Last checked at 17 Jun 2008 07:00
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.