Annual Report • Mar 31, 2014
Annual Report
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Annual report for the year ended 31 March 2014
| 02 | Strategic report | 24 | Statements of financial position |
|---|---|---|---|
| 07 | Directors' report | 25 | Statements of cash flows |
| 10 | Corporate governance report | 26 | Notes to the financial statements |
| 14 | Directors' remuneration report | 43 | Five year record |
| 19 | Independent auditors' report to the members of Triad Group Plc |
44 | Shareholders' information and financial calendar |
| 22 | Statements of comprehensive income and expense |
45 | Corporate information |
| 23 | Statements of changes in equity |
Dr John Rigg, Executive Chairman
The Group's results for the financial year ended 31 March 2014 constitute a solid performance, with the second half of the year significantly stronger than the first. Our key performance indicators show improvement versus last year, with gross profit and the gross profit percentage improving on an increased revenue base.
The Group has now successfully integrated its service offering across Consulting & Solutions and Resourcing, enabling clients to access the full spectrum of Triad's capability more easily and efficiently. This has generated particular benefits via the Government's G-cloud framework, including significant orders from The Ministry of Justice and The Home Office in addition to a number of contracts with other departments and agencies. Beyond Government, clients in the commercial sector are also benefiting from our integrated service.
Our Resourcing business has reversed its decline in revenues despite continued pressure on margins. Volume growth was achieved in key accounts without sacrificing margin. We continue to perform well as a Tier 1 supplier to several major organisations in the banking, online learning and technology services sectors, with contractor numbers at their highest for several years.
During the year we discontinued the operation of a dedicated permanent staffing team in favour of a "dual desk" role, enabling more consultants to focus on both non-permanent and permanent recruitment activities which has also improved customer experience.
New client acquisition remained a priority during the year, with notable successes in Government departments using G-cloud to procure services. Triad was awarded a contract by The Home Office to supply a number of Agile development specialists.
The business also gained entry to the inaugural Government Digital Services Framework, from which we expect momentum to build during the new financial year.
Demand is high in key areas such as Agile development, open source systems, and mobility with opportunities across all sectors, particularly in Government. Other sectors, such as Insurance, also show signs of increased activity and we are poised to exploit this in the new financial year.
The Consulting & Solutions business produced a muchimproved second half following a disappointing first quarter that was impacted by low consultant utilisation levels.
Utilisation was consistently high in the second half of the financial year, further to a range of wins across the Government and Commercial sectors. Utilisation among the senior fee earners was particularly strong. This has contributed to an improved gross profit for the segment.
As well as the improvement in consultant utilisation, average fees per consultant day have increased. This reflects the value attached by our clients to the experience and expertise offered by our consultants, many of whom are long-serving employees of the company.
Deal size and duration have improved compared with prior years, reducing the productivity loss associated with smaller, shorter duration projects.
Work in Government has included IT Strategy and Architecture consultancy, Agile coaching, Agile development, mobility strategy development and delivery of collaborative communications platforms. Triad was successful in bidding for a 13 month Agile Development and Consultancy engagement at Ministry of Justice.
A number of consultants have been engaged on work elsewhere in Government via arrangements with our partner organisations.
The Government's Digital Services agenda is having a significant impact on the way Government ICT is procured. Our track record, our SME status (Small to Medium Size Enterprise) and the fact that our service proposition aligns perfectly with the GDS agenda means that we are well placed to exploit more of these opportunities.
In the non-Government sector, the business delivered a range of consultancy assignments with a particular emphasis on general ICT strategy. Strategy work included planning for one of the UK's largest visitor attraction groups. This model has proved effective in opening up further opportunities, including software development which, in turn, have improved our repeat business ratio.
Notable software projects have included the development of a mobile portal for driving instructors at one of the UK's largest driving schools and the delivery of a global platform for project managers within a leading automotive consultancy.
Our Insights practice has continued to create value for clients using a portfolio of techniques for unlocking critical business information. Our geospatial capability combined with our business intelligence expertise is providing an invaluable extra dimension to our consultancy and software development capabilities.
In contrast to the start of the year when a number of key contracts drew to a close, most have remained in place at the commencement of the new financial year, shielding the business from the utilisation issues we experienced in first quarter.
On behalf of the Board I would like to thank all our staff for their efforts during the past year.
John Rigg Chairman 19 June 2014
Triad Group Plc is engaged in the provision of IT resourcing, consultancy and solutions services to the public and private sectors. The Group consists of two operating segments, Triad Resourcing and Triad Consulting and Solutions.
The principal objectives of the Company are to;
The key elements of our strategy to achieve our objectives are;
• Our strategy includes working with carefully chosen partners operating under their client frameworks in addition to the frameworks on which Triad is listed. This will expose more opportunities whilst reducing the cost of sale.
The Group provides services to the public and private sectors in the areas of IT resourcing (both contract and permanent), and the provision of IT consultancy and solutions services, including location intelligence services. The Group consists of two operating segments, Triad Resourcing and Triad Consulting and Solutions, both operating in the United Kingdom from offices in Milton Keynes and Godalming.
The contract resourcing business earns fees from the provision of independent contractors on a time hire basis to clients. Contractors are paid on the same basis at a lower rate. The difference in client and contractor fee rates generates gross profit.
The permanent resourcing business sources and selects candidates for permanent positions with clients. A fee is earned from our client when they successfully recruit a candidate.
The consultancy and solutions business earns fees from charging the time of its employees to clients or delivering projects to clients. In addition some income is earned from licencing software that we have developed.
As with any business in the UK IT services market the Group faces a number of principal risks and uncertainties.
These are summarised as follows;
The demand for IT services is affected by UK market conditions. For example, the election in 2015 will generate some uncertainty in public sector expenditure which could impact utilisation. The continual development of the Group's business into new niches and sectors is important in protecting the Group from fluctuations in market conditions.
The pipeline of contracted orders for time and materials consultancy work is relatively short. The Board carefully reviews forecasts to assess the level of risk arising from business that is forecast to be won.
Offshore IT service companies, particularly those located in Asia and Eastern Europe, continue to exert downward pressure on fee rates. The Group continues to develop niche markets and focus on delivering effective solutions where close collaboration with the client is required.
The ability to recruit and retain staff, and access to a large, appropriately skilled contractor resource are key to ensuring the ability to win and deliver IT services to our clients. The Group continues actively to recruit quality individuals, and ensures the contractor database is constantly updated and expanded.
Financial and non-financial key performance indicators (KPIs) used by the Board to monitor progress are revenue, profit from operations, gross margin, net borrowings and headcount. Financial KPIs are discussed in more detail in the Financial Review below.
The KPIs are as follows;
| 2014 | 2013 | |
|---|---|---|
| Revenue | £19,702,000 | £18,880,000 |
| Profit/(loss) from operations (before exceptional items) |
£125,000 | (£25,000) |
| Earnings before interest, tax, depreciation and amortisation (EBITDA) |
£200,000 | £213,000 |
| Gross margin | 14.5% | 14.3% |
| Net cash and cash equivalents at 31 March |
£4,000 | £283,000 |
| Average headcount | 57 | 65 |
The Group is committed to equal opportunities and operates employment policies which are designed to attract, retain and motivate high quality staff, regardless of sex, age, race, religion or disability. The Group has a policy of supporting staff in long term career development.
The Group recognises the importance of having effective communication and consultation with, and of providing leadership to, all its employees, who are critical to its future success. The Group promotes the involvement of its employees in understanding the aims and performance of the business.
The following table shows the number of persons, by gender, who at 31 March 2014 were directors, senior managers or employees of the Company.
| Male | Female | Total | |
|---|---|---|---|
| Directors | 4 | - | 4 |
| Senior managers | 2 | 1 | 3 |
| Employees | 44 | 9 | 53 |
| 50 | 10 | 60 |
The Group is committed to ensuring that the actual and potential environmental impact of its activities is understood and managed effectively.
The annual quantity of Greenhouse Gas (GHG) Emissions for the period 1 April 2013 to 31 March 2014 in tonnes of carbon dioxide equivalents (tCO2e) is shown in the table below.
| Emission source: | tCO2e* |
|---|---|
| Combustion of fuel | 41 |
| Electricity and heat purchased for own use | 86 |
| Total | 127 |
| tCO2e per £1m revenue | 6.4 |
*The calculation of tCO2e for each source has been prepared in accordance with DEFRA guidelines for GHG reporting.
The Group's performance for the financial year ended 31 March 2014, has shown steady improvement over the year.
Group revenue has increased to £19.7m (2013: £18.9m) as a result of an increase in revenues in the resourcing business.
The Group reports an increase in profit from operations before exceptional items to £0.13m (2013: £0.03m loss). Earnings before interest, tax, depreciation and amortisation (EBITDA) is unchanged at £0.2m (2013: £0.2m). The Group reports a profit after tax of £0.01m (2013: £0.03m).
Gross margin has increased to 14.5% (2012: 14.3%) as a result of improved utilisation in the consulting business during the year. Margins remain under pressure in the resourcing business.
Cash and cash equivalents at the year-end are £4,000 (2013: £283,000). Cash management and credit control continue to be tightly managed.
The Group presents its results across two segments, Resourcing and Consulting & Solutions.
Revenue for the financial year to 31 March 2014 in the Resourcing business has increased to £17.0m (2013: £16.0m). This has come primarily from volume growth in long standing key accounts. The segment reports a profit from operations of £0.3m (2013: £0.4m profit). The decrease in operating profit is as a result of continued pressure on gross margins.
Revenue in the Consulting & Solutions segment has decreased to £2.7m (2013: £2.9m). Reported revenue for the segment includes amounts attributable to subcontractors where partner organisations have been used to provide specialist services. The amount paid to subcontractors in the year ended 31 March 2014 has fallen substantially from the previous year meaning that the revenue earned by Triad staff has actually increased this year. This is as a direct result of implementation of our strategy to improve consultant utilisation and increase charge out rates.
The segment reports a reduced loss from operations before exceptional items of £0.2m (2013: £0.4m loss). The majority of this loss was generated in the first half of the financial year following a slow first quarter.
Excluding exceptional items, administrative expenses for the year are unchanged at £2.7m (see note 5).
Staff costs have reduced by 8.0% to £3.4m (2013: £3.6m). This is broadly in line with the reduction in average headcount for the year to 57 (2013: 65).
There are no exceptional items for the year ended 31 March 2014. An exceptional credit of £0.16m was recognised in the previous year in respect of a reduction in the vacant property provision as a result of an agreement with the landlords for a one year rent holiday which commenced on 25 June 2013. See note 5.
Cash and cash equivalents at 31 March 2014 stood at £4,000 (2013: £283,000). There was a net cash outflow from operating activities of £279,000 (2013: £780,000 inflow). The primary reason for this movement is fluctuations in the levels of cash received from clients at the year end. The net cash outflow from investing activities was £14,000 (2013: £15,000).
Amortisation relating to the internally developed software, Zubed was £0.03m (2013: £0.03m). There were no development costs capitalised during the year (2013: £nil).
During the year, unclaimed dividends totalling £58,000 (2013: £nil) were repaid to the Company in accordance with the Company's Articles of Association.
The net asset position of the Group at 31 March 2014 was £479,000 (2013: £398,000). The increase over the year was due to the profit for the year and the repayment of unclaimed dividends detailed above.
There were no options granted during the year. An expense of £12,000 has been recognised in the year relating to options granted in September 2011.
As we move towards the end of the first quarter of the new financial year we look to build on the momentum gained in the second half of the reporting year. Key to this will be increasing the number of fee earners in the Consultancy Business whilst maintaining healthy utilisation levels. As important will be growing the Resourcing Business through the strengthening of the client base and delivery of a targeted improvement in gross margin. Whilst the signs of economic recovery are encouraging, the Board remains cautiously optimistic.
By order of the Board
Finance Director 19 June 2014
The Directors present their Annual Report on the activities of the Group, together with the financial statements for the year ended 31 March 2014 and the Board confirms that these, taken as a whole, are fair, balanced and understandable and that the narrative sections of the report are consistent with the financial statements and accurately reflect the Group's performance and financial position.
The Strategic Report provides information relating to the Group's activities, its business and strategy and the principal risks and uncertainties faced by the business, including analysis using financial and other KPIs where necessary. These sections, together with the Directors' Remuneration and Corporate Governance Reports, provide an overview of the Group, including environmental and employee matters and give an indication of future developments in the Group's business, so providing a balanced assessment of the Group's position and prospects, in accordance with the latest narrative reporting requirements. The Group's principal subsidiary undertakings are disclosed in the notes to the financial statements.
As at 31 March 2014, the Company's issued share capital comprised a single class of shares referred to as ordinary shares. Details of the ordinary share capital can be found in note 20 to these financial statements.
The Group's articles provide that on a show of hands at a general meeting of the Company every member who (being an individual) is present in person and entitled to vote shall have one vote and on a poll, every member who is present in person or by proxy shall have one vote for every share held. The notice of the Annual General Meeting specifies deadlines for exercising voting rights and appointing a proxy or proxies to vote in relation to resolutions to be passed at the Annual General Meeting.
There are no restrictions on the transfer of ordinary shares in the Company other than as contained in the Articles:
• The Board may, in its absolute discretion, and without giving any reason for its decision, refuse to register any transfer of a share which is not fully paid up (but not so as to prevent dealing in listed shares from taking place) and on which the Company has a lien. The Board may also refuse to register any transfer unless it is in respect of only one class of shares, in favour of no more than four transferees, lodged at the Registered office, or such other place as the Board may decide, for registration, accompanied by a certificate for the shares to be transferred (except where the shares are registered in the name of a market nominee and no certificate has
been issued for them) and such other evidence as the Board may reasonably require to prove the title of the intending transferor or his right to transfer the shares.
Certain restrictions may from time to time be imposed by laws and regulations, for example:
The Board may appoint Directors. Any Directors so appointed shall retire from office at the next Annual General Meeting of the Company, but shall then be eligible for re-appointment.
The current Articles require that at the Annual General Meeting one third of the Directors shall retire from office but shall be eligible for re-appointment. The Directors to retire by rotation at each Annual General Meeting shall include any Director who wishes to retire and not offer himself for re-election and otherwise shall be the Directors who, at the date of the meeting, have been longest in office since their last appointment or re-appointment.
A Director may be removed from office by the service of a notice to that effect signed by at least three quarters of all the other Directors.
Amendment of the Company's Articles of Association
The Company's Articles may only be amended by a special resolution passed at a general meeting of shareholders.
In addition to the disclosure on page 17 of the interests of Directors who held office at the end of the financial year, the Company has been notified of the following holdings of 3% or more of the share capital of the Company at 31 March 2014 and 1 June 2014:
| Percentage of issued share capital |
|
|---|---|
| M Makar | 29.76% |
| Liontrust Investment Services Ltd | 10.37% |
| The Chatham Trust | 4.79% |
The Directors have neither declared an interim dividend nor do they recommend that a final dividend be paid in respect of the year ended 31 March 2014 (2013: nil per 1p ordinary share).
The Board reviews and agrees policies for managing financial risk. These policies, together with an analysis of the Group's exposure to financial risks are summarised in note 3 of these financial statements.
Research and development activities are undertaken with the prospect of gaining new technical knowledge and understanding, and developing new software.
Directors' interests in contracts are shown in note 23 to the accounts.
The Company maintains directors' and officers' liability insurance which gives appropriate cover for any legal action brought against its directors and officers. The directors also have the benefit of the indemnity provisions contained in the Company's Articles of Association. These provisions, which are qualifying third-party indemnity provisions as defined by Section 236 of the Companies Act 2006, were in force throughout the year and are currently in force.
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Company's auditors for the purposes of their audit and to establish that the auditors are aware of that information. The directors are not aware of any relevant audit information of which the auditors are unaware.
The Strategic Report contains forward-looking statements. Due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information, the actual results of operations, financial position and liquidity may differ materially from those expressed or implied by these forward-looking statements.
The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic Report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Strategic
Report, and in note 18 to the financial statements. In addition note 3 to the financial statements includes the Group's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and hedging activities, and its exposure to credit risk and liquidity risk. As highlighted in note 18 to the financial statements, the Group meets its day to day working capital requirements through an invoice finance facility.
The Group's projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current facility. The facility may be terminated by either party with one month's written notice. The Board receives regular cash flow and working capital projections to enable it to monitor its available headroom under this facility. These projections indicate that the Group expects to have sufficient resources to meet its reasonably expected obligations. The bank has not drawn to the attention of the Group any matters to suggest that this facility will not be continued on acceptable terms.
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.
BDO LLP have indicated their willingness to continue in office. Accordingly, a resolution to reappoint BDO LLP as auditors of the Company will be proposed at the next Annual General Meeting.
Carbon dioxide emissions data, is contained in the Corporate Social Responsibility section of the Strategic Report, due to its strategic importance.
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements and have elected to prepare the Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss for the Group and Company for that period.
In preparing these financial statements, the Directors are required to:
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
The Directors confirm to the best of their knowledge:
By order of the Board
Company Secretary 19 June 2014
The Board has considered the principles and provisions of the UK Corporate Governance Code 2012 ("the Code") as set out in the Listing Rules of the UK Listing Authority and applicable for this financial period. The following statement sets out the Group's application of the principles of the Code and the extent of compliance with the Code's provisions, made in accordance with the requirements of the Listing Rules.
The Directors who held office during the financial year were:
John Rigg, Chairman
Nick Burrows, Group Finance Director
Alistair Fulton, senior independent non-executive Director
Steven Sanderson
John Rigg is Chairman. He is a Chartered Accountant. He was a founder of Marcol Group Plc and was its Managing Director from 1983 until 1988. Marcol was floated on the Unlisted Securities Market in 1987. He was Chairman of Vega Group plc from 1989 until 1996, holding the post of Chief Executive for much of this period. Vega floated on the main market in 1992. He was a founder shareholder of Triad and served as the Chairman of the Company from 1988 up to just before its flotation in 1996, when he resigned to develop new business interests overseas. He was appointed as non-executive Chairman in June 1999: in May 2004 he became part-time executive Chairman. Between 4 February 2005 and 5 September 2007 John was acting Group Chief Executive.
Alistair Fulton is a non-executive Director. He is a Chartered Engineer and member of the British Computer Society. He was the founding Managing Director of Triad. He continued in this role until February 1997 when he became non-executive Chairman, a position he retained until June 1999, when he took up his present position. He is currently a director of Enabled City Ltd and HBU World Ltd.
Steven Sanderson is a non-executive Director. He is a Chartered Accountant. He was appointed nonexecutive Director in January 2007. He has extensive experience at executive director level in the IT services and telecommunications sectors. His background includes public flotations, plc directorship, fund raising, acquisition and disposal activities.
Nick Burrows is a Chartered Accountant who joined Triad in 2001 as Financial Controller of the Consulting & Solutions business. He was appointed Company Secretary in 2008 and executive Finance Director in October 2009.
The Board exercise full and effective control of the Group and has a formal schedule of matters specifically reserved to it for decision, including responsibility for formulating, reviewing and approving Group strategy, budgets and major items of capital expenditure.
Regularly the Board will consider and discuss matters which include, but are not limited to:
The Executive Chairman, John Rigg, is responsible for the leadership and efficient operation of the Board. This entails ensuring that Board meetings are held in an open manner, and allow sufficient time for agenda points to be discussed. It also entails the regular appraisal of each director, providing feedback and reviewing any training or development needs.
The Board meets regularly with senior management to discuss operational matters. The Non-Executive Directors must satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust. Following presentations by senior management and a disciplined process of review and challenge by the Board, clear decisions on the policy or strategy are adopted. The responsibility for implementing Board decisions is delegated to management on a structured basis and monitored at subsequent meetings.
During the period under review, and to date, the Executive Chairman has not held any significant commitments outside the Group.
Alistair Fulton is the nominated senior independent non-executive Director. He has long standing industry experience. He is also free from any business or other relationship which could materially interfere with the exercise of his independent judgement. The Board benefits from this experience and independence, when he brings his individual judgement to Board decisions. He has been a non-executive Director for twelve years but the Board consider that he continues to remain independent for the reasons stated above.
The Group has a procedure for Directors to take independent professional advice in connection with the affairs of the Group and the discharge of their duties as Directors.
The Board has an Audit Committee, comprised of the Executive Chairman John Rigg, and the independent nonexecutive Directors, Alistair Fulton and Steven Sanderson. The Committee is chaired by Alistair Fulton.
The Board has a Remuneration Committee, comprised of the Executive Chairman John Rigg, and the independent non-executive Directors, Alistair Fulton and Steven Sanderson. The Committee is chaired by Alistair Fulton.
The following table shows the attendance of Directors at scheduled meetings of the Board and Audit and Remuneration Committees during the year ended 31 March 2014 and shows that the Board are able to allocate sufficient time to the company to discharge their responsibilities effectively.
| Board | Audit Committee |
Remuneration Committee |
||||
|---|---|---|---|---|---|---|
| Number of meetings held |
12 | 2 | 1 | |||
| Number of meetings attended | ||||||
| Executive Directors: | ||||||
| John Rigg (Chairman) | 12 | 2 | 1 | |||
| Nick Burrows | 12 | n/a | n/a | |||
| Non-executive Directors: | ||||||
| Alistair Fulton | 12 | 2 | 1 | |||
| Steven Sanderson | 11 | 2 | 1 |
The members of the Audit Committee are shown above.
The Board believe that John Rigg and Steven Sanderson, both Chartered Accountants with broad experience of the IT industry, and Alistair Fulton, who has been a Director of companies in the IT sector for over 20 years, have recent and relevant financial experience, as required by the Code.
The Audit Committee is responsible for reviewing the Group's annual and interim financial statements and other announcements. It is also responsible for reviewing the Group's internal financial controls and its internal control and risk management systems. It considers the appointment and fees of external auditors, and discusses the audit scope and findings arising from audits. The Committee is also responsible for assessing the Group's need for an internal audit function.
The Audit Committee have considered the following significant issues in relation to the preparation of these financial statements;
Revenue Recognition: The Committee has considered revenue recognised in consultancy and development projects active at the end of the financial year, and software licence revenues earned during the year, to ensure revenue has been recognised correctly.
Onerous lease provision: The Committee has reviewed the cash flows and discount rate used in the calculation of the vacant property provision.
Intangible asset valuation: The Committee has reviewed the calculations and assumptions used in the calculation of the carrying value of the Zubed intangible asset.
Going concern: The Committee has reviewed budgets and cash flow projections against borrowing facilities available to the Group to ensure the going concern basis of preparation of the results remains appropriate.
The Audit Committee met with the auditors prior to commencement of the year end audit to discuss;
Further meetings were held following completion of the audit with the senior finance team and the auditors to assess the effectiveness of the audit and discuss audit findings.
The Committee conducts an annual review of the effectiveness of the annual report process. Inputs into the review include feedback from the finance team, planning and scope of the audit process and identification of risk, the execution of the audit, communication by the auditor with the Committee, how the audit adds value and a review of auditor independence and objectivity. Feedback is provided to the external auditor and management by the Committee, with any actions reviewed by the Committee.
The Committee has procedures in place to ensure that independence and objectivity is not impaired. These include restrictions on the types of services which the external Auditor can provide, in line with the APB Ethical Standards on Auditing. The external auditors themselves have safeguards in place to ensure that objectivity and independence is maintained and the Committee regularly reviews independence taking into consideration relevant UK professional and regulatory requirements. The external auditors are required to rotate audit partners responsible for the Group audit every five years.
The Committee reviews all non-audit work to ensure it is appropriate and the fees justified. In relation to the nonaudit services provided by BDO LLP during the year, the Committee reviewed and approved management's reasons for selecting BDO LLP as the best placed adviser on a case-by-case basis. This decision was typically based on the merit of using BDO's existing knowledge of the Group.
BDO LLP was appointed external auditor in 2006 following a tendering process.
BDO LLP has confirmed to the Committee that they remain independent and have maintained internal safeguards to ensure that the objectivity of the engagement partner and audit staff is not impaired.
The Committee has considered the level of non-audit fees and the nature of non-audit services provided and is satisfied that auditor independence has been maintained.
The Audit Committee has considered the need for a separate internal audit function this year but does not consider it appropriate in view of the above controls, and in light of the size of the Group. The Group is certified to ISO 9001: 2008.
The Board has applied the internal control and risk management provisions of the Code by establishing a continuous process for identifying, evaluating and managing the significant risks faced by the Group. The Board regularly reviews the process, which has been in place from the start of the year to the date of approval of this report and which is in accordance with Internal Control: Revised Guidance for Directors on the Combined Code. The Board is responsible for the Group's system of internal control and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against misstatement or loss.
In compliance with the Code, the Audit Committee regularly reviews the effectiveness of the Group's systems of internal financial control and risk management. The Board's monitoring covers all controls, including financial, operational and compliance controls and risk management. It is based principally on reviewing reports from management to consider whether significant weaknesses and risks are effectively managed and, if applicable, considering the need for more extensive monitoring.
The Board has also performed a specific assessment for the purpose of this annual report. This assessment considers all significant aspects of internal control and risk management arising during the period covered by the report.
The key elements of the internal control and risk management systems are described below:
• Clearly documented procedures contained in a series of manuals covering Group operations and management, which are subject to internal project audit and external audit as well as regular Board review.
The Remuneration Committee is responsible for setting remuneration for executive directors and the Chairman in accordance with the remuneration policy below. In addition, the Committee is responsible for recommending and monitoring the level and structure of remuneration for senior management.
The Group's Remuneration Committee is authorised to take appropriate counsel to enable it to discharge its duty to make recommendations to the Board in respect of all aspects of the remuneration package of Directors.
The Directors Remuneration Report can be found on page 14.
Staff may contact the senior independent non-executive Director, in confidence, to raise genuine concerns of possible improprieties in financial reporting or other matters.
Any new Board members are made fully aware of their duties and responsibilities as Directors of listed companies, and are supported in understanding and applying these by established and more experienced Directors. Further training is available for any Director at the Group's expense should the Board consider it appropriate in the interests of the Group.
Substantial time and effort is spent by Board members on meetings with and presentations to existing and prospective investors. The views of shareholders derived from such meetings are disseminated by the Chairman to other Board members.
Private shareholders are invited to attend and participate at the Annual General Meeting.
The terms of reference of the Audit and Remuneration Committees are available on request from the Company Secretary.
The Board considers that it has been compliant with the provisions of the Code for the whole of the period, except as detailed below:
B.6 The board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors. There is a process of continuous informal evaluation, due to the small size of the Board.
B.2.3 Non-executive directors should be appointed for specified terms subject to re-election. Although not appointed for fixed terms, Nonexecutive Directors are subject to re-election in accordance with the Company's Articles of Association at the Annual General Meeting. Their contracts are subject to a notice period that does not exceed one month.
By order of the Board
Company Secretary 19 June 2014
On the following pages we set out the Remuneration Report for the year ended 31 March 2014. The members of the Remuneration Committee are shown in the Corporate Governance Report on page 10.
This report has been prepared in accordance with the Companies Act 2006 and the new requirements of the Large and Medium Sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, and is split into two sections as follows;
The Directors' remuneration policy. This will be subject to a binding shareholder vote at this years' Annual General Meeting.
The Annual report on remuneration. This will be subject to an advisory shareholder vote at this years' Annual General Meeting.
No major decisions or changes were made to Directors' remuneration during the year.
The Remuneration Committee presents the Directors' Remuneration Policy Report which will be put to shareholders at this year's Annual General meeting. It is the current intention of the Remuneration Committee that the remuneration policy will stay in force for three years from the date approval of the policy at the next Annual General Meeting.
The remuneration policy is consistent with that disclosed in the Annual Report and Accounts for the year ended 31 March 2013 which was approved at the Annual General Meeting of the Company on 12 August 2013, and will continue to apply up to the date of the next annual general meeting. A copy of the 2013 Annual Report can be found at www.triadgroup.plc.uk
| Element | Relevance to short and long term strategic objectives |
Operation | Maximum payable | Performance metrics |
|---|---|---|---|---|
| Base salary | Reflects the individual's skills, responsibilities and experience. Supports the recruitment and retention of Executive Directors. |
Reviewed annually taking into consideration individual and companywide performance and the wider employee pay review |
Ordinarily, salary increases will be in line with average increases awarded to other employees in the Company. |
None, although individual performance is considered when setting salary levels. |
| Benefits in kind | Protects the well being of directors and provides fair and reasonable market competitive benefits. |
Benefits in kind include company cars or allowances, private medical insurance, life cover and permanent health insurance. Benefits are reviewed periodically. |
Benefits are set at a level considered to be appropriate taking into account individual circumstances |
None. |
| Pension | Provides competitive post-retirement benefits to support the recruitment and retention of Executive Directors. |
The Company pays contributions into a personal pension scheme or cash alternative. |
The Company matches individual contributions up to a maximum of 5%. |
None. |
| Share option scheme | Encourages share ownership amongst employees and aligns their interests with the shareholders. |
The Company operates an EMI share option scheme. Discretionary awards are made in accordance with the scheme rules. |
The potential value of options held rises as the Company's share price increases. |
Specific performance criteria are specified at the time of awarding the share options to ensure alignment with the interests of shareholders. |
The award of share options is at the discretion of the Remuneration Committee: there is no scheme providing entitlement to share options, and there is no long-term incentive scheme. The Group does not believe that performance related bonuses are appropriate at the present time. The Executive Directors' existing interests in shares and share options are expected to align their interests with those of shareholders.
| Element | Relevance to short and long term strategic objectives |
Operation | Maximum payable | Performance metrics |
|---|---|---|---|---|
| Fees | Competitive fees to attract experienced directors |
Reviewed annually | In general the level of fee increase for the non-executive directors will be set taking account of any change in responsibility. |
Not applicable. |
The remuneration of the non-executive Directors is agreed by the Board. However no Director is involved in deciding their own remuneration.
The Group's remuneration policy is to provide remuneration packages which secure and retain management of the highest quality. Therefore when determining the remuneration packages of new executive Directors, the Remuneration Committee will structure a package in accordance with the general policy for Executive Directors as shown above. In doing so the Committee will consider a number of factors including:
The details of the Directors' contracts are summarised as follows: AuditRemuneBoardCommittee
| Date of contract | Notice period | |
|---|---|---|
| J C Rigg | 01/07/1999 | 1 month |
| A M Fulton | 19/02/1997 | 1 month |
| S M Sanderson | 01/01/2007 | 1 month |
| N E Burrows | 19/10/2009 | 6 months |
All contracts are for an indefinite period. No contract has any provision for the payment of compensation upon the termination of that contract.
As there are currently no performance related or variable elements of executive director remuneration it is not appropriate to prepare illustrations required under the legislation.
It is the Group's policy in relation to Directors' contracts that:
In setting the Executive Directors' remuneration the Committee takes into account the pay and employment conditions applicable across the Group in the reported period. In common with the fact that there were no general pay increases for employees elsewhere in the Group, no increases were made in the period to Directors' remuneration terms since the prior year. No consultation has been held with employees in respect of Executive Directors' remuneration.
The policy is unchanged from the previous year as endorsed by the almost unanimous vote in favour of the approval of the Directors' Remuneration Report at the Annual General Meeting in August 2013.
The remuneration of each of the Directors for the period they served as a Director are set out below:
| 2014 | 2013 | ||||
|---|---|---|---|---|---|
| Director | Basic salary and fees |
Benefits in kind |
Pension | Total | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Executive | |||||
| J C Rigg | 25 | - | - | 25 | 25 |
| N E Burrows | 89 | 11 | 16 | 116 | 116 |
| Non-executive | |||||
| A M Fulton | 25 | - | - | 25 | 25 |
| S M Sanderson | 20 | - | - | 20 | 20 |
Benefits in kind include the provision of company car and medical insurance.
No performance measures or targets were in place for either the year ended 31 March 2014, or any prior financial year, upon which any variable pay elements could become payable during the year.
One Director is a member of a money purchase scheme into which the Group made contributions during the year. The contributions paid by the Group in respect of this Director is as follows:
| 2014 | 2013 |
|---|---|
| £'000 | £'000 |
| N E Burrows 16 |
16 |
The pension contribution for NE Burrows is greater than the 5% of salary shown as it includes an additional amount of £10,000 relating to the Group's salary exchange scheme. This reflects a sacrifice from his salary plus the resulting National Insurance saving for the company (13.8% of the sum sacrificed).
There were no share options awarded to the executive Directors during the year.
There were no payments to past Directors during the year. Audit RemuneBoardCommitteeCommittee
There were no payments for loss of office during the year.
The Directors who held office at the end of the financial year had the following beneficial interests in the ordinary shares of the Company. No change has occurred between the year end and the date of this report.
| 1 April 2013 | 31 March 2014 | |
|---|---|---|
| A M Fulton | 354,100 | 354,100 |
| J C Rigg | 4,509,400 | 4,509,400 |
| S M Sanderson | 104,089 | 104,089 |
| N E Burrows | 7,893 | 7,893 |
The interests of executive Directors in share options were as follows:
| At | Granted | Lapsed | At end of | Exercise | Exercise | |
|---|---|---|---|---|---|---|
| beginning of year |
during year |
during year |
year | price | period | |
| N E Burrows : | ||||||
| granted 07.03.06 | 20,000 | - | - | 20,000 | 51.5p | 07.03.09 to 07.03.16 |
| granted 07.08.08 | 25,000 | - | - | 25,000 | 14.0p | 07.08.11 to 07.08.18 |
| granted 23.09.11 | 100,000 | - | - | 100,000 | 13.5p | 23.09.14 to 23.09.21 |
| 145,000 | - | - | 145,000 |
45,000 share options were exercisable at the end of the year (2013: 45,000)
Share options are exercisable provided that the relevant performance requirement has been satisfied.
The total share based payment expense recognised in the year in respect of Directors' share options is £1,556 (2013: £1,556).
The market price of the Company's shares was 10.75p at 31 March 2014 and the range during the year was between 5.50p and 15.25p.
The following graph shows the Group's performance, measured by total shareholder return, compared with the performance of the FTSE Fledgling Index ("FTSEFI") also measured by total shareholder return ("TSR"). The FTSEFI has been selected for this comparison because it is an index of companies with similar current market capitalisation to Triad Group Plc.
There have been no changes to the remuneration of the Chief Executive during the year.
During the year there were no dividends or other cash distributions to shareholders (2013: £nil). The total employee remuneration (including directors) during the year was £3.039m (2013: £3.306m).
During the year there were no meetings held relating to directors' remuneration other than to review the remuneration policy for inclusion in the 2013 Annual Report and Accounts.
At the last annual general meeting 99.9% of the votes cast were in favour of approving the Directors' Remuneration Report with 0.1% voting against. There were no votes withheld.
Chairman, Remuneration Committee 19 June 2014
In our opinion:
The financial statements of Triad Group Plc for the year ended 31 March 2014 comprise:
The financial reporting framework that has been applied in the preparation of the Group and Parent Company financial statements is applicable law and IFRSs as adopted by the European Union and as regard the Parent Company, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial reporting Council's (FRC's) Ethical Standards for Auditors.
A description of the scope of an audit of financial statements is provided on the FRC's website at www.frc.org.uk/ auditscopeukprivate.
The objective of our audit is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatements, whether due to fraud or error, thereby enabling us to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework. We apply the concept of materiality in assessing the risks of material misstatement and in determining the nature, timing and extent of our audit procedures to gather sufficient appropriate audit evidence. For the purposes of determining whether the financial statements are free from material misstatement we define materiality as the magnitude of misstatement that makes it probable that the economic decisions of a reasonably knowledgeable person, relying on the financial statements would be changed or influenced. We also determine a level of performance materiality which we use to determine the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements in the financial statements exceeds materiality for the financial statements as a whole. Based on out professional judgement, we determined materiality for the Group financial statements as a whole to be £147,500 and performance materiality set at 75% of materiality, namely £110,625.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £2,950 as well as misstatements below that amount, that in our view warranted reporting for qualitative reasons.
The Group financial statements are a consolidation of six companies made up of one trading company (the Parent Company) which provides consultancy and development services and five dormant companies. In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed on each company. The Group operates solely in the United Kingdom.
Based on our assessment we performed an audit of the complete financial information of the Parent Company as the only trading company.
In preparing the financial statements, the Directors made a number of subjective judgements around significant accounting estimates which involved making assumptions on future events which are inherently uncertain. Our assessed risks of material misstatements include those areas of particular subjective judgement and had the greatest impact on the audit strategy and the allocation of resources in the audit.
In our audit, we tested and examined information, using sampling and other auditing techniques, to the extent we considered necessary to provide a reasonable basis for us to draw conclusions. Our audit evidence was largely obtained through substantive procedures.
The following risks of material misstatement identified were discussed with the Audit Committee and are included within their report on those matters they considered to be significant issues in relation to the financial statements set out on page 11.
| Risk of material misstatement | Our response to the risks identified |
|---|---|
| Revenue recognition | We tested the timing of revenue recognition by reviewing all |
| We consider the timing of revenue recognition and the | ongoing consultancy contracts at the balance sheets date |
| appropriateness of deferred and accrued revenue balances | and the level of completion in terms of milestones achieved |
| at the balance sheets date, which involves judgement. | and time recorded. |
| The ISA's (UK & Ireland) presume there is a risk of fraud in | We tested a sample of approved timecards along with billings |
| revenue recognition because of the pressure management | either side of the balance sheet date and compared these to |
| may feel to achieve expected results. | recorded revenue, accrued revenue and deferred revenue. |
| Going concern This was considered to be an area of audit focus due to the current financial position of the Group and its trading performance in recent years. |
We obtained the Group's forecast through to 30 June 2015. We evaluated the assumptions underlying the forecasts including challenging the forecast cashflows and the discount rate applied. We considered the adequacy of the Group's financing structure, including holding a discussion with the Group's lenders evaluating compliance with covenants and assessed the sensitivity of the forecasts to changes in the key assumptions. |
In our opinion:
We have nothing to report in respect of the following:
Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is:
In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the directors' statement that they consider the annual report is fair, balanced and understandable and whether the annual report appropriately discloses those matters that we communicated to the audit committee which we consider should have been disclosed.
Under the Companies Act 2006 we are required to report to you if, in our opinion:
Under the Listing Rules we are required to review:
We have no exceptions arising from this review.
19 June 2014
For and on behalf of BDO LLP, statutory auditor London United Kingdom
Statements of comprehensive income and expense for the year ended 31 March 2014
| Group and Company | Note | 2014 | 2013 |
|---|---|---|---|
| £'000 | £'000 | ||
| Revenue | 19,702 | 18,880 | |
| Cost of sales | (16,839) | (16,176) | |
| Gross profit | 2,863 | 2,704 | |
| Administrative expenses | (2,738) | (2,566) | |
| Profit from operations before exceptional item | 125 | (25) | |
| Exceptional administrative credit: change in surplus property provision | 5 | - | 163 |
| Profit from operations | 6 | 125 | 138 |
| Profit from operations | 6 | 125 | 138 |
| Finance income | 7 | - | 2 |
| Finance expense | 7 | (114) | (112) |
| Profit before tax | 11 | 28 | |
| Tax expense | 9 | - | - |
| Profit for the year and total comprehensive income attributable | |||
| to equity holders of the parent | 11 | 28 | |
| Basic earnings per share | 11 | 0.07p | 0.18p |
| Diluted earnings per share | 11 | 0.07p | 0.18p |
All amounts relate to continuing activities.
| At 31 March 2014 | 151 | 562 | 104 | (338) | 479 | |
|---|---|---|---|---|---|---|
| Unclaimed dividends | 10 | - | - | - | 58 | 58 |
| Share-based payments | - | - | - | 12 | 12 | |
| Profit for the year and total comprehensive income | - | - | - | 11 | 11 | |
| At 1 April 2013 | 151 | 562 | 104 | (419) | 398 | |
| Share-based payments | - | - | - | 10 | 10 | |
| Profit for the year and total comprehensive income | - | - | - | 28 | 28 | |
| At 1 April 2012 | 151 | 562 | 104 | (457) | 360 | |
| £'000 | £'000 | £'000 | £'000 | £'000 | ||
| Group | Note | Share Capital |
Share premium account |
Capital redemption reserve |
Retained earnings |
Total |
| Company | Note | Share Capital |
Share premium account |
Capital redemption reserve |
Retained earnings |
Total |
|---|---|---|---|---|---|---|
| £'000 | £'000 | £'000 | £'000 | £'000 | ||
| At 1 April 2012 | 151 | 562 | 104 | (462) | 355 | |
| Profit for the year and total comprehensive income | - | - | - | 28 | 28 | |
| Share-based payments | - | - | - | 10 | 10 | |
| At 1 April 2013 | 151 | 562 | 104 | (424) | 393 | |
| Profit for the year and total comprehensive income | - | - | - | 11 | 11 | |
| Share-based payments | - | - | - | 12 | 12 | |
| Unclaimed dividends | 10 | - | - | - | 58 | 58 |
| At 31 March 2014 | 151 | 562 | 104 | (343) | 474 |
Share capital represents the amount subscribed for share capital at nominal value.
The share premium account represents the amount subscribed for share capital in excess of the nominal value.
The capital redemption reserve represents the nominal value of the purchase and cancellation of its own shares by the Company in 2002.
Retained earnings represents the cumulative net gains and losses recognised in the statement of comprehensive income and expense.
| Registered number: 2285049 | |||||
|---|---|---|---|---|---|
| Group | Company | ||||
| Note | 2014 | 2013 | 2014 | 2013 | |
| £'000 | £'000 | £'000 | £'000 | ||
| Non-current assets | |||||
| Intangible assets | 12 | 152 | 207 | 152 | 207 |
| Property, plant and equipment | 13 | 58 | 26 | 58 | 26 |
| 210 | 233 | 210 | 233 | ||
| Current assets | |||||
| Trade and other receivables | 15 | 3,436 | 3,060 | 3,436 | 3,060 |
| Cash and cash equivalents | 16 | 108 | 283 | 108 | 283 |
| 3,544 | 3,343 | 3,544 | 3,343 | ||
| Total assets | 3,754 | 3,576 | 3,754 | 3,576 | |
| Current liabilities | |||||
| Trade and other payables | 17 | (2,355) | (2,399) | (2,360) | (2,404) |
| Financial liabilities | 18 | (109) | - | (109) | - |
| Short term provisions | 19 | (241) | (114) | (241) | (114) |
| (2,705) | (2,513) | (2,710) | (2,518) | ||
| Non-current liabilities | |||||
| Financial liabilities | 18 | (24) | - | (24) | - |
| Long term provisions | 19 | (546) | (665) | (546) | (665) |
| (570) | (665) | (570) | (665) | ||
| Total liabilities | (3,275) | (3,178) | (3,280) | (3,183) | |
| Net assets | 479 | 398 | 474 | 393 | |
| Shareholders' equity | |||||
| Share capital | 20 | 151 | 151 | 151 | 151 |
| Share premium account | 562 | 562 | 562 | 562 | |
| Capital redemption reserve | 104 | 104 | 104 | 104 | |
| Retained earnings | (338) | (419) | (343) | (424) | |
| Total shareholders' equity | 479 | 398 | 474 | 393 |
The financial statements on pages 22 to 42 were approved by the Board of Directors and authorised for issue on 19 June 2014 and were signed on its behalf by:
Director Director
NE Burrows SM Sanderson
Triad Group Plc is registered in England and Wales with registered number 2285049.
| Group and company | Note | 2014 £'000 |
2013 £'000 |
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit for the year before taxation Adjustments for: |
11 | 28 | |
| Depreciation of property, plant and equipment | 20 | 17 | |
| Profit on disposal of property, plant and equipment Amortisation of intangible assets |
(6) 55 |
- 56 |
|
| Finance income | - | (2) | |
| Interest expense | 21 | 16 | |
| Share-based payment expense | 12 | 10 | |
| Changes in working capital | |||
| (Increase)/decrease in trade and other receivables | (376) | 1,106 | |
| Decrease in trade and other payables Increase/(decrease) in provisions |
(44) 8 |
(295) (404) |
|
| Cash (consumed)/generated by operations | (299) | 532 | |
| Corporation tax received Interest paid |
- (21) |
277 (16) |
|
| Interest received | - | 2 | |
| Net cash flows from operating activities | (320) | 795 | |
| Investing activities | |||
| Purchase of intangible assets | - | (1) | |
| Purchase of property, plant and equipment | (20) | (14) | |
| Proceeds from sale of property, plant and equipment | 6 | - | |
| Net cash used in investing activities | (14) | (15) | |
| Financing activities | |||
| Finance lease principal payments | (3) | - | |
| Proceeds from dividend write off | 58 | - | |
| Net cash flows from financing activities | 55 | - | |
| Net (decrease)/increase in cash and cash equivalents | (279) | 780 | |
| Cash and cash equivalents at beginning of the period | 283 | (497) | |
| Cash and cash equivalents at end of the period | 16 | 4 | 283 |
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 years presented, unless otherwise stated.
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) and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS.
These financial statements have been prepared on a historical cost basis and are presented in sterling, the functional currency of the Company.
Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
Property, plant and equipment are stated at cost, net of accumulated depreciation and any impairment in value.
Depreciation is calculated so as to write off the cost of assets, less their estimated residual values, on a straight line basis over the expected useful economic lives of the assets concerned. The principal annual rates used for this purpose are:
| % | |
|---|---|
| Computer hardware | 25-33 |
| Fixtures and fittings | 10-33 |
| Motor vehicles | 25-33 |
Expenditure on internally developed products is capitalised if it can be demonstrated that:
it is able to be used or sold;
the product will generate future economic benefits, internally and/or externally; and
Intangible assets are stated at cost, net of accumulated amortisation and any impairment in value. The cost of internally developed software is the attributable salary costs and directly attributable overheads.
Amortisation is calculated so as to write off the cost of assets, less their estimated residual values, on a straight line basis over the expected useful economic lives of the assets concerned. Amortisation is charged to administration expenses in the statement of comprehensive income and expense. The principal annual rates used for this purpose are:
| Purchased computer software | 25-33 |
|---|---|
| Internally developed software | 10-25 |
Non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount the asset is written down accordingly. Impairment is charged to administration expenses in the statements of comprehensive income and expense.
Trade and other receivables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
Amounts are charged to an impairment account when there is objective evidence that an impairment loss has occurred. Amounts are written off against the carrying amount of trade receivables when it is certain that the receivable will not be realised.
Cash in the balance sheet comprises cash held on demand with banks. For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash, as defined above, net of bank borrowings due on demand.
Trade and other payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.
Borrowings are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.
Costs in respect of operating leases are charged to the statement of comprehensive income and expense on a straight line basis over the lease term.
Assets and liabilities expressed in foreign currencies are translated into sterling at the exchange rate ruling on the balance sheet date. Transactions in foreign currencies are recorded at the exchange rate ruling as at the date of the transaction. All differences on exchange are taken to the statement of comprehensive income and expense in the year in which they arise.
Revenue, which excludes value added tax, represents the invoiced value of goods and services supplied: where a service has been provided, but not yet invoiced, the amount is included in the financial statements as accrued income.
Income from consultancy contracts, which are on a time hire basis, is recognised as the services are provided.
Income from maintenance and fixed price consultancy and development contracts, is recognised over the life of the contract, using the percentage of completion method, and is deferred to the extent that it has not been earned.
Income from the sale of Zubed licences, or the Zubed licence component of any contract, is fully recognised at the point of sale, less any amounts attributable to maintenance and support, which are recognised over the life of the licence.
Items which are both material and non-recurring are presented as exceptional items within their relevant category in the statement of comprehensive income and expense. The separate reporting of exceptional items helps to provide a better indication of the Group's underlying business performance. Events which may give rise to the classification of items as exceptional, if of a significantly material value, include non-routine movements in provisions, litigation and similar settlements, and asset impairments.
The charge for taxation is based on the profit or loss for the year as adjusted for disallowable items. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Full provision is made for deferred tax on all relevant temporary differences resulting from the difference between the carrying value of an asset or liability and its tax base. Deferred tax assets are recognised to the extent that it is probable that the deferred tax asset will be recovered in the foreseeable future. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled.
Contributions to defined contribution plans are charged to the statements of comprehensive income and expense as the contributions accrue.
Share-based incentive arrangements are provided to employees under the Group's share option scheme. Share options granted to employees since 7 November 2002 are valued at the date of grant using an appropriate option pricing model and are charged to operating profit over the performance or vesting period of the scheme. The annual charge is modified to take account of shares forfeited by employees who leave during the performance or vesting period and, in the case of non-market related performance conditions, where it becomes unlikely the option will vest.
A provision is recognised when the Group has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, expected future cash flows are discounted using a current pre-tax rate that reflects the risks specific to the liability. Calculations of these provisions require judgements to be made.
The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic Review. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Strategic Review, and in note 18 to the financial statements. In addition note 3 to the financial statements includes the Group's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and hedging activities, and its exposure to credit risk and liquidity risk. As highlighted in note 18 to the financial statements, the Group meets its day to day working capital requirements through an invoice finance facility.
The Group's projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current facility. The facility may be terminated by either party with one month's written notice. The board receives regular cash flow and working capital projections to enable it to monitor its available headroom under this facility. These projections indicate that the Group expects to have sufficient resources to meet its reasonably expected obligations. The bank has not drawn to the attention of the Group any matters to suggest that this facility will not be continued on acceptable terms.
After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.
The Group has adopted the following new standards, amendments and interpretations during the year. Adoption of these standards, amendments and interpretations did not have any effect on the financial performance or position of the Group. These standards and interpretations have been adopted from 1 April 2013 unless stated otherwise.
Annual Improvements to IFRSs (2009-2011 Cycle)
Amendments to IAS 1 'Presentation of Items of Other Comprehensive Income'
Amendments to IAS 19 'Employee Benefits '
IFRS 13 'Fair Value Measurement'
There has been no impact on the results, cash flows, financial position of the Group or their presentation as a result of the adoption of these standards.
At the date of approval of these financial statements, the following relevant standards and interpretations were issued but not yet mandatory (and in some cases had not yet been adopted by the EU). The Group has not applied these standards and interpretations in the preparation of these financial statements.
IFRS 9 'Financial Instruments'
IFRS 10 'Consolidated Financial Statements'
IFRS 11 'Joint Arrangements'
IFRS 12 'Disclosure of interests in other entities'
Annual Improvements to IFRSs (2010-2012 Cycle)
Annual Improvements to IFRSs (2011-2013 Cycle)
Amendments to IAS 27 'Separate Financial Statements'
Amendments to IAS 28 'Investments in Associates and Joint Ventures'
Amendments to IAS 32 'Offsetting financial assets and financial liabilities'
Amendments to IFRS 7 'Disclosures – offsetting financial assets and financial liabilities'
Amendments to IFRS 10, IFRS 12 and IAS 27 for investment entities
Amendments to IFRS 10, 11 and 12 on transition guidance
Narrow-scope amendments to IAS 36 'Impairment of Assets'
Narrow-scope amendments to IAS 39 'Financial Instruments: Recognition and Measurement'
The Directors do not anticipate that the adoption of the standards and amendments will have a material impact on the Group's financial statements in the period of initial application.
Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Provision has been made to meet the estimated liabilities of any property surplus to the requirements of the business. All ongoing costs net of estimated future rental income are charged to the provision. The provision is discounted, unless the effect of the time value of money is not material (see note 19).
Management exercises judgement in estimating costs, rental incomes and the discount rate used in the calculation of the provision.
Were the discount rate to increase or decrease by 1% this would increase or decrease net income and equity by £16,000.
Were 50% of the vacant property to be let for 3 years at a rent that was the same as the rent paid, this would increase net income and equity by £283,000.
A deferred tax asset of £1,826,000 (2013: £2,013,000) 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.
Revenue from maintenance and fixed price consultancy contracts is recognised over the life of the contract, using the percentage of completion method, and is deferred to the extent that it has not been earned. This requires the Group to estimate the services performed to date as a percentage of the total services to be performed. As at the balance sheet date, were the percentage of services performed to total services to be performed to differ by 10%, net income and equity would be increased by £nil if the percentage performed were increased, or net income and equity would be decreased by £nil if the percentage performed were decreased.
Revenue from consultancy contracts, which are on a time hire basis, is recognised as the services are delivered. This requires an assessment of services performed between the date of the last time sheet received and the balance sheet date. As at the balance sheet date, were the estimated amounts to differ by 10% this would increase/ decrease net income and equity by £2,000.
Revenue from Zubed licences is fully recognised at the point of sale providing there are no outstanding performance obligations. Any revenue attributable to further performance obligations such as maintenance and support, is estimated by attributing an appropriate profit margin to the estimated total cost of those obligations, and is recognised over the lifetime of the licence.
Intangible assets are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount is determined based on value-in-use calculations prepared on the basis of management's assumptions and estimates.
In applying its accounting policies the Group has not been required to make any judgements, apart from those involving estimates, that have had a significant effect on the amounts recognised in these financial statements.
The Group uses financial instruments that are necessary to facilitate its ordinary purchase and sale activities, namely cash, bank borrowings in the form of a receivables finance facility and trade payables and receivables: the resultant risks are foreign exchange risk, interest rate risk, credit risk and liquidity risk. The Group does not use financial derivatives in its management of these risks.
The Board reviews and agrees policies for managing these risks and they are summarised below. These policies are consistent with last year.
There are a small number of routine trading contracts with both suppliers and clients in euros. In all such circumstances the "back to back" contracts with supplier and client will be in the same currency thereby mitigating the Group's exposure to movements in exchange rates. Payments and receipts are made through a bank account in the currency of the contract: therefore balances held in any foreign currency are to facilitate day to day transactions. With a functional currency of sterling there are the following foreign currency net assets:
| Group and company | Note | 2014 £'000 |
2013 £'000 |
|---|---|---|---|
| Currency: Euros | |||
| Net cash | 16 | 10 | 26 |
| Trade and other receivables | 15 | 130 | 37 |
| Trade and other payables | 17 | (98) | (25) |
| 42 | 38 |
Any change in currency rates would have no significant effect on results.
The Group's interest rate risk arises from its borrowings, which are at a rate that fluctuates in relation to movements in bank base rate. This facility, as detailed in note 18, is secured by way of a debenture over all assets. At the year end borrowing under this facility totalled £104,000 (2013: £nil).
Cash balances are held in short term interest bearing accounts, repayable on demand: these attract interest rates which fluctuate in relation to movements in bank base rate. This maintains liquidity and does not commit the Group to long term deposits at fixed rates of interest.
A 1% change in interest rates would have changed net income and equity by £5,000 (2013: £4,000).
The Group is mainly exposed to credit risk from credit sales. It is Group policy to assess the credit risk of new customers before entering into contracts. Each new customer is assessed, using external ratings and relevant information in the public domain, before any credit limit is granted. In addition, trade receivables balances are monitored on a regular basis to minimise exposure to bad debts. The amount charged to the income statement during the year in respect of bad debts was £nil, (2013: £11,000, being 0.06% of revenue).
The Group is also exposed to credit risk from accrued income, being revenue earned but not yet invoiced (note 15).
Financial assets that are past due but not impaired are analysed in note 15. Each balance has been reviewed by management to assess its recoverability.
The Group also has credit risk from cash deposits with banks (note 16). The Group only banks with financial institutions with a good credit rating.
The Group's maximum exposure to credit risk is:
| Note | 2014 £'000 |
2013 £'000 |
|
|---|---|---|---|
| Trade and other receivables | 15 | 2,944 | 2,612 |
| Accrued income | 15 | 258 | 210 |
| Cash and cash equivalents | 16 | 108 | 283 |
| 3,310 | 3,105 |
The Group's liquidity risk arises from its management of working capital. The Group has a facility to borrow an amount up to 90% of approved trade debtors subject to a maximum limit of £2m. The facility may be terminated by either party with one month's written notice. The Board receives regular cash flow and working capital projections to enable it to monitor its available headroom under this facility. At the balance sheet date these projections indicated that the Group expected to have sufficient liquid resources to meet its reasonably expected obligations. Maturity of financial liabilities is set out in notes 17 and 18.
The Group's capital comprises both borrowings and shareholders' equity. Its objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to maximise shareholder value. To maintain or adjust the capital structure the Group may adjust the dividend payment to shareholders, return capital to shareholders, issue new shares or alter the level of borrowings.
The carrying value of financial assets and liabilities approximate their fair values.
The Group derives its revenue from two operating segments, which offer different services, being Resourcing and Consulting & Solutions.
The Resourcing segment provides services to the public and private sectors in the areas of both contract and permanent IT resourcing. The Consulting & Solutions segment provides IT consultancy and solutions services, including location intelligence services to both the public and private sectors.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors.
| Resourcing | Consulting & Solutions |
Total | |
|---|---|---|---|
| 2014 | 2014 | 2014 | |
| £'000 | £'000 | £'000 | |
| Revenue | 16,991 | 2,711 | 19,702 |
| Profit/(loss) from operations before exceptional items | 327 | (202) | 125 |
| Exceptional items | - | - | - |
| Profit/(loss) from operations after exceptional items | 327 | (202) | 125 |
| Resourcing | Consulting & Solutions |
Total | |
|---|---|---|---|
| 2013 | 2013 | 2013 | |
| £'000 | £'000 | £'000 | |
| Revenue | 16,030 | 2,850 | 18,880 |
| Profit/(loss) from operations before exceptional items | 417 | (442) | (25) |
| Exceptional items | - | 163 | 163 |
| Profit/(loss) from operations after exceptional items | 417 | (279) | 138 |
Assets and liabilities are not reported internally by segment as management do not require such information to manage the business, so no such segmental information is presented.
The Group operates solely in the UK. All material revenues are generated in the UK.
20% (2013: 12%) of revenue was generated in the public sector. The largest single customer contributed 28% (2013: 21%) of Group revenue, was in the private sector, and is reported within the Resourcing segment.
There was an exceptional administrative credit of £163,000 in the previous year in respect of a reduction in the provision for vacant property costs as a result of an agreement with the landlords for a one year rent holiday on the vacant property, which commenced on 25 June 2013.
| 2014 | 2013 | |
|---|---|---|
| £'000 | £'000 | |
| Administrative expenses | 2,738 | 2,729 |
| Exceptional administrative credit: vacant property provision | - | (163) |
| Total administrative expenses | 2,738 | 2,566 |
| 6. Profit from operations | ||
| 2014 £'000 |
2013 £'000 |
|
| Profit from operations is stated after charging/(crediting): | ||
| Profit on disposal of property, plant and equipment | (6) | - |
| Depreciation of owned assets | 20 | 17 |
| Amortisation of intangible assets | 55 | 56 |
| Operating leases for land and buildings | 380 | 515 |
| Impairment of receivables | - | 11 |
| Auditors' remuneration: | ||
| Audit of financial statements: Group and company | 53 | 46 |
| Taxation services | 3 | 4 |
| 7. Finance income and expense | ||
| 2014 | 2013 | |
| £'000 | £'000 | |
| Finance income | ||
| Net foreign exchange gain | - | 2 |
| Total finance income | - | 2 |
| Finance expense | ||
| Bank interest payable | (19) | (16) |
| Other interest payable | (2) | - |
| Total interest expense | (21) | (16) |
| Unwinding of discount on provisions | (92) | (96) |
| Net foreign exchange loss | (1) | - |
| Total finance expense | (114) | (112) |
| Net finance expense recognised in income and expense | (114) | (110) |
| Group and company | 2014 Number |
2013 Number |
|---|---|---|
| Average number of persons (including executive Directors) employed | ||
| Senior management | 4 | 5 |
| Fee earners | 28 | 30 |
| Sales | 16 | 20 |
| Administration and finance | 9 | 10 |
| 57 | 65 | |
| Staff costs for the above persons (including executive Directors) | 2014 | 2013 |
| £'000 | £'000 | |
| Wages and salaries | 2,792 | 3,073 |
| Social security costs | 317 | 340 |
| Defined contribution pension costs | 235 | 223 |
| Equity settled share-based payments | 12 | 10 |
| 3,356 | 3,646 | |
| Directors | £'000 | £'000 |
| Emoluments | 170 | 170 |
| Money purchase pension contributions | 16 | 16 |
| 186 | 186 |
One Director (2013: one) had retirement benefits accruing under money purchase pension schemes.
| 2014 £'000 |
2013 £'000 |
|
|---|---|---|
| Tax expense in income statement | - | - |
The tax expense for the year differs from the standard rate of corporation tax in the UK (23%; 2013: 24%). The differences are explained below:
| 2014 £'000 |
2013 £'000 |
|
|---|---|---|
| Profit before tax | 11 | 28 |
| Profit before tax multiplied by standard rate of corporation tax in the UK of 23% (2013: 24%) Effects of: |
3 | 7 |
| Expenses not deductible for tax purposes | 9 | 15 |
| Movement in unrecognised deferred tax asset in respect of operating losses | (6) | (14) |
| Movement in unrecognised deferred tax asset in respect of temporary differences | (6) | (8) |
| Total tax charge for the year | - | - |
A deferred tax asset of £1,826,000 (2013: £2,013,000) on trading losses of £8,475,000 (2013: £8,502,000) 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.
| Group and company | 2014 £'000 |
2013 £'000 |
|---|---|---|
| Accelerated depreciation Losses carried forward indefinitely |
46 1,780 |
58 1,955 |
| Unrecognised deferred tax asset | 1,826 | 2,013 |
No dividends have been paid or proposed for year ended 31 March 2014 (2013: nil).
During the year, unclaimed dividends totalling £58,000 (2013: £nil) were repaid to the Company in accordance with the Company's Articles of Association, and credited directly to the retained earnings account.
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:
| 2014 | 2013 | |
|---|---|---|
| Profit for the year | £11,000 | £28,000 |
| 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 | 0.07p | 0.18p |
| Diluted earnings per share | 0.07p | 0.18p |
* The share options have no dilutive effect in either the current or previous years. Potentially dilutive share options are disclosed in Note 21.
| Group and company | Purchased software |
Internally developed software |
Total |
|---|---|---|---|
| £'000 | £'000 | £'000 | |
| Cost | |||
| At 31 March 2012 | 634 | 1,576 | 2,210 |
| Additions | 1 | - | 1 |
| At 31 March 2013 | 635 | 1,576 | 2,211 |
| Disposals | (10) | (466) | (476) |
| At 31 March 2014 | 625 | 1,110 | 1,735 |
| Accumulated amortisation/impairment | |||
| At 31 March 2012 | 577 | 1,371 | 1,948 |
| Charge for the year | 22 | 34 | 56 |
| At 31 March 2013 | 599 | 1,405 | 2,004 |
| Charge for the year | 21 | 34 | 55 |
| Disposals | (10) | (466) | (476) |
| At 31 March 2014 | 610 | 973 | 1,583 |
| Net book value | |||
| At 31 March 2014 | 15 | 137 | 152 |
| At 31 March 2013 | 36 | 171 | 207 |
| Group and company | Computer hardware £'000 |
Fixtures & fittings £'000 |
Motor vehicles £'000 |
Total £'000 |
|---|---|---|---|---|
| Cost | ||||
| At 31 March 2012 | 538 | 962 | 25 | 1,525 |
| Additions | 12 | 2 | - | 14 |
| At 31 March 2013 | 550 | 964 | 25 | 1,539 |
| Additions | 14 | - | 38 | 52 |
| Disposals | (262) | - | (21) | (283) |
| At 31 March 2014 | 302 | 964 | 42 | 1,308 |
| Accumulated depreciation | ||||
| At 31 March 2012 | 521 | 953 | 22 | 1,496 |
| Charge for the year | 10 | 4 | 3 | 17 |
| At 31 March 2013 | 531 | 957 | 25 | 1,513 |
| Charge for the year | 11 | 2 | 7 | 20 |
| Disposals | (262) | - | (21) | (283) |
| At 31 March 2014 | 280 | 959 | 11 | 1,250 |
| Net book value | ||||
| At 31 March 2014 | 22 | 5 | 31 | 58 |
| At 31 March 2013 | 19 | 7 | - | 26 |
The net carrying amount of property, plant and equipment includes £31,000 (2013: £nil) in respect of assets held under finance leases.
(a) Generic Software Consultants Limited ("Generic"), a 100% subsidiary undertaking, in respect of both voting rights and issued shares, which is registered in England and Wales and has an issued share capital of 5,610 US\$1 ordinary shares. The investment is stated in the Company's books at £440.
Up to 31 March 2009 Generic acted as an agent for the business, but did not enter into any transactions in its own right: its business was included within the figures reported by the Company. On 1 April 2009 the agency agreement was terminated and all business is now conducted directly by the parent company through its Generic business.
(b) Triad Special Systems Limited, Generic Online Limited, Zubed Geospatial Limited, Zubed Sales Limited, are all 100% subsidiaries which are registered in England and Wales. They are dormant companies, which have never traded. Each has a share capital of £1.
| Group and company | 2014 £'000 |
2013 £'000 |
|---|---|---|
| Trade receivables Less: provision for impairment of trade receivables |
2,944 - |
2,624 (12) |
| Trade receivables-net | 2,944 | 2,612 |
| Accrued income Prepayments |
258 234 |
210 238 |
| 3,436 | 3,060 |
The fair value of trade and other receivables approximates closely to their book value.
Trade receivables are normally on 30 days payment terms. As at 31 March 2014 trade receivables of £727,000 (2013: £594,000) were past due but not impaired. They relate to customers with no default history. The total number of customer ledger balances at 31 March 2014 was 90 (2013: 96). The ageing analysis of these receivables is as follows:
| Group and company | 2014 | 2013 |
|---|---|---|
| £'000 | £'000 | |
| Up to 30 days past due | 572 | 496 |
| 30 to 60 days past due | 120 | 58 |
| Over 60 days past due | 35 | 40 |
| 727 | 594 |
Movements on the provision for impairment of trade receivables is as follows:
| Group and company | 2014 £'000 |
2013 £'000 |
|---|---|---|
| At beginning of the year | 12 | 12 |
| Charged to income statement | - | 12 |
| Credited to income statement | (12) | (1) |
| Receivables written off as uncollectable | - | (11) |
| At end of the year | - | 12 |
The carrying amount of the Group's trade and other receivables are denominated in the following currencies:
| Group and company | 2014 £'000 |
2013 £'000 |
|---|---|---|
| Sterling Euros |
3,072 130 |
2,785 37 |
| 3,202 | 2,822 |
Debtor days are calculated by matching year end debtor balances to most recent sales on a day by day basis.
| Group and company | 2014 | 2013 |
|---|---|---|
| £'000 | £'000 | |
| Cash available on demand | 108 | 283 |
The fair value of cash and cash equivalents approximates closely to their book value.
The carrying amount of the Group's cash and cash equivalents is denominated in the following currencies:
| Group and company | 2014 £'000 |
2013 £'000 |
|---|---|---|
| Sterling Euros |
98 10 |
257 26 |
| 108 | 283 |
For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash, as detailed above, net of bank borrowings repayable on demand.
| Group and company | 2014 £'000 |
2013 £'000 |
|---|---|---|
| Cash available on demand Bank borrowings repayable on demand |
108 (104) |
283 - |
| 4 | 283 |
| Group | Company | ||||
|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | ||
| £'000 | £'000 | £'000 | £'000 | ||
| Trade payables | 1,586 | 1,679 | 1,586 | 1,679 | |
| Accruals | 307 | 368 | 307 | 368 | |
| Owed to subsidiary | - | - | 5 | 5 | |
| 1,893 | 2,047 | 1,898 | 2,052 | ||
| Deferred income | 145 | 70 | 145 | 70 | |
| Other taxation and social security | 317 | 282 | 317 | 282 | |
| 2,355 | 2,399 | 2,360 | 2,404 |
The maturity date of trade and other payables is as follows:
| Group | Company | |||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| £'000 | £'000 | £'000 | £'000 | |
| Up to 3 months | 1,802 | 1,942 | 1,807 | 1,947 |
| 3 to 6 months | 33 | 39 | 33 | 39 |
| 6 to 12 months | 58 | 66 | 58 | 66 |
| 1,893 | 2,047 | 1,898 | 2,052 |
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:
| Group | Company | |||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| Sterling | £'000 1,795 |
£'000 2,022 |
£'000 1,800 |
£'000 2,027 |
| Euros | 98 | 25 | 98 | 25 |
| 1,893 | 2,047 | 1,898 | 2,052 |
| Group and company | 2014 £'000 |
2013 £'000 |
|---|---|---|
| Current | ||
| Bank borrowings | 104 | - |
| Finance lease obligations | 5 | - |
| 109 | - | |
| Non-current | ||
| Finance lease obligations | 24 | - |
The fair value of bank borrowings approximates closely to their book value.
The carrying amount of the Group's financial liabilities is all denominated in sterling.
Bank borrowings are in the form of a receivables finance facility to borrow an amount up to 90% of approved trade debtors subject to a maximum limit of £2m. This facility is secured by way of a debenture over all assets, being £3.65m at 31 March 2014. Bank borrowings are repayable upon demand.
The receivables finance facility is included as part of cash and cash equivalents for the purpose of the cash flow statement as it forms an integral part of the Group's cash management.
| Group and company | Provision for vacant properties £'000 |
Provision for property dilapidation £'000 |
Total £'000 |
|---|---|---|---|
| At 1 April 2013 | 753 | 26 | 779 |
| Charged to income statement | - | 33 | 33 |
| Utilised in year | (117) | - | (117) |
| Unwinding of discount: passage of time (note 7) | 92 | - | 92 |
| At 31 March 2014 | 728 | 59 | 787 |
The discount rate applied in the calculation of the provision for vacant properties is 12% (2013: 12%).
| Group and company | Provision for vacant properties |
Provision for property dilapidation |
Total |
|---|---|---|---|
| £'000 | £'000 | £'000 | |
| The maturity profile of the present value of provisions is as follows: | |||
| Current | 184 | 57 | 241 |
| Non-current | 544 | 2 | 546 |
| 728 | 59 | 787 |
The provision for vacant properties covers the anticipated future costs of rent, rates and other outgoings in respect of unoccupied property, less anticipated future rental income. It has been calculated on the basis of when the property is anticipated to be sub-let. These liabilities have been discounted therefore there is no material difference between the value of the provision recorded in the accounts and the fair value. The maturity profile of the carrying amount of this provision as at 31 March 2014 is as follows:
| Group and company | 2014 £'000 |
2013 £'000 |
|---|---|---|
| In one year or less | 184 | 102 |
| In more than one year, but not more than 2 years | 201 | 165 |
| In more than 2 years, but not more than 5 years | 343 | 486 |
| 728 | 753 |
The provision for property dilapidation covers the estimated future costs required to meet obligations under property leases to redecorate and repair property.
| 2014 | 2013 | |
|---|---|---|
| Ordinary shares of 1p each | ||
| Issued, called up and fully paid: | ||
| Number | 15,149,579 | 15,149,579 |
| Nominal value | £151,496 | £151,496 |
| Authorised: | ||
| Number | 33,500,000 | 33,500,000 |
| Nominal value | £335,000 | £335,000 |
At 31 March 2014 1,183,000 options granted under employee share option schemes remain outstanding:
| Number | Exercise price | Performance criteria | Period options exercisable |
|---|---|---|---|
| 190,000 | 51.5p | 1 | 8 March 2009 to 8 March 2016 |
| 158,000 | 14.0p | 2 | 7 August 2012 to 7 August 2018 |
| 835,000 | 13.5p | 1 | 23 September 2014 to 23 September 2021 |
1 Performance criteria: that, the Company shall have achieved a positive basic earnings per share (subject to adjustment to exclude identified exceptional items), as reported in its audited annual accounts, in any financial year commencing at least one year after the date of grant.
2 Performance criteria: that if, but only if, the total Earnings per Share of the Company in the period of the three years ending 31 March 2012 exceeds 9.5p per share, and the amount of Earnings per Share for each of those years is a positive amount, then an Option shall become exercisable in respect of 50% of the shares over which it subsists. If, but only if, the total Earnings per Share of the Company in the period of three years ending 31 March 2012 exceeds 19p per share, and the amount of Earnings per Share for each of those years is a positive amount, then an Option shall become exercisable in respect of 100% of the shares over which it subsists.
The options outstanding at 31 March 2014 had a weighted average remaining contractual life of 6.2 years (2013: 7.3 years).
Options have been valued using the Black-Scholes option-pricing model. No performance conditions were included in the fair value calculations.
There were no options granted during the year (2013: nil).
The total expense recognised in the year is £12,000 (2013: £10,000).
A reconciliation of option movements over the year to 31 March 2014 is shown below:
| 2014 | 2013 | |||
|---|---|---|---|---|
| Number of options |
Weighted average exercise price Pence |
Number of options |
Weighted average exercise price Pence |
|
| Outstanding at start of year | 1,384,000 | 19.0 | 1,635,412 | 19.9 |
| Forfeited | (201,000) | 14.7 | (37,000) | 15.6 |
| Lapsed | - | (214,412) | 26.5 | |
| Outstanding at end of year | 1,183,000 | 19.7 | 1,384,000 | 19.0 |
| Exercisable at end of year | 348,000 | 34.5 | 394,000 | 32.7 |
There were no options exercised during the year. The above figures include options held by Directors which are set out in the Directors' Remuneration Report on page 17.
The Group had capital commitments totalling £nil at 31 March 2014 (31 March 2013: £nil).
The future aggregate minimum lease payments under non-cancellable operating leases, all of which relate to property, are:
| 2014 £'000 |
2013 £'000 |
|
|---|---|---|
| Not later than 1 year Later than 1 year and no later than 5 years |
443 1,185 |
413 1,628 |
| 1,628 | 2,041 |
The Group rents two of its 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 2008. A rent holiday was agreed with the landlords for one of the offices for a period of one year commencing from 25 June 2013. Therefore the rent payable during that period was reduced to £215,000. JC Rigg, a Director, has notified the Board that he has a 50% beneficial interest in these contracts. The balance owed at the year end was £nil (2013: £nil).
Key management comprises the Board of Directors and their remuneration is set out in the Directors' Remuneration Report on page 16.
| Years ended 31 March | 2014 | 2013 | 2012 | 2011 | 2010 |
|---|---|---|---|---|---|
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Revenue | 19,702 | 18,880 | 19,447 | 23,298 | 27,176 |
| Gross profit | 2,863 | 2,704 | 3,239 | 3,644 | 4,723 |
| Profit/(loss) on ordinary activities before taxation | 11 | 28 | (76) | (920) | (613) |
| Taxation on loss on ordinary activities | - | - | 277 | - | - |
| Profit/(loss) on ordinary activities after taxation | 11 | 28 | 201 | (920) | (613) |
| Dividends | - | - | - | - | - |
| Retained profit/(sustained loss) for the financial year | 11 | 28 | 201 | (920) | (613) |
| Basic profit/( loss) per ordinary share of 1p each (pence) | 0.07 | 0.18 | 1.33 | (6.07) | (4.05) |
| Balance sheet | |||||
| As at 31 March | 2014 | 2013 | 2012 | 2011 | 2010 |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Non-current assets | 210 | 233 | 291 | 484 | 892 |
| Current assets | 3,544 | 3,343 | 4,491 | 4,582 | 6,365 |
| Current liabilities | (2,705) | (2,513) | (3,474) | (3,842) | (4,939) |
| Non-current liabilities | (570) | (665) | (948) | (1,071) | (1,245) |
| Net assets | 479 | 398 | 360 | 153 | 1,073 |
| Share capital | 151 | 151 | 151 | 151 | 151 |
| Share premium account | 562 | 562 | 562 | 562 | 562 |
| Capital redemption reserve | 104 | 104 | 104 | 104 | 104 |
| Retained earnings | (338) | (419) | (457) | (664) | 256 |
| Equity shareholders' funds | 479 | 398 | 360 | 153 | 1,073 |
Equiniti maintain the register of members of the Company. If you have any questions about your personal holding of the Company's shares, please contact:
Equiniti PO Box 4630 Aspect House Spencer Road Lancing West Sussex BN99 6QQ
Telephone: 0870 6015366
If you change your name or address or if the details on the envelope enclosing the report, including your postcode, are incorrect or incomplete, please notify the registrar in writing.
If you have an enquiry about the Group's business, or about something affecting you as a shareholder (other than queries which are dealt with by the registrar) you should contact the Company Secretary, by letter or telephone at the Company's registered office.
Company Secretary and registered office:
Nick Burrows Triad Group Plc Weyside Park Catteshall Lane Godalming Surrey GU7 1XE
Telephone: 01483 860222 Fax: 01483 860198 Email: [email protected]
| Annual General Meeting | Summer 2014 |
|---|---|
Financial year ended 31 March 2015: expected announcement of results
| Half year | November 2014 |
|---|---|
| Full year preliminary announcement | June 2015 |
John Rigg, Chairman Nick Burrows
Alistair Fulton Steven Sanderson
Nick Burrows Triad Group Plc Weyside Park Catteshall Lane Godalming Surrey GU7 1XE
Telephone: 01483 860222 Fax: 01483 860198 Email: [email protected]
domicile of parent company
Legal form Public limited company
2285049
BDO LLP 55 Baker Street London W1U 7EU
Allen & Overy LLP One Bishops Square London E1 6AO
Lloyds TSB Bank plc City Office 11-15 Monument Street London EC3V 9JA
Equiniti Aspect House Spencer Road Lancing West Sussex BN99 6DA
Godalming office: Weyside Park Catteshall Lane Godalming Surrey GU7 1XE
T. 01483 860222 F. 01483 860198
St Andrews House Caldecotte Lake Drive Caldecotte Business Park Milton Keynes MK7 8LE
T. 01908 278450 F. 01908 630133
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