Legal Entity Identifier (LEI) No. 213800MDNBFVEQEN1G84

Triad Group Plc

Half year results for the six months ended 30 September 2021

Financial highlights

Chairman's statement

Dr John Rigg

For the period ended 30 September 2021 the Group reports revenue of £8.58m (2020: £8.73m). The profit before tax was £0.67m (2020: £1k), gross profit has increased by 54% to £2.30m (2020: £1.49m) and gross profit as a percentage of revenue has increased to 26.8% (2020: 17.1%). 

This has been a very strong first half, building on the progress made during last year. The Group continued to recruit more permanent staff, with 34 consultants joining in the period. The increase in headcount, taking the Group total to over 100 during the period, contributed significantly to improved gross profit without diluting utilisation levels. Gross profit as a percentage of sales also increased significantly versus the same time last year, as well as improving on the second half of last year.

These results are a direct consequence of the strategy to concentrate our efforts on consulting services and reflect the reduction in emphasis on our IT contractor resourcing activities. The reduction in emphasis on contractor resourcing combined with our ability to increase fully payrolled services, also reduced significantly the Group's exposure to risk associated with IR35 legislation, with no material impact arising from the legislative changes introduced at the beginning of the period.

The Group continued to deal effectively with the circumstances brought about by the Covid-19 situation. Full service was maintained throughout the period, albeit with the majority of our staff continuing to work remotely. Indeed, out of the Covid adversity the Group seized the opportunity to widen its recruitment net using remote working practices to enable the hiring of staff from beyond the normal catchment areas. Thankfully, none of our staff was taken seriously ill by the virus. The Group chose not to furlough any of its staff.

Cash reserves have increased by 31% to £5.34m (2020: £4.08m) and reflects both the improved profitability and strong cash collection processes. During the period, the Group did not need to utilise the existing lending facility, other external debt or take advantage of the financial assistance schemes offered by the Government due to the pandemic. Further consideration of the impact of Covid-19 is set out in the going concern statement.

Business Highlights

Work continued on the Ministry of Justice's Crime Programme as our teams provided the Business Analysis services to this major national programme. Elsewhere within the Ministry of Justice, we were very pleased to secure the Project Management Delivery service and have significantly increased the number of project management and programme management resources to support an array of initiatives including the implementation of "Nightingale courts" and supporting the modernisation of the prison estate. We also successfully handed over operation of the Production Services contract to the new incumbent.

Our teams at Department for Business, Energy and Industrial Strategy have increased our footprint and are now engaged across a number of workstreams as they deal with significant workloads that have been increased by the pressures of Covid response and post-Brexit requirements.

Our delivery team helped Department for Transport (DfT) to secure a successful "alpha" assessment from Government Digital Services in respect of the ROS platform under development, and the team continues to progress through the "beta" stage.

A successful working prototype was delivered to the Marine Stewardship Council (MSC) by a Triad team in another project closely associated with sustainability. Other work in the renewable energy sector, alongside MSC, DfT and Ofgem, is helping to reinforce the Group's credentials as a significant player in the delivery of digital capability to those organisations in the energy/renewables/sustainability arenas.

Two of our clients within the renewable energy sector are using Workpoint technology to complement their Microsoft platforms. With Triad now a Workpoint partner, this has opened up opportunities for recurring revenue connected with Workpoint licences the first of which were recognised towards the end of the reporting period.

Work at the leading technology distributor, Westcoast, continued during the period as Triad teams worked with Westcoast personnel and other partners to deliver API-driven services into Westcoast's legacy architecture. 

The Group was pleased to win a place on the Technology Services (3) framework, an important commercial route into public sector opportunities. The Group also gained acceptance on to the Fortrus framework providing an additional commercial route into the law enforcement sector.

The Group was extremely proud to win the award for "Tech company of the year" in the medium category at the Global Business Tech awards. Our work at Department for Transport has also seen the Group short-listed for the best public sector project of the year at the British Computer Society (The Chartered Institute for IT) awards. On the other side of the award process, the Group is proud to be supporting the forthcoming blockchain hackathon run by our technology partner Stratis.

It was rewarding to see a hardy bunch of Triad volunteers raise money for the Action for Children charity during the Summer by participating in the "Boycott your Bed" event.

Outlook

The second half of the year should see a continuation of high utilisation levels and increases in consultant headcount, in response to persistent demand anticipated within the Group's key accounts.

Work will continue to unwind the remaining lower-margin contractor accounts and to replace them with margin-enriching consultancy engagements, following a clear direction in terms of new business development.

Recruitment remains a challenge across the industry, but with a dedicated in-house resourcing team the Group believes it has the wherewithal and the proposition to attract the best affordable talent into the company.

With the Group's sharp focus on its consultancy credentials, and with a business model that is extremely well-suited to the needs of the market, I am optimistic about the prospects.

Dividend

The Group believes that dividend payments play a vital role in demonstrating the health of the business.  Given the strong performance over the period combined with the positive outlook an interim dividend of 2p is proposed (2020 interim dividend: nil).

Employees

On behalf of the Board of Directors I would like to thank our staff for their hard work and for their continued efforts in dealing so positively with the challenges caused by the ongoing Covid situation.

Dr John Rigg

Executive Chairman

1 November 2021

Unaudited condensed consolidated statement of comprehensive income and expense

for the six months ended 30 September 2021

All amounts relate to continuing activities.

Unaudited condensed consolidated statement of changes in equity

for the six months ended 30 September 2021

Unaudited condensed consolidated statement of financial position

as at 30 September 2021

Unaudited condensed consolidated statement of cash flows

for the six months ended 30 September 2021

Notes to the financial statements

for the six months ended 30 September 2021

1.    Principal accounting policies

Basis of preparation

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the periods presented, unless otherwise stated.

These financial statements have been prepared in accordance with UK adopted international accounting standards.

The comparative financial information for the year ended 31 March 2021 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2021 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for 2021 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The financial information for the half years ended 30 September 2021 and 30 September 2020 does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006 and has been neither audited nor reviewed pursuant to guidance issued by the Auditing Practices Board.

These financial statements have been prepared on a going concern basis.

These financial statements have been prepared on a historical cost basis and are presented in sterling, the functional currency of the Company.

Going Concern

Despite the continued negative effects of the Covid-19 pandemic upon the UK economy, the Group has continued to improve trading during the period. All key ratios and profitability have improved, and the Group continues to build cash reserves without the requirement for any external funding or take advantage of Government support schemes.

The Group continues to operate an efficient low-cost and cash generative model.  For the six months ended 30 September 2021, the Group has not utilised any external debt or lending facilities (2020: nil) with no exposure to bad debts in the period. Cash balances have grown to £5.34m at the balance sheet date (2020: £4.08m) and the future cash position remains strong.

The going concern assessment made at the year ended 31 March 2021 is still relevant to both current and future trading expectations. This going concern assessment included in particular a reverse stress test model which included the effects of any future Covid-19 pandemic issues, with all current client contracts discontinued at expiry, with no extension or replacement and with no cost mitigation. Following a review of these assessments in light of current trading performance and cash flow forecasts for the next 12 months, the Directors have concluded that the Group would have sufficient headroom and cash balances to continue in operation.

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and at least twelve months from the date of approval of the financial statements. Accordingly, they continue to adopt the going concern basis in preparing the half year accounts.

New standards, interpretations and amendments

The accounting policies applied in these financial statements are as applied in the annual report and accounts for the year ended 31 March 2021 with the addition that revenue earned on the reselling of licences where the company is acting as agent rather than principal is recognised in full on inception of the licence. 

2.    Revenue

The Group operates solely in the UK. All material revenues are generated in the UK.

In accordance with IFRS 15, the Group disaggregates revenue by contract type as management believe this best depicts how the nature, timing and uncertainty of the Group's revenue and cash flows are affected by economic factors. Accordingly, the following table disaggregates the Group's revenue by contract type:

The Group also disaggregates revenue by operating sector reflecting the different commercial risks (e.g. credit risk) associated with each.

3.    Finance expense

4.    Tax (credit)/charge

The differences between the actual tax charge for the period and the standard rate of corporation tax in the UK applied to profits for the period are as follows:

Deferred tax assets have been recognised in respect of tax losses where the Directors believe it is probable that the assets will be recovered. This expectation of recovery is calculated by modelling conservative estimates of future taxable profits that can be offset with historic trading losses brought forward. A deferred tax asset amounting to £244,000 (2020: £662,000) has not been recognised in respect of trading losses which can be carried forward indefinitely.

The main rate of UK corporation tax is to increase on 1 April 2023 from 19% to 25%. The prevailing corporation tax rate of 19% has been reflected in the calculation of the deferred tax.

5.    Dividends

The Directors propose an interim dividend for the period to 30 September 2021 of 2p per share (2020 interim dividend: nil per share).

The Company will pay the dividend on 24 December 2021 to all shareholders on the register of members of the Company at the close of business on 3 December 2021. The ex-dividend date will be on 2 December 2021.

6.    Earnings per ordinary share

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

7.    Leases

Right-of-use Assets

The carrying amounts of the right-of-use assets recognised and the movements during the period are outlined below:

Lease Liabilities

The carrying amounts of the lease liabilities recognised are as follows:

At the balance sheet date, the Group had outstanding commitments for future lease payments as follows:

Finance lease receivables

The carrying amounts of the lease receivable asset are as follows:

At the balance sheet date, the Group had future lease receivables as follows:

8.    Trade and other receivables

The fair value of trade and other receivables approximates closely to their book value.

Movements on the provision for expected credit loss are as follows:

The carrying amount of the Group's trade and other receivables are denominated in the following currencies:

9.    Trade and other payables

The majority of trade and other payables are settled within three months from the period end.

The fair value of trade and other payables approximates closely to their book value.

The carrying amount of trade and other payables is denominated in the following currencies:

10.  Related party transactions

The Group and Company rents one of its offices under a lease expiring in 2028, with a break clause in 2023. The current annual rent of £215,000 was fixed, by independent valuation, at the last rent review in 2008. JC Rigg, a Director, has notified the Board that he has a 50% beneficial interest in this contract. The balance owed at the period end was £nil (2020: £nil).

11.  Statement of the directors' responsibilities

The Board confirms to the best of their knowledge;

·    that the condensed consolidated half year financial statements for the six months to 30 September 2021 have been prepared in accordance with IAS 34 'Interim Financial Reporting' as per UK adopted international accounting standards; 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 condensed 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.

By order of the Board

James McDonald

Company Secretary

1 November 2021

Names of the current Board of Directors can be found on the company website at www.triad.co.uk.