.33)p --------- --------- * The share options have no dilutive effect in either the current or previousyears. 5. Dividends No dividends have been paid or proposed for year ended 31 March 2007 (2006:nil). 6. Tax expense 2007 2006Analysis of charge in the year £'000 £'000 Current tax:UK corporation tax on losses of the year at 30%(2006: 30%) - -Adjustments in respect of previous years - 9 -------- --------Total current tax - 9Deferred taxation 206 7 -------- --------Tax expense in income statement 206 16 --------- --------- Due to accumulated losses the directors believe that it is more likely than notthere will be insufficient profits in the short term to enable them to continueto recognise the deferred tax asset in relation to temporary differences. Theamount charged to the consolidated income statement in relation to the deferredtax asset is £206,000 (2006: £7,000). The tax expense for the year differs from the standard rate of corporation taxin the UK (30%). The differences are explained below. 2007 2006 £'000 £'000 Loss before tax (995) (791) Loss before tax multiplied by standard rate ofcorporation tax in the UK of 30% (2006: 30%) (298) (237) Effects of: Expenses not deductible for tax purposes 37 22Adjustments in respect of previous periods - 9Movement in unrecognised deferred tax asset in respectof operating losses 302 222Movement in unrecognised deferred tax asset in respectof temporary differences (41) -Unrecognised deferred tax asset in respect of temporarydifferences at the start of the year 206 - -------- --------Total tax charge for the year 206 16 --------- --------- A deferred tax asset of £2,334,000 (2006: £1,867,000) has not been recognisedbecause of the uncertainty of the timing of future profits. The unrecogniseddeferred tax asset may result in any future profits being charged to tax belowthe standard rate. This information is provided by RNS The company news service from the London Stock Exchange