Triad Group
Annual Report 2015

Plain-text annual report

TRIAD GROUP PLC Annual Report and Accounts 5 1 / 4 1 Godalming office: Weyside Park Catteshall Lane Godalming Surrey GU7 1XE 01483 860222 Milton Keynes office: 37 Sunningdale House Caldecotte Lake Business Park Milton Keynes MK7 8LF 01908 278450 triad.co.uk Table of contents Triad Group Plc | Annual report for the year ended 31 March 2015 02 07 10 14 19 22 Strategic report Directors’ report Corporate governance report Directors’ remuneration report Independent auditors’ report to the members of Triad Group Plc 24 25 26 43 44 Statements of financial position Statements of cash flows Notes to the financial statements Five year record Shareholders’ information and financial calendar Statements of comprehensive income and expense 45 Corporate information 23 Statements of changes in equity Triad Group Plc Annual Report and Accounts 2015 | 01 Strategic Report Financial highlights • Revenue for the year ended 31 March 2015: £23.5m (2014: £19.7m) • Profit from operations: £0.46m (2014: £0.13m) • Earnings before interest, tax, depreciation and amortisation (EBITDA): £0.54m (2014: £0.20m) • Profit after tax: £0.35m (2014: £0.01m) • Gross profit as a percentage of revenue: 14.1% (2014: 14.5%) Chairman’s statement Dr John Rigg, Executive Chairman The Group’s results for the financial year ended 31 March 2015 demonstrate the significant progress made in all areas of the business, and represent our strongest performance for over 10 years. These years have been a particularly difficult period for small and medium sized enterprises (SME’s), and it is a testament to the resilience of the Group and its staff that Triad has survived and is now looking forward to better times ahead. The improvement in results has been achieved by the effort and determination of Triad’s management and staff to build a more focused and robust business, with Triad teams winning and retaining projects across a wide range of Government departments, as well as in a number of major private sector accounts. The unified business model introduced last year has created real traction during the period, particularly in the public sector. Triad’s presence on the G-Cloud and Digital Services frameworks has enabled it to engage directly with new and existing clients to provide a broad spectrum of services including consultancy, business analysis, software development and coaching. Significant successes have been around the provision of staff to support projects aligned to the Government’s Digital agenda, with central government clients including Ministry of Justice, Home Office and Cabinet Office. New clients included Welsh Government, Companies House and Central & North West London NHS Trust. We were also very proud to have been able to support the Roll of Honour at the Tower of London in our role as IT Solutions Partner, playing a small part in the remembrance celebrations in 2014. Elsewhere, we supported the National Trust in its own commemoration activities, with our geospatial platform Zubed being used to display locations of the Trust’s war memorials. 02 | Triad Group Plc Annual Report and Accounts 2015 In the private sector, Triad continued to provide consultancy, development and resourcing services to a wide range of clients. We supplied a team of consultants to help a leading energy management provider redevelop its energy management portal which is used by major players in the energy sector. We also developed a platform to improve collaboration and work-winning for one of the world’s foremost automotive consultancy firms. We continued to excel as a Tier 1 supplier of IT resources to one of the world’s largest banks. Revenue and operating profit have increased across the Group. Whilst we have been determined in our efforts to drive margin upwards, a significant source of revenue growth was with one particular account that has been operating at a fixed, lower margin. This had the effect of diluting margin improvements elsewhere, although progress was made on this front in the last quarter of the period. Improvement in a number of areas has driven the positive performance in the Group. A concerted attempt to raise the profile of the Group by promoting the facilities of G-Cloud and Digital Services frameworks has helped to win more business in the public sector. A more joined-up business has facilitated the introduction of new areas of expertise to our clients, using our resourcing capability to develop centres of excellence around skillsets such as DevOps and User Experience. Our focus on value and productivity has given clients the confidence to extend and renew contracts, helping to improve consultant utilisation rates in the process. Our agility as an SME, combined with our heritage and experience of 27 years, has allowed the Group to operate very responsively, setting a standard that our clients have used as the benchmark for other suppliers to achieve. The Group has worked very successfully in multi-supplier environments, with numerous examples of effective collaboration with suppliers both large and small. Board Appointment The Board was strengthened in March 2015 with the appointment of Adrian Leer as Executive Commercial Director. Adrian has been with the Group for a number of years, and his appointment reflects Triad’s commitment to organic growth. Segmental Reporting In practice, the group no longer operates on a segmental basis. There is one management team. Opportunities are developed centrally, and resourced according to client needs. Efforts to create a single, seamless business have been successful to the point where the separation of the business into two segments for reporting purposes no longer makes sense. Reporting for the next and subsequent periods will be non-segmental. Strategic Report Outlook A key focus going forward will be on efficiency and driving profit. Recruitment of talented staff is essential to this objective, particularly around the consultancy practice where a number of positions in the previous reporting period have been occupied by temporary staff. The Group expects to improve its work-winning rate in Government, exploiting further the major frameworks, and utilising opportunities with key partners. The Group’s track record of building solutions that generate efficiencies places Triad in a strong position to help deliver the new Government’s agenda. Following a small number of successes in the NHS and Health sector generally, the Group plans to increase its presence in this area and capitalise on opportunities afforded by a more localised approach to investment. The Group expects to see more investment in the private sector too, with increasing economic confidence and an emphasis on productivity and innovation. Employees Principal objectives The principal objectives of the Company are to; • Provide clients with industry leading service in our core skills. • Achieve sustainable profitable growth across the business and increase long term shareholder value. The key elements of our strategy to achieve our objectives are; To provide a range of specialist services relevant to our clients business • Our services include consultancy, change leadership, project delivery, software development, mobility services and business insights. Further capacity and expertise is provided via our resourcing services. • We continue to adopt a “business first, technology second” approach to solving our clients’ problems. A cornerstone of our service offer is our consultancy model, offering advice and guidance to clients in terms of technology investments. On behalf of the Board I would like to thank all our staff for their efforts during the past year. To develop long term client relationships across a broad client base • Enduring client relationships fuel profitability. A hallmark of our recent improvements has been the frequency of repeat business, which itself has been a function of outstanding delivery and proactive business development within existing accounts. • Our consistent track record in this regard is our major asset when developing propositions for new clients, along with the use of case studies and references. • We have structured our service offering to enable clients to engage early, thus enabling the building of trust and confidence from the outset. To work with partners • 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. John Rigg Chairman 10 June 2015 Organisation overview Triad Group Plc is engaged in the provision of IT resourcing, consultancy and solutions services to the public and private sectors. For the year to 31 March 2015 the Group consisted of two operating segments, Triad Resourcing and Triad Consulting & Solutions. From 1 April 2015 the Group will consist of one operating segment as explained in the Chairman’s Statement above. Triad Group Plc Annual Report and Accounts 2015 | 03 Strategic Report To leverage group capability and efficiency to increase profitability • We continue to develop synergies across the Group’s activities both externally and internally, driving better outcomes for clients whilst improving efficiency and effectiveness. The management team sets objectives to ensure that these synergies are exploited. • We enable our clients to benefit from access to a full range of ICT services, delivered through a single, easy to access, point of sale. Our resourcing team provides rapid, scalable capacity and skills to our consultancy and development projects as demand dictates. Our consultants offer expertise and experience to our resourcing team as increasingly complex technical requirements emerge from our clients. • We will continue to strive to provide the highest quality of service through the provision of niche resources using market experts, and the supply of IT services though our team of skilled consultants. • We will strengthen our pipeline of work through the development of fulfilling and productive client relationships. Business model 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. For the year ended 31 March 2015 the Group consists of two operating segments, Triad Resourcing and Triad Consulting & Solutions, both operating in the United Kingdom from offices in Milton Keynes and Godalming. The 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. • 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 licensing software that we have developed. 04 | Triad Group Plc Annual Report and Accounts 2015 From 1 April 2015 the Group will no longer be reporting segmental results. This is to reflect the Group’s operating model and management’s reporting and decision making processes as explained in the Chairman’s Statement above. Principal risks and uncertainties 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: IT services market The demand for IT services is affected by UK market conditions. The continual development of the Group’s business into new niches and sectors is important in protecting the Group from fluctuations in market conditions. Revenue visibility 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. Availability of staff 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. Offshore competition 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. Performance assessment, financial review and outlook 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. Strategic Report The KPIs are as follows; Revenue £23,482,000 £19,702,000 Profit from operations £462,000 £125,000 2015 2014 £543,000 £200,000 Earnings before interest, tax, depreciation and amortisation (EBITDA) Gross margin Average headcount Emission source: Combustion of fuel Electricity and heat purchased for own use 14.1% 14.5% Total 52 57 tCO2e per £1m revenue 2015 tCO2e* 2014 tCO2e* 25 109 134 5.7 41 86 127 6.4 *The calculation of tCO2e for each source has been prepared in accordance with DEFRA guidelines for GHG reporting. Financial review Group performance The Group reports significantly improved operating performance for the financial year ended 31 March 2015. Group revenue has increased to £23.5m (2014: £19.7m) further to an increase in contractor numbers in the Resourcing business and improved utilisation the Consulting business. The Group reports an increase in profit from operations to £0.46m (2014: £0.13m). Earnings before interest, tax, depreciation and amortisation (EBITDA) is £0.54m (2014: £0.20m). The Group reports a profit after tax of £0.35m (2014: £0.01m). Gross margin has decreased slightly to 14.1% (2014: 14.5%). This is as a result of a higher proportion of Resourcing business being conducted at lower margins when compared to last year. Utilisation in the Consulting business has also improved further to securing longer term client engagements. Cash and cash equivalents at the year-end have increased to £390,000 (2014: £4,000). Operating segments The Group presents its results across two segments, Resourcing and Consulting & Solutions. Corporate social responsibility Our employees 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 2015 were directors, senior managers or employees of the Company. Directors Senior managers Employees Male Female Total 5 1 36 42 - 1 14 15 5 2 50 57 Environment and greenhouse gas reporting 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 2014 to 31 March 2015 in tonnes of carbon dioxide equivalents (tCO2e) is shown in the table below. Triad Group Plc Annual Report and Accounts 2015 | 05 Strategic Report Revenue for the financial year to 31 March 2015 in the Resourcing business has increased to £19.8m (2014: £17.0m). This increase is as a result of growth in long standing, but lower margin, key accounts together with the development of significant new accounts, particularly in the public sector where Triad teams consisting of both contractors and consultants are able to support a wider range of projects, offering clients rapid access to specialist skills. The segment reports a profit from operations of £0.4m (2014: £0.3m). Whilst this represents a solid performance the average gross margin percentage has been impacted by the relative increase in lower margin business offsetting higher margins being achieved elsewhere. Revenue in the Consulting & Solutions segment has increased to £3.6m (2014: £2.7m). Included in this figure is revenue attributable to subcontractors where partner organisations have been used to provide specialist services. During the year, the amount paid to such organisations has increased to £0.74m (2014: £0.13m). The return of the Consulting business to profit marks a significant achievement with the segment reporting a profit from operations of £0.1m (2014: £0.2m loss). Consultant utilisation has remained high throughout the year and day rates have held up well. Overheads Administrative expenses for the year are £2.8m (2014: £2.7m). Staff costs are unchanged at £3.4m (2014: £3.4m). The average headcount for the year has reduced to 52 (2014: 57). Cash flows Cash and cash equivalents at 31 March 2015 stood at £390,000 (2014: £4,000). There was a net cash inflow from operating activities of £498,000 (2014: £320,000 outflow). The net cash outflow from investing activities was £107,000 (2014: £14,000). Tangible assets Tangible assets were purchased totalling £97,000 (2014: £20,000). This primarily relates to the fitting out of a replacement office in Milton Keynes and associated equipment. Intangible assets Amortisation relating to the internally developed software, Zubed was £0.03m (2014: £0.03m). There were no development costs capitalised during the year (2014: £nil). Net assets The net asset position of the Group at 31 March 2015 was £839,000 (2014: £479,000). The increase over the year was due to the profit for the year. Share options 405,000 options were granted during the year. An expense of £8,000 has been recognised in the year relating to options granted in September 2011 and September 2014. Outlook Key to the advances made this year is that the Group’s operations are being driven forward as one business, no longer being run as two separate operating segments. The business model now being adopted by the Group is able to support steady growth in headcount in both contract resource and permanent headcount. This is reflected in the reporting to senior management and operating decisions subsequently made. Consequently, from the start of the new financial year, Triad will no longer be reporting its results across the current operating segments. This will enable management to focus on driving efficiency and achieving improved profitability. By order of the Board NE Burrows Finance Director 10 June 2015 06 | Triad Group Plc Annual Report and Accounts 2015 Directors’ Report The Directors present their Annual Report on the activities of the Group, together with the financial statements for the year ended 31 March 2015. The Board confirms that these, taken as a whole, are fair, balanced and understandable, and that they provide the information necessary for shareholders to assess the company’s position and performance, business model and strategy, 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. Corporate Governance disclosures required with the Directors’ Report have been included within our Corporate Governance Report beginning on page 10. Share capital and substantial shareholdings Share capital As at 31 March 2015, 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 19 to these financial statements. Voting rights 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. Transfer of shares 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: • Insider trading laws; and • The Listing Rules of the Financial Conduct Authority whereby certain employees of the Group require the approval of the Company to deal in the Company’s ordinary shares. Appointment and replacement of directors 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. Triad Group Plc Annual Report and Accounts 2015 | 07 Directors’ Report Amendment of the Company’s Articles of Association Disclosure of information to auditors 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. Forward-looking statements 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. Going concern 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 17 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 17 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 Company’s Articles may only be amended by a special resolution passed at a general meeting of shareholders. Substantial shareholdings 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 is aware of the following holdings of 3% or more of the share capital of the Company at 31 March 2015 and no changes have been disclosed to the Company between this date and 1 June 2015: M Makar Liontrust Investment Services Ltd The Chatham Trust Percentage of issued share capital 29.76% 9.61% 4.46% Dividends 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 2015 (2014: nil per 1p ordinary share). Financial instruments 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 activity Research and development activities are undertaken with the prospect of gaining new technical knowledge and understanding, and developing new software. Directors’ interests in contracts Directors’ interests in contracts are shown in note 22 to the accounts. Directors’ insurance and indemnities 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. 08 | Triad Group Plc Annual Report and Accounts 2015 Directors’ Report Auditors 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. Environment and greenhouse gas reporting Carbon dioxide emissions data, is contained in the Corporate Social Responsibility section of the Strategic Report, due to its strategic importance. Statement of Directors’ responsibilities 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: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; • prepare a Directors’ Report, Strategic Report and Director’s Remuneration Report which comply with the requirements of the Companies Act 2006. 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: • The Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group. • The annual report includes a fair review of the development and performance of the business and the financial position of the Group and the Parent Company, together with the description of the principal risks and uncertainties that they face. By order of the Board NE Burrows Company Secretary 10 June 2015 Triad Group Plc Annual Report and Accounts 2015 | 09 Corporate governance report 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 Board The Directors who held office during the financial year were: Executive Directors John Rigg, Chairman Nick Burrows, Finance Director Adrian Leer, Commercial Director (appointed 3 March 2015) Independent non-executive Directors 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. Steven Sanderson is a non-executive Director. He is a Chartered Accountant. He was appointed non- executive 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 the Finance Director. He 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. Adrian Leer was appointed to the Board as Commercial Director on 3 March 2015. He initially joined Triad in 2009 10 | Triad Group Plc Annual Report and Accounts 2015 in a consultative capacity, providing advice to the business regarding its fledgling geospatial product, Zubed, and helping to secure significant wins with major clients. In 2010, Adrian became General Manager of Zubed Geospatial. In 2012 Adrian became Commercial Director of Triad Consulting & Solutions. Before joining Triad, Adrian was Group IT Director for the Pettifer Group of Companies, and prior to that he held a number of leadership roles at the global FMCG business, Avon Products. This included being their IT Director for the Western Europe, Middle East & Africa regions and Head of the UK Distribution Centre. 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: • Strategy; • Financial performance and forecast; • Human resources; and • City and compliance matters. 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 eighteen years but the Board consider that he continues to remain independent for the reasons stated above. Corporate governance report 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 non- executive 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 2015 and shows that the Board are able to allocate sufficient time to the company to discharge their responsibilities effectively. Audit Remuneration Board Committee Committee Number of meetings held 13 1 2 Number of meetings attended Executive Directors: John Rigg (Chairman) Nick Burrows Adrian Leer (appointed 3 March 2015) Non-executive Directors: Alistair Fulton Steven Sanderson 13 12 - 12 13 1 n/a n/a 1 1 2 n/a n/a 2 2 Audit Committee 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. Consideration of significant Issues in relation to the financial statements 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. 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. Meetings with auditors and senior finance team The Audit Committee met with the auditors prior to commencement of the year end audit to discuss; • Audit scope, strategy and objectives • Key audit and accounting matters • Independence and audit fee 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. Effectiveness of external audit process 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. Auditor independence and objectivity 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 FRC 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. Triad Group Plc Annual Report and Accounts 2015 | 11 Corporate governance report Non-audit fees The Committee reviews all non-audit work to ensure it is appropriate and the fees justified. In relation to the non-audit 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. Appointment of external auditor 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. Internal audit 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. Internal controls and risk management 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. 12 | Triad Group Plc Annual Report and Accounts 2015 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. • An appropriate budgeting process where the business prepares budgets for the coming year, which are approved by the Board. • Close involvement in the day to day management of the business by the executive Directors. • Regular meetings between the executive Chairman, executive Director and senior managers to discuss and monitor potential risks to the business, and to implement mitigation plans to address them. Remuneration Committee 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. Whistleblowing Staff may contact the senior independent non-executive Director, in confidence, to raise genuine concerns of possible improprieties in financial reporting or other matters. Directors’ training 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. Relations with shareholders 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. Corporate governance report Terms of reference B.2.3 The terms of reference of the Audit and Remuneration Committees are available on request from the Company Secretary. Statement of compliance 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.7.1 A.2.1 The roles of chairman and chief executive should not be exercised by the same individual. John Rigg is the Executive Chairman. The Board currently has no plans to recruit a Chief Executive Officer, as it considers that the duties are being satisfactorily covered by members of the Executive Board and the Group’s senior management. B2.1/2.4 There should be a nominations committee which should lead the process for board appointments and make recommendations to the board. The Board considers that because of its size, the whole Board should be involved in Board appointments. 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. Non-executive directors should be appointed for specified terms subject to re-election. Although not appointed for fixed terms, Non-executive 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. Non-executive directors who have served longer than nine years should be subject to annual re- election. The Board consider that because of its size, re-election by rotation in accordance with the Company’s Articles of Association at the Annual General Meeting is sufficient. By order of the Board NE Burrows Company Secretary 10 June 2015 Triad Group Plc Annual Report and Accounts 2015 | 13 Directors’ Remuneration report On the following pages we set out the Remuneration Report for the year ended 31 March 2015. 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 2014, and is split into two sections as follows; 1. The Directors’ remuneration policy. This will be subject to a binding shareholder vote at this years’ Annual General Meeting. 2. 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. Directors’ remuneration policy The remuneration policy sets out the framework within which the Company remunerates its Directors. The Company’s remuneration policy was put to a shareholder vote at the 2014 Annual General Meeting of the Company and was approved by 100% of shareholders. There is no requirement to vote on the policy in 2015 unless any changes to the policy are proposed, and the Committee does not intend making any changes to the policy at this time. Policy table – executive Directors Element Base salary Benefits in kind Pension Share option scheme Relevance to short and long term strategic objectives Reflects the individual’s skills, responsibilities and experience. Supports the recruitment and retention of Executive Directors. Protects the well- being of directors and provides fair and reasonable market competitive benefits. Provides competitive post-retirement benefits to support the recruitment and retention of Executive Directors. Encourages share ownership amongst employees and aligns their interests with the shareholders. Operation Maximum payable Performance metrics Reviewed annually taking into consideration individual and companywide performance and the wider employee pay review. Benefits in kind include company cars or allowances, private medical insurance, life cover and permanent health insurance. Benefits are reviewed periodically. The Company pays contributions into a personal pension scheme or cash alternative. 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. None. Benefits are set at a level considered to be appropriate taking into account individual circumstances The Company matches individual contributions up to a maximum of 5%. None. 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. 14 | Triad Group Plc Annual Report and Accounts 2015 Directors’ Remuneration report 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. Policy table – non-executive Directors Element Fees Relevance to short and long term strategic objectives Competitive fees to attract experienced directors Operation Maximum payable Reviewed annually In general the level of fee increase for the non-executive directors will be set taking account of any change in responsibility. Performance metrics Not applicable. The remuneration of the non-executive Directors is agreed by the Board. However no Director is involved in deciding their own remuneration. Approach to recruitment 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 salaries and benefits available to executive Directors of comparable companies; • the need to ensure executive Directors’ commitment to the continued success of the Group; • the experience of each executive Director; and • the nature and complexity of the work of each executive Director. Directors’ service contracts and policy The details of the Directors’ contracts are summarised as follows: J C Rigg A M Fulton S M Sanderson N E Burrows A Leer Date of contract Notice period 01/07/1999 19/02/1997 01/01/2007 03/03/2015 03/03/2015 1 month 1 month 1 month 6 months 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. Illustrations of application of remuneration policy 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. Triad Group Plc Annual Report and Accounts 2015 | 15 Directors’ Remuneration report Policy on payment for loss of office It is the Group’s policy in relation to Directors’ contracts that: • executive Directors should have contracts with an indefinite term providing for a maximum of six months’ notice by either party. • non-executive Directors should have terms of engagement for an indefinite term providing for one month notice by either party. • there is no provision for termination payments to Directors. Consideration of employment conditions elsewhere in group 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. Consideration of shareholders views The policy is unchanged from the previous year as endorsed by the unanimous vote in favour of the approval of the Directors’ Remuneration Report at the Annual General Meeting in August 2014. Annual report on remuneration (audited) Directors’ remuneration - single total figure of remuneration The remuneration of each of the Directors for the period they served as a Director are set out below: Director Executive J C Rigg N E Burrows A Leer (appointed 3 March 2015) Non-executive A M Fulton S M Sanderson Basic salary and fees Benefits in kind Pension 2015 Total 2014 Total £’000 £’000 £’000 £’000 £’000 25 91 8 25 20 - 11 1 - - - 16 1 - - 25 118 10 25 20 25 116 - 25 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 2015, or any prior financial year, upon which any variable pay elements could become payable during the year. Two Directors are members of a money purchase scheme into which the Group made contributions during the year. The contributions paid by the Group in respect of these Director are as follows: N E Burrows A Leer (from 3 March 2015) 2015 £’000 16 1 2014 £’000 16 - The pension contributions for both directors is greater than the 5% of salary shown as it includes an additional amount relating to the Group’s salary exchange scheme. This reflects a sacrifice from salary plus the resulting National Insurance saving for the company (13.8% of the sum sacrificed). 16 | Triad Group Plc Annual Report and Accounts 2015 Directors’ Remuneration report Details of share options awarded to Directors in the year During the year N E Burrows was awarded 25,000 share options, which are not exercisable at the year end. Payments to past Directors There were no payments to past Directors during the year. Payment for loss of office There were no payments for loss of office during the year. Directors’ interests in shares 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. A M Fulton J C Rigg S M Sanderson N E Burrows A Leer *As at date of appointment, 3 March 2015 N E Burrows: granted 07.03.06 granted 07.08.08 granted 23.09.11 granted 18.09.14 A Leer: granted 23.09.11 granted 18.09.14 1 April 2014 31 March 2015 354,100 4,509,400 104,089 7,893 5,379* 354,100 4,509,400 104,089 7,893 5,379 At beginning of year Granted during year Lapsed during year At end of year Exercise price Exercise period 20,000 25,000 100,000 - - - - 25,000 50,000 - - 100,000 195,000 125,000 - - - - - - - 20,000 25,000 100,000 25,000 50,000 100,000 320,000 51.5p 14.0p 13.5p 11.0p 07.03.09 to 07.03.16 07.08.11 to 07.08.18 23.09.14 to 23.09.21 18.09.17 to 18.09.24 13.5p 11.0p 23.09.14 to 23.09.21 18.09.17 to 18.09.24 195,000 share options were exercisable at the end of the year (2014: 45,000) Share options are exercisable provided that the relevant performance requirement has been satisfied. • that the Group shall have achieved positive earnings per share in any financial year commencing at least one year after the date of grant of the option. This performance requirement is the same as that applying to employee share options granted at the same time. The total share based payment expense recognised in the year in respect of Directors’ share options is £1,005 (2014: £1,556). The market price of the Company’s shares was 10.5p at 31 March 2015 and the range during the year was between 7.75p and 19.0p. Triad Group Plc Annual Report and Accounts 2015 | 17 Directors’ Remuneration report Annual report on remuneration (Unaudited) Performance graph 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. TRD v FTSE Fledging Index Fledging Fledging Triad Triad Index 300 250 200 150 100 50 Mar-09 Mar-09 Mar-10 Mar-11 Mar-12 Year Year Mar-13 Mar-14 Mar-15 Chief executive remuneration There have been no changes to the remuneration of the Executive Chairman during the year. Relative importance of spend on pay During the year there were no dividends or other cash distributions to shareholders (2014: £nil). The total employee remuneration (including directors) during the year was £3.045m (2014: £3.039m). Consideration of matters related to directors remuneration During the year there were no meetings held relating to directors’ remuneration other than to review the remuneration policy for inclusion in the 2014 Annual Report and Accounts. Statement of voting at last general meeting At the last annual general meeting the Directors’ Remuneration Report was approved with 100% of votes cast in favour of the resolution. There were 2,550 votes withheld. The Directors’ Remuneration Policy was approved with 100% of votes cast in favour of the resolution. There were 3,000 votes withheld. Alistair Fulton Chairman, Remuneration Committee 10 June 2015 18 | Triad Group Plc Annual Report and Accounts 2015 Independent auditors’ report to the members of Triad Group Plc Opinion on the financial statements In our opinion: • the financial statements give a true and fair view of the state of the Group’s and the Parent Company’s affairs as at 31 March 2015 and of the Group’s profit for the year then ended; • the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; • the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and applied in accordance with the provisions of the Companies Act 2006; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the Group financial statements, Article 4 of the IAS Regulation. The financial statements of Triad Group Plc for the year ended 31 March 2015 comprise: • The Group and Parent Company statement of comprehensive income for the year then ended; • The Group and Parent Company statements of financial position as at 31 March 2015; • The Group and Parent Company statements of changes in equity for the year then ended; • The Group and Parent Company statements of cash flows for the year then ended; and • The accounting policies and critical accounting judgements and the notes to the financial statements. 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. Respective responsibilities of Directors and auditors 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. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the FRC’s website at www.frc.org.uk/ auditscopeukprivate. Auditor commentary Our application of materiality 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. Based on out professional judgement, we determined materiality for the Group financial statements as a whole to be £176,000. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £3,500 as well as misstatements below that amount that in our view warranted reporting for qualitative reasons. Triad Group Plc Annual Report and Accounts 2015 | 19 Independent auditors’ report to the members of Triad Group Plc An overview of our audit approach 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 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. Our assessment of risk of material misstatement 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. 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 consider the timing of revenue recognition and the appropriateness of deferred and accrued revenue balances at the balance sheets date, which involves judgement. Our procedures included understanding and testing the controls in respect of billing from approved timecards and testing the revenue recognised in the period. The ISA’s (UK & Ireland) presume there is a risk of fraud in revenue recognition because of the pressure management may feel to achieve expected results. We tested the timing of revenue recognition by reviewing all ongoing consultancy contracts at the balance sheets date and the level of completion in terms of milestones achieved and time recorded. 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 tested a sample of approved timecards along with billings either side of the balance sheet date and compared these to recorded revenue, accrued revenue and deferred revenue. We obtained the Group’s forecast through to 30 September 2016. 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, considered compliance with covenants and assessed the sensitivity of the forecasts to changes in the key assumptions. Opinion on other matters prescribed by the Companies Act 2006 In our opinion: • the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006; and • the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements. 20 | Triad Group Plc Annual Report and Accounts 2015 Independent auditors’ report to the members of Triad Group Plc Matters on which we are required to report by exception 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: • materially inconsistent with the information in the audited financial statements; or • apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of performing our audit; or • is otherwise misleading. 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: • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or • the parent company financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Under the Listing Rules we are required to review: • the directors’ statement, set out on page 8, in relation to going concern; and • the part of the corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. We have no exceptions arising from this review. Anna Draper (senior statutory auditor) 10 June 2015 For and on behalf of BDO LLP, statutory auditor London United Kingdom Triad Group Plc Annual Report and Accounts 2015 | 21 Statements of comprehensive income and expense for the year ended 31 March 2015 Group and company Revenue Cost of sales Gross profit Administrative expenses Profit from operations Finance expense Profit before tax Tax expense Profit for the year and total comprehensive income attributable to equity holders of the parent Basic earnings per share Diluted earnings per share All amounts relate to continuing activities. Note 2015 £’000 2014 £’000 23,482 19,702 (20,171) (16,839) 3,311 (2,849) 462 (110) 352 - 352 2.32p 2,863 (2,738) 125 (114) 11 - 11 0.07p 2.32p 0.07p 5 6 8 10 10 22 | Triad Group Plc Annual Report and Accounts 2015 Statements of changes in equity for the year ended 31 March 2015 Group At 1 April 2013 Profit for the year and total comprehensive income Share-based payments Unclaimed dividends At 1 April 2014 Profit for the year and total comprehensive income Share-based payments At 31 March 2015 Company At 1 April 2013 Profit for the year and total comprehensive income Share-based payments Unclaimed dividends At 1 April 2014 Profit for the year and total comprehensive income Share-based payments At 31 March 2015 Share Capital £’000 151 - - - Share premium account £’000 Capital redemption reserve Retained earnings Total £’000 £’000 £’000 562 104 (419) 398 - - - - - - 11 12 58 11 12 58 151 562 104 (338) 479 - - - - - - 352 352 8 8 151 562 104 22 839 Share Capital £’000 151 - - - Share premium account £’000 Capital redemption reserve Retained earnings Total £’000 £’000 £’000 562 104 (424) 393 - - - - - - 11 12 58 11 12 58 151 562 104 (343) 474 - - - - - - 352 352 8 8 151 562 104 17 834 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. Triad Group Plc Annual Report and Accounts 2015 | 23 Statements of financial position at 31 March 2015 Non-current assets Intangible assets Property, plant and equipment Current assets Trade and other receivables Cash and cash equivalents Total assets Current liabilities Trade and other payables Financial liabilities Short term provisions Non-current liabilities Financial liabilities Long term provisions Total liabilities Net assets Shareholders’ equity Share capital Share premium account Capital redemption reserve Retained earnings Total shareholders’ equity Registered number: 2285049 Group Company Note 2015 £’000 2014 £’000 2015 £’000 2014 £’000 11 12 14 15 112 124 236 152 58 210 112 124 236 152 58 210 4,011 3,436 4,011 3,436 390 108 390 108 4,401 3,544 4,401 3,544 4,637 3,754 4,637 3,754 16 17 18 (3,133) (2,355) (3,138) (2,360) (6) (248) (109) (241) (6) (248) (109) (241) (3,387) (2,705) (3,392) (2,710) 17 18 (18) (393) (24) (546) (18) (393) (24) (546) (411) (570) (411) (570) (3,798) (3,275) (3,803) (3,280) 839 479 834 474 19 151 562 104 22 839 151 562 104 (338) 479 151 562 104 17 834 151 562 104 (343) 474 The financial statements on pages 24 to 42 were approved by the Board of Directors and authorised for issue on 10 June 2015 and were signed on its behalf by: NE Burrows Director SM Sanderson Director Triad Group Plc is registered in England and Wales with registered number 2285049. 24 | Triad Group Plc Annual Report and Accounts 2015 Statements of cash flows for the year ended 31 March 2015 Group and company Cash flows from operating activities Profit for the year before taxation Adjustments for: Depreciation of property, plant and equipment Profit on disposal of property, plant and equipment Amortisation of intangible assets Interest expense Share-based payment expense Changes in working capital Increase in trade and other receivables Increase/(decrease) in trade and other payables (Decrease)/increase in provisions Cash generated/(consumed) by operations Interest paid Note 2015 £’000 2014 £’000 352 31 - 50 11 8 (575) 778 (146) 509 (11) 11 20 (6) 55 21 12 (376) (44) 8 (299) (21) Net cash flows from operating activities 498 (320) Investing activities Purchase of intangible assets Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Net cash used in investing activities Financing activities Finance lease principal payments Proceeds from dividend write off Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period (10) (97) - (107) (5) - (5) - (20) 6 (14) (3) 58 55 386 (279) 4 283 Cash and cash equivalents at end of the period 15 390 4 Triad Group Plc Annual Report and Accounts 2015 | 25 Notes to the financial statements for the year ended 31 March 2015 1. Principal accounting policies Basis of preparation The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the 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. Basis of consolidation Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee and the ability of the investor to use its power to affect those variable returns. 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 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 Fixtures and fittings Motor vehicles Intangible assets % 25-33 10-33 25-33 Expenditure on internally developed products is capitalised if it can be demonstrated that: • the product will generate future economic benefits, internally and/or externally; and • expenditure attributable to the development of the product can be measured reliably. 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 Internally developed software % 25-33 10-25 Impairment of non-financial assets 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 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 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 • it is technically feasible to develop the product so that it will be available for use or sale; • adequate resources are available to complete the Trade and other payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method. development; • there is an intention to complete the product and use or sell it; • it is able to be used or sold; Borrowings Borrowings are recognised initially at fair value, and subsequently measured at amortised cost using the effective 26 | Triad Group Plc Annual Report and Accounts 2015 Notes to the financial statements for the year ended 31 March 2015 Leases 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. Finance lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated so as to produce a constant periodic rate of interest on the remaining balance of the liability. Foreign currencies 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 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. Exceptional items 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. Taxation 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. Pension costs Contributions to defined contribution plans are charged to the statements of comprehensive income and expense as the contributions accrue. Share-based payments Share-based incentive arrangements are provided to employees under the Group’s share option scheme. Share options granted to employees 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. Provisions 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. Going concern 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 17 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 17 to the financial statements, the Group meets its day to day working capital requirements through an invoice finance facility. Triad Group Plc Annual Report and Accounts 2015 | 27 Notes to the financial statements for the year ended 31 March 2015 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. Surplus property 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 18). 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 £10,000 Were 50% of the vacant property to be let through to the end of the lease at a rent that was the same as the rent paid, this would increase net income and equity by £113,000. New standards and interpretations Deferred tax asset The Group has adopted with effect from 1 April 2014 certain mandatory new standards, amendments and interpretations. Adoption of these standards, amendments and interpretations did not have any impact on the results, cash flows or financial position of the Group or their presentation. There are also certain standards, amendments and interpretations which have been issued but which are 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. However 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. 2. Critical accounting estimates and judgements 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. Critical accounting estimates and assumptions 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. A deferred tax asset of £1,646,000 (2014: £1,826,000) 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. Impairment of intangible assets 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. Critical judgements in applying the entity’s accounting policies 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. 3. Financial risk management 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. 28 | Triad Group Plc Annual Report and Accounts 2015 Notes to the financial statements for the year ended 31 March 2015 The Group is also exposed to credit risk from accrued income, being revenue earned but not yet invoiced (note 14). Financial assets that are past due but not impaired are analysed in note 14. Each balance has been reviewed by management to assess its recoverability. The Group also has credit risk from cash deposits with banks (note 15). The Group only banks with financial institutions with a good credit rating. The Group’s maximum exposure to credit risk is: Trade and other receivables Accrued income Cash and cash equivalents Note 14 14 15 2015 £’000 3,420 411 390 2014 £’000 2,944 258 108 4,221 3,310 Liquidity risk 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 16 and 17. Capital risk management 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. 3.2 Fair value estimation The carrying value of financial assets and liabilities approximate their fair values. The Board reviews and agrees policies for managing these risks and they are summarised below. These policies are consistent with last year. 3.1 Financial risk factors Foreign exchange risk 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 2015 £’000 2014 £’000 Currency: Euros Net cash Trade and other receivables Trade and other payables 15 14 16 66 19 (28) 57 10 130 (98) 42 Any change in currency rates would have no significant effect on results. Interest rate risk 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 17, is secured by way of a debenture over all assets. At the year end borrowing under this facility totalled £ nil (2014: £104,000). 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 £4,000 (2014: £5,000). Credit risk 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 £28,000, being 0.12% of revenue (2014: £nil). Triad Group Plc Annual Report and Accounts 2015 | 29 Notes to the financial statements for the year ended 31 March 2015 4. Segmental reporting 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. Revenue Profit from operations Revenue Profit/(loss) from operations Resourcing 2015 £’000 Consulting & Solutions 2015 £’000 Total 2015 £’000 19,845 3,637 23,482 392 70 462 Resourcing 2014 £’000 Consulting & Solutions 2014 £’000 Total 2014 £’000 16,991 2,711 19,702 327 (202) 125 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. 26% (2014: 20%) of revenue was generated in the public sector. The largest single customer contributed 35% (2014: 28%) of Group revenue, was in the private sector, and is reported within the Resourcing segment. From 1 April 2015 the Group will not be reporting its results in accordance with the operating segments above. This is to more accurately reflect the Group’s operating model and management’s reporting and decision making processes as explained in the Chairman’s Statement above. 30 | Triad Group Plc Annual Report and Accounts 2015 Notes to the financial statements for the year ended 31 March 2015 5. Profit from operations Profit from operations is stated after charging/(crediting): Profit on disposal of property, plant and equipment Depreciation of owned assets Amortisation of intangible assets Operating leases for land and buildings Other operating leases Impairment of receivables Auditors’ remuneration: Audit of financial statements: Group and company Taxation services 6. Finance expense Bank interest payable Other interest payable Total interest expense Unwinding of discount on provisions Net foreign exchange loss Total finance expense 2015 £’000 2014 £’000 - 31 50 453 31 28 50 4 (6) 20 55 380 - - 53 3 2015 £’000 2014 £’000 8 3 11 87 12 19 2 21 92 1 110 114 Triad Group Plc Annual Report and Accounts 2015 | 31 Notes to the financial statements for the year ended 31 March 2015 7. Employees and directors Group and company Average number of persons (including executive Directors) employed Senior management Fee earners Sales Administration and finance Staff costs for the above persons (including executive Directors) Wages and salaries Social security costs Defined contribution pension costs Equity settled share-based payments Directors Emoluments Money purchase pension contributions One Director (2014: one) had retirement benefits accruing under money purchase pension schemes. 2015 2014 Number Number 4 24 16 8 52 4 28 16 9 57 2015 £’000 2014 £’000 2,793 2,792 356 244 8 317 235 12 3,401 3,356 2015 £’000 2014 £’000 181 17 198 170 16 186 32 | Triad Group Plc Annual Report and Accounts 2015 Notes to the financial statements for the year ended 31 March 2015 8. Tax expense Tax expense in income statement 2015 £’000 2014 £’000 - - The tax expense for the year differs from the standard rate of corporation tax in the UK (21%; 2014: 23%). The differences are explained below: Profit before tax Profit before tax multiplied by standard rate of corporation tax in the UK of 21% (2014: 23%) Effects of: Expenses not deductible for tax purposes Movement in unrecognised deferred tax asset in respect of operating losses Movement in unrecognised deferred tax asset in respect of temporary differences Total tax charge for the year 2015 £’000 2014 £’000 352 74 12 (75) (11) - 11 3 9 (6) (6) - A deferred tax asset of £1,646,000 (2014: £1,826,000) on trading losses of £8,119,000 (2014: £8,475,000) 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 Accelerated depreciation Losses carried forward indefinitely Unrecognised deferred tax asset 9. Dividends No dividends have been paid or proposed for year ended 31 March 2015 (2014: nil). 2015 £’000 2014 £’000 22 46 1,624 1,780 1,646 1,826 Triad Group Plc Annual Report and Accounts 2015 | 33 Notes to the financial statements for the year ended 31 March 2015 10. Earnings per ordinary share Earnings per share have been calculated on the profit for the year divided by the weighted average number of shares in issue during the period based on the following: Profit for the year Average number of shares in issue Effect of dilutive options * Average number of shares in issue plus dilutive options Basic earnings per share Diluted earnings per share 2015 2014 £352,000 £11,000 15,149,579 15,149,579 - - 15,149,579 15,149,579 2.32p 0.07p 2.32p 0.07p * The share options have no dilutive effect in either the current or previous years. Potentially dilutive share options are disclosed in note 20. 11. Intangible assets Group and company Cost At 31 March 2013 Disposals At 31 March 2014 Additions Disposals At 31 March 2015 Accumulated amortisation/impairment At 31 March 2013 Charge for the year Disposals At 31 March 2014 Charge for the year Disposals At 31 March 2015 Net book value At 31 March 2015 At 31 March 2014 34 | Triad Group Plc Annual Report and Accounts 2015 Purchased Internally software developed software £’000 £’000 635 (10) 625 10 (371) 1,576 (466) 1,110 - - Total £’000 2,211 (476) 1,735 10 (371) 264 1,110 1,374 599 21 (10) 610 16 (371) 1,405 34 (466) 973 34 - 255 1,007 9 15 103 137 2,004 55 (476) 1,583 50 (371) 1,262 112 152 Notes to the financial statements for the year ended 31 March 2015 12. Property, plant and equipment Group and company Cost At 31 March 2013 Additions Disposals At 31 March 2014 Additions Disposals At 31 March 2015 Accumulated depreciation At 31 March 2013 Charge for the year Disposals At 31 March 2014 Charge for the year Disposals At 31 March 2015 Net book value At 31 March 2015 At 31 March 2014 Computer hardware £’000 Fixtures & fittings £’000 Motor vehicles £’000 Total £’000 550 14 (262) 302 37 (37) 302 531 11 (262) 280 13 (37) 256 964 - - 964 60 (318) 706 957 2 - 959 9 (318) 650 25 38 (21) 1,539 52 (283) 42 1,308 - - 97 (355) 42 1,050 25 7 (21) 11 9 - 20 1,513 20 (283) 1,250 31 (355) 926 46 22 56 5 22 31 124 58 The net carrying amount of property, plant and equipment includes £22,000 (2014: £31,000) in respect of assets held under finance leases. Triad Group Plc Annual Report and Accounts 2015 | 35 Notes to the financial statements for the year ended 31 March 2015 13. Investments Company Investments are: (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. 14. Trade and other receivables Group and company Trade receivables Less: provision for impairment of trade receivables Trade receivables-net Accrued income Prepayments 2015 £’000 2014 £’000 3,448 2,944 (28) - 3,420 2,944 411 180 258 234 4,011 3,436 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 2015 trade receivables of £850,000 (2014: £727,000) were past due but not impaired. They relate to customers with no default history. The total number of customer ledger balances at 31 March 2015 was 73 (2014: 90). The ageing analysis of these receivables is as follows: Group and company Up to 30 days past due 30 to 60 days past due Over 60 days past due 36 | Triad Group Plc Annual Report and Accounts 2015 2015 £’000 2014 £’000 617 204 29 850 572 120 35 727 Notes to the financial statements for the year ended 31 March 2015 Movements on the provision for impairment of trade receivables is as follows: Group and company At beginning of the year Charged to income statement Credited to income statement At end of the year The carrying amount of the Group’s trade and other receivables are denominated in the following currencies: Group and company Sterling Euros Debtor days are calculated by matching year end debtor balances to most recent sales on a day by day basis. 15. Cash and cash equivalents Group and company Cash available on demand 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 Sterling Euros 2015 £’000 2014 £’000 - 28 - 28 12 - (12) - 2015 £’000 3,812 19 2014 £’000 3,072 130 3,831 3,202 2015 £’000 2014 £’000 390 108 2015 £’000 2014 £’000 324 66 98 10 390 108 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 Cash available on demand Bank borrowings repayable on demand 2015 £’000 390 - 390 2014 £’000 108 (104) 4 Triad Group Plc Annual Report and Accounts 2015 | 37 Notes to the financial statements for the year ended 31 March 2015 16. Trade and other payables Trade payables Accruals Owed to subsidiary Deferred income Other taxation and social security The maturity date of trade and other payables is as follows: Up to 3 months 3 to 6 months 6 to 12 months 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: Sterling Euros Group Company 2015 £’000 2014 £’000 2015 £’000 2014 £’000 1,889 1,586 1,889 1,586 692 - 307 - 692 5 307 5 2,581 1,893 2,586 1,898 142 410 145 317 142 410 145 317 3,133 2,355 3,138 2,360 Group Company 2015 £’000 2014 £’000 2015 £’000 2014 £’000 2,452 1,802 2,457 1,807 33 96 33 58 33 96 33 58 2,581 1,893 2,586 1,898 Group Company 2015 £’000 2014 £’000 2015 £’000 2014 £’000 2,553 1,795 2,558 1,800 28 98 28 98 2,581 1,893 2,586 1,898 38 | Triad Group Plc Annual Report and Accounts 2015 Notes to the financial statements for the year ended 31 March 2015 17. Financial liabilities Group and company Current Bank borrowings Finance lease obligations Non-current Finance lease obligations 2015 £’000 2014 £’000 - 6 6 104 5 109 18 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 £4.6m at 31 March 2015. 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. 18. Provisions Group and company At 1 April 2014 Charged to income statement Utilised in year Unused amounts reversed Unwinding of discount: passage of time (note 6) At 31 March 2015 Provision for vacant properties Provision for Total property dilapidation £’000 £’000 £’000 728 - (206) - 87 609 59 24 (6) (45) - 787 24 (212) (45) 87 32 641 The discount rate applied in the calculation of the provision for vacant properties is 6.44% (2014: 12%). Triad Group Plc Annual Report and Accounts 2015 | 39 Notes to the financial statements for the year ended 31 March 2015 Group and company The maturity profile of the present value of provisions is as follows: Current Non-current Provision for vacant properties Provision for Total property dilapidation £’000 £’000 £’000 225 384 609 23 9 32 248 393 641 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 2015 is as follows: Group and company In one year or less In more than one year, but not more than 2 years In more than 2 years, but not more than 5 years 2015 £’000 2014 £’000 225 202 182 609 184 201 343 728 The provision for property dilapidation covers the estimated future costs required to meet obligations under property leases to redecorate and repair property. 19. Share capital Ordinary shares of 1p each Issued, called up and fully paid: Number Nominal value Authorised: Number Nominal value 40 | Triad Group Plc Annual Report and Accounts 2015 2015 2014 15,149,579 15,149,579 £151,496 £151,496 33,500,000 33,500,000 £335,000 £335,000 Notes to the financial statements for the year ended 31 March 2015 20. Share-based payments At 31 March 2015 1,476,000 options granted under employee share option schemes remain outstanding: Number 178,000 138,000 755,000 405,000 Exercise price Performance criteria Period options exercisable 51.5p 14.0p 13.5p 11.0p 1 1 1 1 8 March 2009 to 8 March 2016 7 August 2012 to 7 August 2018 23 September 2014 to 23 September 2021 18 September 2017 to 18 September 2024 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. The options outstanding at 31 March 2015 had a weighted average remaining contractual life of 6.4 years (2014: 6.2 years). Options have been valued using the Black-Scholes option-pricing model. No performance conditions were included in the fair value calculations. There were 405,000 options granted during the year (2014: nil). In respect of the options granted during the year the fair value per option granted and the assumptions used in the calculation were as follows; Date of grant: Number of options granted: Weighted average share price: Weighted average exercise price: Expected volatility: Expected life: Risk free rate: Expected dividends: Fair value: 18 September 2014 405,000 11p 11p 40% 4 years 2.5% 0 3.80p Triad Group Plc Annual Report and Accounts 2015 | 41 Notes to the financial statements for the year ended 31 March 2015 The expected volatility is based on historic volatility over the last three years. The expected life is the expected period to exercise. The risk free rate of return is the yield on zero-coupon UK government bonds of a term consistent with the assumed option life. The total expense recognised in the year is £8,000 (2014: £12,000). A reconciliation of option movements over the year to 31 March 2015 is shown below: Number of options 2015 Weighted average exercise price Pence Number of options 2014 Weighted average exercise price Pence Outstanding at start of year 1,183,000 19.7 1,384,000 Granted Forfeited 405,000 11.0 - (112,000) 17.7 (201,000) Outstanding at end of year 1,476,000 17.4 1,183,000 Exercisable at end of year 1,071,000 19.9 348,000 19.0 - 14.7 19.7 34.5 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. 21. Commitments The Group had capital commitments totalling £nil at 31 March 2015 (31 March 2014: £nil). The future aggregate minimum lease payments under non-cancellable operating leases are: Not later than 1 year Later than 1 year and no later than 5 years 22. Related party transactions 2015 £’000 512 1,237 1,749 2014 £’000 443 1,185 1,628 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. The rent payable during the period was £350,000. 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 (2014: £nil). Key management comprises the Board of Directors and their remuneration is set out in the Directors’ Remuneration Report on page 16. 42 | Triad Group Plc Annual Report and Accounts 2015 Five year record Consolidated income statement Years ended 31 March Revenue Gross profit Profit/(loss) on ordinary activities before taxation Taxation on loss on ordinary activities Profit/(loss) on ordinary activities after taxation Dividends Retained profit/(sustained loss) for the financial year Basic profit/( loss) per ordinary share of 1p each (pence) Balance sheet As at 31 March Non-current assets Current assets Current liabilities Non-current liabilities Net assets Share capital Share premium account Capital redemption reserve Retained earnings 2015 £’000 2014 £’000 2013 £’000 2012 £’000 2011 £’000 23,482 19,702 18,880 19,447 23,298 3,325 2,863 2,704 3,239 352 - 352 - 352 2.32 11 - 11 - 11 28 - 28 - 28 0.07 0.18 (76) 277 201 - 201 1.33 2015 £’000 2014 £’000 2013 £’000 2012 £’000 236 210 233 291 4,401 3,544 3,343 4,491 3,644 (920) - (920) - (920) (6.07) 2011 £’000 484 4,582 (3,387) (2,705) (2,513) (3,474) (3,842) (411) (570) (665) (948) (1,071) 839 479 398 360 151 562 104 22 151 562 104 151 562 104 151 562 104 (338) (419) (457) (664) 153 151 562 104 Equity shareholders’ funds 839 479 398 360 153 Triad Group Plc Annual Report and Accounts 2015 | 43 Shareholders’ information and financial calendar Share register 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 Aspect House Spencer Road Lancing West Sussex BN99 6DA Telephone: 0871 384 2486. Calls to this number are charged at 8p per minute plus network extras. Lines are open 8:30 am to 5:30 pm, Monday to Friday, excluding UK public holidays. Telephone: +44 (0)121 415 7047, if calling from outside the UK. 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. Shareholders’ enquiries 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 Email: Website: investors@triad.co.uk www.triad.co.uk Financial calendar Annual General Meeting Summer 2015 Financial year ended 31 March 2016: expected announcement of results Half year November 2015 Full year preliminary announcement June 2016 44 | Triad Group Plc Annual Report and Accounts 2015 Corporate information Executive Directors John Rigg, Chairman Nick Burrows Adrian Leer (appointed 3 March 2015) Non-executive Directors Alistair Fulton Steven Sanderson Secretary and registered office Nick Burrows Triad Group Plc Weyside Park Catteshall Lane Godalming Surrey GU7 1XE Telephone: 01483 860222 Email: investors@triad.co.uk Website: www.triad.co.uk Country of incorporation and domicile of parent company United Kingdom Legal form Public limited company Company number 2285049 Registered Auditors BDO LLP 55 Baker Street London W1U 7EU Solicitors Allen & Overy LLP One Bishops Square London E1 6AO Bankers Lloyds Bank plc City Office 11-15 Monument Street London EC3V 9JA Registrars Equiniti Aspect House Spencer Road Lancing West Sussex BN99 6DA Triad Group Plc Annual Report and Accounts 2015 | 45 TRIAD GROUP PLC Annual Report and Accounts 5 1 / 4 1 Godalming office: Weyside Park Catteshall Lane Godalming Surrey GU7 1XE 01483 860222 Milton Keynes office: 37 Sunningdale House Caldecotte Lake Business Park Milton Keynes MK7 8LF 01908 278450 triad.co.uk 

Continue reading text version or see original annual report in PDF format above