Last checked at 16 Jun 2009 07:00
Triad Group Plc
Preliminary announcement of audited results for year ended
31 March 2009
Chairman's statement
Dr John Rigg, Executive Chairman
Financial Highlights
Revenue for the year ended 31 March 2009: £32.8m (2008: £33.3m)
Operating profit after exceptional items: £0.17m (2008: £0.48m loss)
Loss before tax: £0.04m (2008: £0.70m loss)
Operating profit before exceptional items: £0.24m (2008: £0.23m loss)
Gross profit as a percentage of revenue: 19.0% (2008: 18.3%)
Business Performance
Despite difficult trading conditions and markets hit by economic uncertainty, the Group has continued its encouraging first half performance and reports improved results for the year to 31 March 2009. The Group made an operating profit of £165,000 (2008: £478,000 loss) for the year. Year end net borrowings have reduced to £612,000 (2008: £1,121,000).
As reported in my interim management statement in February 2009, the Group has seen some of its operations affected by the global economic crisis. Customer decisions in these areas are taking longer to conclude, with budgets coming under much closer scrutiny. Despite this, the Group's overall trading performance has only been marginally impacted. The Group has, as part of its strategy, maintained a broad portfolio of market sectors, within which its niche capabilities and expertise are still in demand. In addition, Triad's location intelligence business, Zubed, continues to develop, with the first orders for this service now having been secured.
Financial Review
For the year ended 31 March 2009 the Group reports an operating profit before exceptional items of £235,000 (2008: £226,000 loss). The operating profit after exceptional items of £165,000 (2008: £478,000 loss) and the loss before tax of £40,000 (2008: £698,000 loss) are both stated after deducting exceptional administrative expenses of £70,000 (2008: £252,000).
In the 6 months to 30 September 2008 the Group reported an operating profit before exceptional items of £131,000 (6 months to 30 September 2007: £246,000 loss). For the second 6 months of the year the Group is reporting an operating profit before exceptional items of £104,000 (6 months to 31 March 2008: £20,000 profit).
Revenue has decreased slightly to £32.8m (2008: £33.3m). Whilst there has been a slowdown in client spending in some sectors, the Group's diverse portfolio of clients and markets has provided resilience to overall trading performance.
Gross profit as a percentage of revenue has increased to 19.0% (2008: 18.3%) due to improved utilisation in the consultancy business.
Overheads remain under tight control and savings have been made across a number of areas, resulting in pre-exceptional administrative expenses decreasing by 5.1% to £5.98m (2008: £6.30m). Included in exceptional administrative expenses for the year is a charge of £70,000 arising from an increase in its vacant property provision as a result of a decrease in the applicable discount rate.
During the year £362,000 (2008: £248,000) of expenditure has been capitalised, being the development costs of the suite of services offered by Triad's location intelligence business, Zubed. Amortisation of the Zubed development costs began on 1 April 2008. The amortisation charge for the year was £102,000.
Net borrowings at the year end fell to £0.61m (2008: £1.12m). Cost and credit control and cash management remain a priority. Debtor days at the year-end were 48 days (2008: 56 days). We continue to trade comfortably within the facilities available to us. The relationship with our bank remains a healthy one.
Employees
On behalf of the Board I would like to thank all our staff for their efforts during the past year.
John Rigg
Chairman
15 June 2009
Operating Review
Ian Haynes, Chief Executive
The Group's business operates in the fields of IT resourcing & consultancy, systems and software services and location intelligence.
Despite the global economic slowdown, the consultancy and resourcing business has held up during the year. There are, however, signs of pressure on fee rates and contract durations, and client decision making has, on occasions, been protracted. Due to the niche nature of the consulting and resourcing business the effect of this has been contained. With the uncertainty caused by the current economic climate we expect these pressures to continue, but we are working hard to develop new niches on an ongoing basis.
During the year the systems business has been focusing on enterprise architectures and their integration with web 2.0 technologies, such as Microsoft SharePoint. The result of this focus has seen a number of new contracts won across a broad range of sectors including charities, hedge funds, international banks, and legal.
Triad was named by Microsoft as one of a select group of partners able to offer SharePoint deployment planning services. Triad has also seen increased interest in business intelligence solutions using Microsoft PerformancePoint.
Triad has delivered a number of solutions, using mainly Microsoft technologies, in the following areas:
Knowledge management - work performed by Triad consultants has provided organisations with the ability to search for and access unstructured information thereby ensuring that they maximise the value in all their information assets.
Efficiency gains - Triad consultants have built system solutions to implement business process improvements, for example by utilising electronic forms and workflows.
Collaboration - working with clients Triad has developed the capability to allow client teams to work together effectively and efficiently by, for example, sharing information, collaborating and utilising web 2.0 features.
Triad has recently gained approved partner status for Microsoft Online Services enabling us to provide cloud-based Microsoft solutions.
The Group's location intelligence business, Zubed Geospatial, has successfully developed and launched a product line of integrated search and mapping tools into the Web-GIS marketplace that span most industry sectors. These include products based around complex geospatial data visualisation sitting over large databases or spreadsheets. The Zubed solutions are securely delivered via the web or the customer's intranet, in real time, to office, portable or mobile devices.
On the back of these products Zubed has successfully delivered a number of bespoke projects in the local and central government, banking, commercial and charity sectors. The Zubed sales pipeline continues to strengthen with a number of very exciting opportunities in crime and disorder mapping, local government and geographic add-ons to CRM, Talent Management and Business Intelligence Solutions.
Outlook
With the economy in recession, the new financial year remains challenging. Uncertainty in market conditions continues to impact client spending plans and, consequently, the Group's sales pipeline, resulting in lower visibility. However, the Group is well positioned in existing markets, which together with encouraging developments in the suite of Zubed services, and careful management of the Group's cost base, enables the Group to be in a good position to meet the challenges that lie ahead.
Ian Haynes
Chief Executive
15 June 2009
Consolidated income statement
for the year ended 31 March 2009
| Before exceptional items | Exceptional items | After exceptional items | Before exceptional items | Exceptional items | After exceptional items | ||
| Note | 2009 £'000 | 2009 £'000 | 2009 £'000 | 2008 £'000 | 2008 £'000 | 2008 £'000 | |
| Revenue | 32,770 | 32,770 | 33,294 | 33,294 | |||
| Cost of sales | (26,552) | (26,552) | (27,216) | (27,216) | |||
| ------------- | ------------- | ------------- | ------------- | ||||
| Gross profit | 6,218 | 6,218 | 6,078 | 6,078 | |||
| Administrative expenses | 3 | (5,983) | (70) | (6,053) | (6,304) | (252) | ( 6,556) |
| ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ||
| Operating profit/(loss) | 235 | (70) | 165 | (226) | (252) | (478) | |
| Finance income | 18 | 18 | 19 | 19 | |||
| Finance expense | (223) | (223) | ( 239) | ( 239) | |||
| ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ||
| Profit/(loss) before tax | 30 | (70) | (40) | (446) | (252) | (698) | |
| Tax expense | 6 | - | - | - | - | - | - |
| ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ||
| Profit/(loss) for the year attributable to equity holders of the parent company | 30 | (70) | (40) | (446) | (252) | (698) | |
| ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ||
| Basic earnings per share | 4 | (0.26)p | (4.61)p | ||||
| --------- | --------- | ||||||
| Diluted earnings per share | 4 | (0.26)p | (4.61)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
at 31 March 2009
| 2009 £'000 | 2008 £'000 | |
| Non-current assets | ||
| Intangible assets | 533 | 296 |
| Property, plant and equipment | 540 | 775 |
| ---------- | ---------- | |
| 1,073 | 1,071 | |
| ---------- | ---------- | |
| Current assets | ||
| Trade and other receivables | 6,537 | 7,435 |
| Cash and cash equivalents | 86 | 136 |
| ---------- | ---------- | |
| 6,623 | 7,571 | |
| ---------- | ---------- | |
| Total assets | 7,696 | 8,642 |
| ---------- | ---------- | |
| Current liabilities | ||
| Trade and other payables | (3,687) | (4,006) |
| Bank and other borrowings | (703) | (1,268) |
| Short term provisions | (266) | (238) |
| ----------- | ----------- | |
| (4,656) | (5,512) | |
| ---------- | ---------- | |
| Non-current liabilities | ||
| Bank and other borrowings | - | (5) |
| Long term provisions | (1,362) | (1,413) |
| ----------- | ----------- | |
| (1,362) | (1,418) | |
| ----------- | ----------- | |
| Total liabilities | (6,018) | (6,930) |
| ----------- | ----------- | |
| Net assets | 1,678 | 1,712 |
| ----------- | ----------- | |
| Shareholders' equity | ||
| Share capital | 151 | 151 |
| Share premium account | 562 | 562 |
| Capital redemption reserve | 104 | 104 |
| Retained earnings | 861 | 895 |
| ---------- | ---------- | |
| Total shareholders' equity | 1,678 | 1,712 |
| ---------- | ---------- |
Consolidated cash flow statement
for the year ended 31 March 2009
| Group and company | 2009 £'000 | 2008 £'000 |
| Loss for the year | (40) | (698) |
| Adjustments for: | ||
| Depreciation of property, plant and equipment | 378 | 385 |
| Loss/(profit) on disposal of property, plant and equipment | 4 | (18) |
| Amortisation of intangible assets | 131 | 36 |
| Finance income | (18) | (19) |
| Interest expense | 68 | 100 |
| Share-based payment expense | 6 | 28 |
| Changes in working capital | ||
| Decrease in trade and other receivables | 898 | 879 |
| Decrease in trade and other payables | (319) | (2,185) |
| (Decrease)/increase in provisions | (23) | 192 |
| -------------- | -------------- | |
| Cash generated/ (consumed) by operations | 1,085 | (1,300) |
| Interest paid | (68) | (100) |
| Interest received | 18 | 19 |
| Tax paid | - | - |
| -------------- | -------------- | |
| Net cash flows from operating activities | 1,035 | (1,381) |
| -------------- | -------------- | |
| Cash flows used in investing activities | ||
| Purchase of intangible assets | (368) | (279) |
| Purchase of property, plant and equipment | (316) | (590) |
| Proceeds from sale of property, plant and equipment | 169 | 132 |
| -------------- | -------------- | |
| Net cash flows used in investing activities | (515) | (737) |
| -------------- | -------------- | |
| Cash flows used in financing activities | ||
| Finance lease principal payments | (11) | (22) |
| -------------- | -------------- | |
| Net cash flows used in financing activities | (11) | (22) |
| -------------- | -------------- | |
| Net increase/(decrease) in cash and cash equivalents | 509 | (2,140) |
| Cash and cash equivalents at beginning of the period | (1,121) | 1,019 |
| -------------- | -------------- | |
| Cash and cash equivalents at end of the period | (612) | (1,121) |
| -------------- | -------------- |
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 2008.
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 15 June 2009.
The financial information set out in the announcement does not constitute the Group's statutory accounts for the years ended 31 March 2009 or 31 March 2008. Statutory accounts for 2008 have been delivered to the Registrar of Companies. The statutory accounts for 2009 will be delivered to the Registrar of Companies following the Company's annual general meeting. The auditors have reported on the 2009 and 2008 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 £70,000, 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 is based on the Group's estimated long term weighted average cost of capital, which changed from 9.71% to 8.50%.
There was an exceptional administrative charge in 2008 of £252,000 to increase the vacant property provision, resulting from the abolition of empty property business rates relief.
| 2009 | 2008 | |
| £'000 | £'000 | |
| Administrative expenses | 5,983 | 6,304 |
| Exceptional administrative charge: change in surplus property provision | 70 | 252 |
| ---------- | ---------- | |
| Total administrative expenses | 6,053 | 6,556 |
| ---------- | ---------- |
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:
| 2009 | 2008 | |
| Loss for the year | £(40,000) | £(698,000) |
| -------------- | -------------- | |
| 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 | (0.26)p | (4.61)p |
| --------- | --------- | |
| Diluted earnings per share | (0.26)p | (4.61)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 2009 (2008: nil).
6. Tax expense
| 2009 | 2008 | |
| £'000 | £'000 | |
| Tax expense in income statement | - | - |
| --------- | --------- |
The tax expense for the year differs from the standard rate of corporation tax in the UK (28%). The differences are explained below.
| 2009 | 2008 | |
| £'000 | £'000 | |
| Loss before tax | (40) | (698) |
| Loss before tax multiplied by standard rate of corporation tax in the UK of 28% (2008: 30%) | (11) | (209) |
| Effects of: | ||
| Expenses not deductible for tax purposes | 17 | 29 |
| Adjustments in respect of previous periods | 2 | (8) |
| Movement in unrecognised deferred tax asset in respect of operating losses | - | 209 |
| Movement in unrecognised deferred tax asset in respect of temporary differences | (8) | (21) |
| --------- | --------- | |
| Total tax charge for the year | - | - |
| --------- | --------- |
A deferred tax asset of £2,346,000 (2008: £2,522,000) 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.
| 2009 | 2008 | |
| £'000 | £'000 | |
| Accelerated depreciation | 123 | 138 |
| Other temporary differences | 5 | 6 |
| Losses carried forward indefinitely | - | 2,378 |
| -------- | -------- | |
| Unrecognised deferred tax asset | 2,346 | 2,522 |
| --------- | --------- |