TRIAD GROUP PLC Annual Report and Accounts 20222023 Financial Highlights: REVENUE FOR THE YEAR ENDED 31 March 2023: 2022: £14.9m GROSS PROFIT 31 MARCH 2023: 2022: £4.8m GROSS PROFIT AS A PERCENTAGE OF REVENUE 31 MARCH 2023: 2022: 23.6% PROFIT BEFORE TAX 31 MARCH 2023: 2022: £1.1m (LOSS)/PROFIT AFTER TAX 31 MARCH 2023: (£0.0m) CASH RESERVES 31 MARCH 2023: 2022: 2022: £5.3m 28.1%£3.5m£4.8m£17.0m£0.0m£1.2m Table of contents Triad Group Plc | Annual Report for the year ended 31 March 2023 02 Strategic report 14 Directors’ report 17 Corporate governance report 22 Directors’ remuneration report 32 Independent auditor’s report 40 Statements of comprehensive income and expense 41 Statements of changes in equity 42 Statements of financial position 43 Statements of cash flows 44 Notes to the financial statements 63 Five year record 64 Shareholders’ information and financial calendar 65 Corporate information Strategic report Financial highlights Overview of results In my statement dated 30th November 2022 regarding the first half results, I said that “Although the results for the first half are obviously disappointing, I must emphasise that they are entirely due to external factors beyond our control”. I also said that the outlook was extremely positive. I am now delighted to report that my optimism has proved to be fully justified. During the second half of the financial year, we have retrieved the losses reported in the unaudited interim financial statements of the first half and I regard this as a remarkable achievement on the part of the Directors and staff of the Group, for which I tender my wholehearted thanks and appreciation. Outlook Our vital signs continue to be extremely strong. Staff turnover is very low, our recruitment of the highest quality consultants continues apace, cash flow is very healthy, and the quality of our work is being rewarded by impressive levels of compliment from our major clients. Our margins and overhead control continue to be extremely robust. The comments I made regarding the future in my ‘Outlook’ statement on the 30th November are still totally valid. We have successfully ridden out the effects of the Covid-19 pandemic. Year ended 31 March 2023 Year ended 31 March 2022 Difference £14.9m £3.5m 23.6% £0.0m £17.0m £4.8m 28.1% £1.1m -£2.1m -£1.3m -4.5% -£1.1m (£0.0m) £1.2m -£1.2m Revenue Gross Profit Gross Profit % Profit before tax (Loss)/Profit after tax Cash reserves £4.8m £5.3m -£0.5m Basic (loss)/ earnings per share Final dividend – proposed (0.27p) 7.16p -7.43p 4p 4p – Chairman’s statement Dr John Rigg Financial headlines For the year ended 31 March 2023 the Group reports revenue of £14.9m (2022: £17.0m). The gross profit as a percentage of revenue has reduced to 23.6% (2022: 28.1%) primarily as a result of reduced levels of consultant utilisation in the first half. The profit before tax reduced to £9k (2022: £1.1m). The loss after tax was £44k (2022: profit £1.2m). Cash reserves have reduced to £4.8m (2022: £5.3m). The reasons for this performance are explained below. The first half performance was negatively impacted by the external economic and political environment, but the Group recovered in the second half of the year primarily through achieving new business wins. Total revenue in the year reduced by a net £2.1m due to the ongoing increase of consultancy revenues as a proportion of total revenue, serviced by permanent fee earning consultants. Gross profit as a percentage of revenue has reduced to 23.6% (2022: 28.1%) due to the increased number of consultants temporarily off charge in the first half of the year. This is in any case a requirement if we are to have the capacity and rapid reaction capability to achieve future growth. Cash has reduced by £0.5m during the year to £4.8m (2022: £5.3m), which is the net effect of improved operating cash flows offset by a larger dividend distribution to shareholders. 2 | Triad Group Plc Annual Report and Accounts 2023 Strategic report We are increasingly focusing our executive Board and senior management on outward facing activity in order to raise our profile and continue to create long term relationships of trust and confidence with our major clients and new ones to come. This reflects the next stage in regaining our traditional culture as a consultant led, high quality, boutique operation, after significant strengthening of the management structure. Our corporate strategy is based on the longer term and we believe the Group is capable of organically expanding substantially and in a quality controlled way for a number of years to come, which of course should be reflected in profits and dividends. I look forward to the future with great enthusiasm. Board Update On 1 June 2023, positive steps were taken to consolidate and strengthen the Triad Board with the promotion of non- Executive Director Charlotte Rigg to Deputy Executive Chairman and the appointment of Alison Lander to the position of non-Executive Director. Charlotte was appointed to the Board as non-Executive Director on 1 January 2020, and during her time with the business has proven to be an invaluable member of the Board. Alison has many years’ experience in the IT sector, including an extensive working relationship with Triad, and her appointment will bring relevant and valuable experience to the Board. Dividend Recognising the strength of this year’s performance and the Group’s confidence in the near future, the Board proposes a final dividend of 4p per share (2022: 4p per share), which together with the interim dividend already paid of 2p (2022: 2p per share), totals 6p per share for the financial year (2022: 6p per share). Employees On behalf of the Board of Directors, I would like to thank all of the staff for their commitment and contribution during a very important year. John Rigg Executive Chairman 9 June 2023 Organisation overview Triad Group Plc is engaged in the provision of information technology consultants to deliver technology-enabled business change to organisations in the public sector, private sector, and not-for-profit sector. Triad Group Plc Annual Report and Accounts 2023 | 3 Strategic report Managing Director’s statement Adrian Leer Business commentary The Chairman has set out some of the external macro conditions that made for a challenging first half. I am delighted with the way in which our teams responded to that difficult first half, resulting in a profit for the year overall. The Company has made some bold changes to its operating model, a happy consequence of which has been a significant increase in consultant headcount. With nearly twice the number of consultants since 2021, it has been critically important to retain the Triad culture that has permeated through the business for nearly 35 years. The combination of challenges and rewarding work throughout the year has seen that culture not only preserved but enriched. We now have a strong platform for future headcount growth that does not compromise the quality of service cherished by our clients. When it comes to client delivery, the year saw another significant contribution to improving public services in the UK, a source of great pride and satisfaction to all in the company. Highlights included the delivery of an array of project outcomes into the Ministry of Justice. Our team of project management and programme management specialists were involved in projects including digital prisons, technology delivery into prison cells, legacy platform retirement initiatives, and counter-fraud interventions. The service has bent and flexed to accommodate a range of challenging objectives, whilst consistently impressing the customer. Elsewhere, we have enjoyed similar success at the erstwhile Department of Business, Energy and Industrial Strategy (BEIS). Operating across several discrete contracts, we have supported BEIS in the areas of project management, agile delivery, software development, platform migration and technical architecture. Highlights have included the successful launch of a case management system within the Office of Product Safety and Standards, being part of a mixed supplier/client team that won the accolade of “Information Records Management Team of the Year” and completing the Discovery stage for the Clean Heat Market Mechanism service. The latter assignment cementing our position as one of the digital leaders in the net zero space. At Department for Transport, we successfully steered the Road Transport Greenhouse Gas Service product through a GDS Beta assessment; no mean feat for a system of such complexity. It was particularly pleasing to pick up a range of positive comments, including the extent to which our user research activities addressed the accessibility needs of a wide range of users, including those who identified as dyslexic. 4 | Triad Group Plc Annual Report and Accounts 2023 Our law enforcement footprint increased significantly during the year. On top of work with our long-term national law enforcement client, we also delivered projects concerned with the digital implementation of recent law enforcement legislation as it relates to international crime. Our relationship with the Home Office’s Accelerated Capability Environment (ACE) went from strength to strength, and we became one of the select ACE Core+ partners within the ACE community. A source of real advantage is that over 90% of our consultants are already security-cleared, meaning that we have been able to mobilise teams at short notice to work within sensitive domains. From a public sector perspective, it is extremely gratifying to see that our work is directly helping to make the country safer, cleaner, greener and more efficient. Within the private sector, we successfully completed our delivery programme within Westcoast. The Westcoast CIO praised not only our delivery capabilities but also upskilling of the Westcoast team, enabling them to utilise the latest engineering methods on a self-sufficient basis. Our Microsoft 365 specialists continued to offer solutions to a range of clients including Electoral Commission, RES, QEnergy and BEIS. In all cases, clients are relying on us for the benefits of low-code solutions which are as robust and durable as their more engineered cousins. Our user centred design team have continued to combine the latest academic thinking with creative approaches to championing the needs of the user, resulting in the delivery of systems which are a pleasure to use. Routes to market were improved during the year with successful enrolment on to the National Highways ITC Framework, in addition to ongoing participation in frameworks including DOS, G-Cloud, and Digital Services & Programmes. Significant investment went into the development of our “Communities of Practice” model. The three practice areas cover (a) business analysis, user research, and user experience (b) technical and (c) delivery management, project management and PMO. Every consultant is a member of at least one practice area, and these are self-organising groups that seek to develop the collective skill-base to continuously improve our client offering. Cutting across the practice areas we developed “The Model Consultant” framework, aimed at producing a consistently rewarding experience for our clients and providing staff with a means of continuous professional development. The solidification of these support systems during the year is a crucial part of preparing the Company for further headcount development. Strategic report Beyond delivery, the Company has continued to contribute to the greater good. A number of volunteers took part in the “Boycott your Bed” campaign run by the charity Action for Children. The Company also achieved level two status on the “Disability Confident” employer scheme, and we continued to support the TechTalent Charter in its quest to make the technology sector more accessible. The Company also provided mentoring services to students from Hull and Northampton universities, and is contributing actively to the Digital Justice and the Central Government supplier forums facilitated by the industry body TechUK. Looking forward, it is pleasing to note that we start the new year with a significant contract to deliver the Alpha and Beta stages of the Clean Heat Market Mechanism, following a competitive tendering process after the Discovery stage. With significant extensions in place across a number of existing clients, and a number of promising bids in the pipeline, we are well positioned to build on the momentum created within the second half of last year. We hope that Crown Commercial Services makes good on its commitment to restore the levels of transparency associated with the now defunct Digital Marketplace in the replacement platform, as this is a key ingredient in helping suppliers understand how best to support buyers’ needs. I would like to echo the Chairman’s vote of thanks to our staff for their outstanding contributions, and to our clients for allowing us the opportunity to support them in their objectives. Adrian Leer Managing Director 9 June 2023 Triad Group Plc Annual Report and Accounts 2023 | 5 Strategic report Organisation overview Triad Group Plc is engaged in the provision of information technology consultants to deliver technology-enabled business change to organisations in the public sector, private sector, and not-for-profit sector. Business model The Group provides a range of consultancy services to clients to help them deliver a tangible return on their investment in technology. Our primary engagement model is to deliver these services via our permanent consultants, sometimes augmented by carefully selected associates. We rely upon our in-house resourcing team to provide both permanent and associate staff, ensuring that we maintain tight control of our supply chain and quality at all times. Our services span the delivery life cycle from high level consulting, early strategy, programme management, project delivery, software delivery, and support activities. The Group operates mainly in the United Kingdom. Our workforce is increasingly distributed across the UK too, and we have permanent office space in Godalming (registered office) and Milton Keynes. Principal objectives The principal objectives of the Group 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 and business insights. Further capacity and expertise may be provided via our associate network. 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. 6 | Triad Group Plc Annual Report and Accounts 2023 To develop long term client relationships across a broad client base • • • Enduring client relationships fuel profitability. A hallmark of our trading history 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. 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 IT services, delivered through a single, easy to access, point of sale. We will continue to provide the highest quality of service to our customers through our teams of skilled consultants and market experts. Principal risks and uncertainties The Group’s business involves risks and uncertainties, which the Board systematically manages through its planning and governance processes. The Board has conducted a robust assessment of the principal risks facing the Group, examining the Group’s operating environment, scanning for potential risks to the health and wellbeing of the organisation. The Directors factor into the business plan the likelihood and magnitude of risk in determining the achievability of the operational objectives. Where feasible, preventive and mitigating actions are developed for all principal risks. Senior management review the risk register and track the status of these risk factors on an on-going basis, identifying any emerging risks as they appear. Regular meetings are held between the Executive Chairman and the Managing Director to ensure risks are identified and communicated. Strategic report The outputs of this management review form part of the Board’s governance process, reviewed at regular Board meetings. When emerging risks arise, these are reviewed by senior management on an immediate basis and communicated to the Board as appropriate. The principal risks identified are: IT services market The demand for IT services is affected by UK market conditions. This includes, for example, fluctuations in political and economic uncertainty, and the level of public sector spending. Negative impacts can reduce revenue growth and maintenance due to the loss of key clients, reduction in sales pipelines and reduction in current services. The creation of new services, acquisition of new clients and the development of new commercial vehicles are important in protecting the Group from fluctuations in market conditions. Economy The political and economic uncertainty generated by Brexit still has the potential negatively to affect the Group’s marketplace due to an impact on Government spending plans and the cancellation or delay of IT projects. The strong relationships the Group enjoys with a large range of public sector clients within the UK mitigated this risk during the year. During and following the Brexit transition, the Group continued to build strong trading partnerships with EU based companies. Due to the current lack of restrictions of trading digital services within the EU, the Directors do not foresee this changing in the future. Due to the nature of the Group’s client base and activities in the UK, the current conflict in Ukraine has not had a direct impact, and is not considered to do so in the future, however there may be a secondary effect as a result of the impact on the wider economy. The Directors will continue to monitor this situation closely. Inflationary pressures and the challenging interest rate environment in the UK mainly affect the Group’s ability to attract and retain staff as wage inflation will continue to be a risk to the business. The Group’s response to this risk is outlined within the Availability of staff below. Revenue visibility The pipeline of contracted orders for time and materials consultancy work can be relatively short and this reduces visibility on long-term revenue generation. Political uncertainty, particularly in the public sector, can reduce visibility in securing new business. The Board carefully reviews forecasts to assess the level of risk arising from business that is forecast to be won and maintains very strong relationships with key client relationships. Availability of staff In an extremely difficult market for talent acquisition, the ability to access appropriately skilled resources, recruit and retain the best quality staff is key to ensuring the ability to deliver profitable growth and deliver IT services to our clients. This situation has been exacerbated by the cost of living crisis which has resulted in general inflation increases. The Group continues to recruit the best quality individuals and ensures a resilient network of associate resources is scaled appropriately to meet the demands of the business. To mitigate these risks, the Group reviews remuneration and benefits on an annual basis and adjusts these accordingly within market rates. In addition, the Group operates a Company-wide staff development programme to ensure continuous personal growth and consistent staff engagement. The on-boarding of new consultants is managed by a highly experienced and dedicated team of resourcing professionals, and this provides quality assurance processes to accelerate hiring and reduce attrition. Competition The Group operates in a highly competitive environment. The markets in which the Group operates are continually monitored to respond effectively to emerging opportunities and threats. The Group ensures a high quality of service to long-tenured clients, which includes continuous review of delivery against project plan and obtaining client feedback. This promotes longevity of client relationships and to a high degree mitigates the risk of competition. The risk associated with environmental, social and corporate governance (ESG) is considered to be low, although the group takes its responsibilities in this regard very strongly. Details of these responsibilities can be found on page 9. There are or may be other risks and uncertainties faced by the Group that the Directors currently deem immaterial, or of which they are unaware, that may have a material adverse impact on the Group. The risk appetite of the Group is considered in light of the principal risks and their impact on the ability to meet its strategic objectives. The Board regularly reviews the risk appetite which is set to balance opportunities for business development and growth in areas of potentially higher risk, whilst maintaining reputation, regulatory compliance, and high levels of customer satisfaction. Section 172 statement Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of key stakeholders in the Group in their decision making. Engagement with the Group’s stakeholders is essential to successfully managing the business and the effectiveness of this engagement helps to understand the impact of key decisions on stakeholders. Triad Group Plc Annual Report and Accounts 2023 | 7 Strategic report The Board has identified the key stakeholders as shareholders, clients, partners, employees and suppliers. • • • • Shareholders: Shareholders play a significant part in deciding the direction of the business. Dialogue is maintained with shareholders and their advisors and issues of significance are communicated to shareholders as necessary. In addition, a full shareholder briefing is presented at the Group’s annual general meeting of shareholders. Despite the political uncertainty in the first half of the financial year which negatively impacted the business, the Board awarded an interim dividend of 2p per share (2022: 2p per share) to shareholders. This decision was made following a detailed review of second half profitability and cash flow which showed a material improvement. The Board has proposed a final dividend of 4p per share for the year ended 31 March 2023 due to the recent trading performance and expected cash flows (2022: 4p per share). Clients: Delivering a quality service is the key to the Group’s future success, and effective and successful delivery of services to our clients is the key focus of the Group. To increase effectiveness, a constant review of utilisation rates and delivery structures has been undertaken to enhance the efficiency of the Group’s service to clients. Key account delivery and management tools have also been reviewed and enhanced to promote efficiencies. The Group continues the strategy of building permanent consultant numbers to improve and broaden the skill sets and enhance delivery to clients, and utilise associates only on a limited basis where rare technical expertise is required. Partners: Effective working relationships that enable future growth are important to the Group. The Group continue to cultivate strong relationships with our business partners, which may include intermediaries and sub-vendor arrangements, with regular dialogue and updates to ensure that delivery to our shared clients is as effective as possible. During the financial year, the Group continued to explore delivery methods with partners that enable the acquisition of new business. Employees: Motivated and satisfied employees are the lifeblood of our business and our people are key to our success. The Group strives to achieve the highest standards in its dealings with all employees. During the financial year, the Group continued to deliver a high level of communication with employees, including regular Group meetings chaired by the Managing Director. One-to-one meetings with employees and the Managing Director are also available on request, which regularly take place. The Group continued to provide appropriate comprehensive induction and ongoing training tailored to individual needs. Extensive employee benefits are provided which 8 | Triad Group Plc Annual Report and Accounts 2023 are continually reviewed to enhance the wellbeing of all employees. Remuneration packages are reviewed on an annual basis to ensure retention of employees, as are flexible working environments and grading reviews. During the year ended 31 March 2022, the new Triad Employee Share Incentive Plan was implemented, which facilitates awards of restricted stock units (RSUs) to employees from time to time within allowable limits. See page 29 for details. • Suppliers: Effective engagement with suppliers enables the Group to deliver a quality service to our clients. The Group maintains appropriate arm’s-length trading relationships with quality suppliers and is fully committed to fairness in its dealing with them, including embracing the principle of paying suppliers within agreed credit terms during the course of normal business. The Directors continue to ensure there is full regard to the long-term interests of both the Group and its key stakeholders including the impact of its activities on the community, the environment and the Group’s reputation. In doing this, the Directors continue to act fairly and in good faith taking into account what is most likely to promote the long-term success of the Group. • • • • • • Relations with key stakeholders such as shareholders, employees, and suppliers are maintained by regular, open and honest communication in both verbal and written form. The Directors are fully aware of their responsibilities to promote the success of the Group in accordance with section 172 of the Companies Act 2006. The Directors continuously take into account the interests of its principal stakeholders and how they are engaged. This is achieved through information provided by management and also by ongoing direct engagement with the stakeholders themselves. The Board has ensured an appropriate business structure is in place to ensure open and effective engagement with the workforce via the Executive Directors and the senior management team. The Board and the senior management team continue to work responsibly with all relevant stakeholders and has appropriate anti-corruption and anti-bribery, equal opportunities and whistleblowing procedures and policies in place. As required, non-Executive Directors, professional advisors and the Company Secretary provide support to the Board to help ensure that sufficient consideration is given to stakeholder issues. Strategic report Viability Statement In accordance with the Listing Rules the Directors have assessed the Company’s viability over the next three financial years. Given the Group’s business model and commercial and financial exposures the Directors consider that three years is an appropriate period for the assessment. The maximum period of visibility of commercial arrangements with clients is currently two years, however in considering the assessment period assumptions have been made beyond this immediate timeframe based upon the strategic direction of the business. As part of the long-term viability assessment the Directors have considered the principal risks. This assessment of viability has been made with reference to the Group’s current financial and operational positions. Revenue projections, cash flows, availability of required finance, commercial opportunities and threats, and the Group’s experience in managing adverse conditions in the past have been reviewed. The Group was founded in 1988 and has survived several recessions. An example of the robust performance of the business model was the successful navigation of the Covid-19 pandemic. Despite the overwhelming threat the pandemic presented, the Group was able to improve profitability and increased cash reserves without the requirement for external funding or needing to take advantage of Government support schemes. This success was due to the agility of the business model, client delivery techniques and the quality of our employees and hiring processes. Brexit has had no material negative impact upon the Group’s client base and trading results. In some areas trading relationships have increased with new EU and European trading partners, and this is expected to improve. The effects of IR35 legislation is minimal as the Group has continued to reduce associate fee earners in favour of higher margin permanent employees. The risk in this area is not considered material. The Directors have approached the budget and forecasting cycle for the 2024 financial year with a conservative outlook, but are confident in the business model and the ability of the highly skilled and long tenured consultants to improve upon these conservative expectations. The viability assessment considered the principal risks as set out on page 6. The Board modelled a number of realistic scenarios based upon conservative budgets and forecasts. This included modelling the most severe scenario possible which assumed that all current client contracts discontinued at expiry, with no extension or replacement and with no further cost mitigation. The group have extended at a high level these forecasts to 3 years for the purposes of considering viability. In all scenarios, it was found that there was sufficient headroom in cash flow to continue operating within current resources for the next 18 months, and without the requirement to utilise the available financing facility as detailed in note 3, or procure further external funding. The Group was therefore found to have sufficient financial strength to withstand considerable financial headwinds. The Board believes that the Group remains well placed to navigate effectively a prolonged period of uncertainty and to mitigate the risks presented by it. Based upon the results of this analysis, the Board has a reasonable expectation that the Group will be able to continue in operation and be able to meet its liabilities over the next 3-year viability period. In reaching this assessment, the Board has taken into account future trading, access to external funding and cash flow expectations. 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, EBITDA, gross margin and headcount. Financial KPIs are discussed in more detail in the Financial review below. The outlook for the Group is discussed in the Chairman’s statement on page 2. The KPIs are as follows; Revenue £14,858,000 £17,015,000 2023 2022 Profit from operations £35,000 £1,108,000 Earnings before interest, tax, depreciation and amortisation (EBITDA)¹ £308,000 £1,379,000 Gross margin Average headcount 23.6% 115 28.1% 104 1 EBITDA – Profit from operations of £35,000 (2022: £1,108,000) adding back the depreciation and amortisation charge in the year of £273,000 (2022: £271,000) 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 gender, age, race, religion or disability. The Group has a policy of supporting staff in long term career development. Triad Group Plc Annual Report and Accounts 2023 | 9 Strategic report Culture and engagement The Group recognises the importance of having effective communication and consultation with, and of providing leadership to, all its employees. The Group promotes the involvement of its employees in understanding the aims and performance of the business. An assessment of culture, engagement and future contribution made to the business by employees is made at each Board meeting and is considered a key aspect of the meetings. The Board has been satisfied with policies and practices and they are aligned with the Group’s purpose and strategy and no corrective action is required. The Group strives to recruit and retain high quality employees at the cutting edge of technology. A key engagement factor is the continuous professional development of all staff and the Group is committed to providing increased training and development opportunities, to enhance both the expertise and engagement of our workforce, and improving the quality of our services to our clients. Diversity and inclusion Diversity and inclusion is a key component of working life in the Group. Employees are encouraged to take an active role in decision making and driving the business forward, including several platforms within the business to share good practice, successes and potential improvements. We continue to include diversity within our recruitment policies and make improvements as appropriate. The following table shows the average number of persons employed during the year, by gender, who were Directors, senior managers or employees of the Company. Directors Senior managers Employees Total Male Female Total 6 2 75 83 1 – 31 32 7 2 106 115 The average female employees as a proportion of the total Group employees continues to improve and during the year ending 31 March 2023 this increased to 28% (2022: 26%). The following table shows the gender identity and ethnic background of the Board and senior management team during the year. Number of Board members Percentage of the Board Number of senior positions on the Board Number in the senior management team Percentage of senior management Men Women White British or other White 6 1 7 86% 14% 100% 4 – 4 2 – 2 100% – 100% The appointment of Alison Lander to the Board on 1 June 2023 has increased the female representation on the Board to 25%. The Board consists of mainly long Triad Group tenured Directors, and with respect to both female and non-white British directors, there are no specific plans to increase representation other than continuing to recruit and nurture the best available talent, regardless of gender or ethnicity. Environment and greenhouse gas reporting This statement contains the Group’s TCFD aligned disclosure in accordance with FCA requirements of Premium Listed UK Corporates. We have not yet completed planning for different climate related scenarios, including 2 degree or lower, and expect to complete this planning by March 2024. The Group has provided responses across the TCFD’s pillars and aims to advance the maturity of its climate-related actions and disclosures on an annual basis. The four pillars are as follows: 10 | Triad Group Plc Annual Report and Accounts 2023 Strategic report Governance – Governance of climate related risks and opportunities Assessing, identifying, and managing climate related issues is part of the management team’s responsibilities. The Board are informed of any climate related issues identified by the management team as and when they arise. When an issue is identified, the Board will monitor the progress of addressing this issue on a relevant basis. Strategy – Impacts of actual or potential climate related risks and opportunities No actual or potential impacts on the Group have been analysed due to the limited impact of climate related issues over the short, medium and long term, including lower carbon economy considerations and a 2°C or lower scenario, and these have not been considered when making strategic decisions. If, and when a risk is deemed to have a greater impact, the Group will follow the same process as identifying and assessing other risks, described on page 6. Risk Management – identification, assessment, and management of climate related risks Metrics – metrics and targets used to assess, manage and report relevant climate-related risks and opportunities The service nature of the business and the potential downtime of consultants in between assignments, means that climate risk is mitigated in this situation. With the Group’s workforce currently working remotely from locations across the country and having in excess of 3 years’ remote working experience, no localised climate issues will have a material impact. The management team has assessed the impact of the warnings from the National Grid regarding the potential of localised planned three-hour outages and have deemed this to have no material impact. National climate related risks, including electrical supply issues to the entire country at a single time, have been deemed exceptionally remote and not assessed. There are no financial related disclosures due to the immateriality of the risks, in line with the TCFD recommendations. The Group has been involved in climate related projects, such as the Department for Transport’s Renewable Transport Fuels Obligation Operating System (ROS) and with the Department for Business, Energy and Industrial Strategy’s Clean Heat Market Mechanism discovery. This work and our increased expertise in this area provides further opportunities to be involved in future projects of this nature. Climate related risks are assessed as per other risks to the Group, described on page 6. There are no regulatory requirements that would have a material impact on the Group, and in line with our Carbon Reduction Plan, the Group is moving towards zero rated emissions by 2050. The Group’s emissions per scope are detailed below in line with SECR requirements, along with our KPIs of tCO2e per £1m of revenue and per average total headcount, using the emission factors from the Government’s GHG Conversion Factors 2022. Scope 1 – Combustion of fuel; one of the Group’s offices uses gas for heating, which due to the current remote nature of the workforce is being used at a minimum level for both properties. A single company car is also being used where public transport is not available. Scope 2 – Electricity; both offices now are now supplied by renewable energy suppliers, with the small increase due to an increase in office visits. Scope 3 – this covers business travel and employee commuting, with the increase of 13 tCO2e due to an increased requirement for on-site working. Our employees are encouraged to use public transport where available. In November 2022 the Group published its latest Carbon Reduction Plan, available on our website, committing to achieving Net Zero emissions by 2050. It included a shorter-term target to reduce carbon emissions by 18.1% to 150 tCO2e by 2025. During the year, we have promoted remote collaborative working to minimise travel, reduced paper usage by >95% since our baseline emissions calculation and changed to renewable energy suppliers at both of our offices. The continuing reduction will be achieved by continuing to embed a degree of working from home as an ongoing policy, finalise a paperless office environment, increasing the profile of environmental issues and the promotion of good practices through staff communication channels. The management team will continue to review the scope 1 and 2 emissions from office activities and identify and implement reductions through changes to policies and practices. The current measurements remain on target against this plan. Triad Group Plc Annual Report and Accounts 2023 | 11 The emissions are generated solely by activities in the UK. Emissions generated by electricity consumption is 48% (2022: 59%). The Group has not been subject to any environmental fines during the year ended 31 March 2023 (2022: nil). Social, community and human rights issues Triad takes its responsibilities to the community and society as a whole very seriously. With people at the core of our values, during 2020 Triad was proud to have achieved its first Disability Confident badge – Disability Confident Level 1 (“Committed”). To show our continued commitment in this area, during the year we achieved Disability Confident Level 2 (“Employer”), with the ambition to move to the highest level (Level 3 – “Leader”) over the next 12 months. We are using this to guide our practices, particularly with regards to equality of opportunity for disabled staff and through our recruitment process. An example of this is the introduction of a Disability & Accessibility Network, which has been set up to support Triad employees including those with physical and mental impairments. From becoming members of Tech Talent Charter in 2021, we have continued to improve our monitoring of under-represented groups in the workplace through the introduction of company-wide surveys on social mobility and diversity, alongside updating our Equal Opportunities Policy to reflect our commitments. We believe we are working to make a real difference to inclusion and diversity within our organisation and across the technology sector. The Group actively supports charities. Managing Director Adrian Leer is a board member of Action for Children, and our staff participate in regular fund-raising activities for the charity, promoted and supported by Triad. Further charitable donations made in the year included The City of London Police Cadets, which helped to fund extra- curricular development activities for young people within the organisation. There are no human rights issues that impact upon operations. Strategic report The Group has used mileage reports, public transport journey details and meter readings converted to tCO2e using the 2022 UK Government’s conversion factors for company reporting of greenhouse gas emissions. The annual quantity of greenhouse gas (GHG) emissions for the period 1 April 2022 to 31 March 2023 in tonnes of carbon dioxide equivalents (tCO2e) for the Group is shown in the table below, updated following reassessment of carbon footprint criteria: GHG emissions Emission source: Scope 1 – Combustion of fuel Scope 2 – Electricity and heat purchased for own use Total Scope 3 – Including business travel and commuting Total tCO2e per £1m revenue FTE Intensity ratio (tCO₂e per FTE) 2023 tCO2e¹ 2022 tCO2e¹ 7 29 36 24 60 4.0 115 0.5 8 26 34 11 45 2.6 104 0.4 1 The calculation of tCO2e for each source has been prepared in accordance with DEFRA guidelines for GHG reporting. The annual energy consumed as a result of the purchase of electricity and heat for the period 1 April 2022 to 31 March 2023 in kWh is shown in the table below: Energy consumed (kWh) kWh per £1m revenue FTE Intensity ratio (kWh per FTE) 2023 151,355 10,158 115 1,316 2022 124,397 7,317 104 1,196 12 | Triad Group Plc Annual Report and Accounts 2023 Strategic report Financial review Group performance Group revenue has decreased to £14.9m (2022: £17.0m) due to an ongoing increase of consultancy revenues replacing associate led assignments as a proportion of total revenue, serviced by permanent fee earning consultants. Gross profit reduced to £3.5m (2022: £4.8m), primarily due to the increased number of consultants temporarily off charge in the first half of the year, and this has also resulted in the gross profit as a percentage of revenue reducing to 23.6% (2022: 28.1%). The Group reports a profit from operations before taxation of £9k (2022: £1.1m). The reduction in profitability before tax of £1.1m and the reduction in gross profit (£1.3m), was primarily due to reduced consultant utilisation. This is offset by the reduction in administrative personnel overheads of £0.2m. The Group reports a loss after tax of £44k (2022: profit £1.2m). The balance sheet remains strong with no external debt, with the exception of the lease liabilities arising due to the application of IFRS 16, and the Group enjoys strong reserves of cash at £4.8m (2022: £5.3m) and no bad debts (2022: nil). Overheads Administrative expenses for the year are £3.5m (2022: £3.7m). The reduction of £0.2m was the net effect of a reduction in administrative personnel costs derived from a reduction in discretionary one-off payments of £0.3m, reduction in other personnel related costs of £0.1m and an increase in share-based payments of £0.2m and other personnel related costs. Non-personnel costs remained static in the period. Staff costs Total staff costs have increased to £10.0m (2022: £8.6m) (note 7) which is predominantly due to the increase in the average fee earning consultant number to 93 (2022: 77) in line with the Group’s organic growth strategy. This growth in consultant numbers has materially improved the ratio of fee earners to administration staff to 19:1 (2022: 9:1). Cash Cash and cash equivalents as at 31 March 2023 reduced to £4.8m (2022: £5.3m). The maintenance of working capital efficiencies during the year resulted in a net cash inflow from operating activities of £0.7m (2022: £1.2m). During the year, the Group was not required to seek external funding and the Lloyds financing facility remains unutilised. The net cash outflow from financing activities was £1.3m (2022: outflow £0.8m), which included dividends paid of £1.0m (2022: £0.7m). The net cash inflow from investing activities was £0.1m (2022: outflow £0.01m) reflecting the low investment in capital expenditure during the period. Non-current assets Non-current assets excluding taxation increased by £0.4m (2022: reduction £0.1m). This was due to the increase in the right of use asset of £0.2m (2022: reduction £0.2m) and the finance lease receivable of £0.4m (2022: reduction £0.1m) as the lease break on one property was not taken, a reduction of £0.08m was related to purchased assets (2022: increase £0.05m) and trade receivables reduced by £0.1m (2022: increase £0.1m). Taxation The Group adopts a low-risk approach to its tax affairs. The Group does not employ any complex tax structures or engage in any aggressive tax planning or tax avoidance schemes. The deferred tax asset decreased to £0.11m (2022: £0.16m) in the year, mainly due to the expectation that tax losses brought forward will be offset against future profits at a relatively lower level (see note 8). Net assets The net asset position of the Group at 31 March 2023 was £5.2m (2022: £6.0m). The effect of the non-enacted lease break on one property increased total assets by £0.6m and total liabilities by a corresponding £0.6m, and so no overall effect upon net assets in the year. Further movements during the year are detailed on page 42. Share options and restricted stock units A total of 43,084 options were exercised by staff during the year (2022: 511,000). No further options were granted in the year (2022: nil). No restricted stock options (RSUs) were granted to either Directors or staff during the year (2022: 750,000). A share-based expense has been recognised in the year of £200,128 (2022: £476). Dividends With the strong expectation of continued profitability and future positive cash flows, the Board are proposing a final dividend of 4p per share (2022: 4p per share), which together with the interim dividend already paid of 2p (2022: 2p per share), totals 6p per share for the financial year (2022: 6p per share). See note 9. By order of the Board James McDonald Finance Director 9 June 2023 Triad Group Plc Annual Report and Accounts 2023 | 13 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 2023. 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 Group’s and 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 subsidiary undertakings are disclosed in the note 14 to the financial statements. Corporate Governance disclosures required within the Directors’ report have been included within our Corporate Governance report beginning on page 17 and form part of this report. Share capital and substantial shareholdings Share capital As at 31 March 2023, 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. 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 • • 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 themselves for re- election and otherwise shall be the Directors who, at the date of the meeting, have been longest in office since their last appointment or re-appointment. A Director may be removed from office by the service of a notice to that effect signed by at least three quarters of all the other Directors. Amendment of the Company’s Articles of Association The Company’s Articles may only be amended by a special resolution passed at a general meeting of shareholders. Substantial shareholdings As at 31 March 2023, since the date of the last annual report in May 2022, the Company had received the following notifications relating to interests in the Company’s issued share capital, as required under the Disclosure and Transparency Rules (DTR 5) when a notifiable threshold is crossed: Transfer of shares Percentage of issued share capital There are no restrictions on the transfer of ordinary shares in the Company other than as contained in the Articles: M Needham and S Cook (as the joint trustees in bankruptcy of M Makar) • 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 W Barbour 20.98% 5.03% 14 | Triad Group Plc Annual Report and Accounts 2023 Directors’ report Since the year end, the Company received the following further notifications: Percentage of issued share capital AM Fulton 3.00% As at 9 June 2023, no further notifications have been received since the year end. Disclosure of information to auditor 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 auditor for the purposes of their audit and to establish that the auditor is aware of that information. The Directors are not aware of any relevant audit information of which the auditor is unaware. Dividends There was a 2p per share interim dividend paid during the year (2022: 2p per share).The Directors propose a final dividend of 4p per share (2022: 4p per 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. During the year, our activities included the utilisation of a dedicated team to complete the development of a unique lightweight SharePoint site provisioning tool, which would provide a competitive advantage in the marketplace. Also of note, a prototype service was also developed that will allow industry to assess their exposure with respect to new heat pump legislation, which builds upon on the Group’s net zero experience and credentials. None of the research and development activity met the required criteria for capitalisation. Directors’ interests in contracts Directors’ interests in contracts are shown in note 21 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. 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. 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. The Group meets its day to day working capital requirements through cash reserves and an invoice finance facility (which is currently unutilised). The Group operates an efficient low-cost and historically cash generative model. The client base generally consists of large blue-chip entities, particularly within the public sector, enjoying long-term and productive client relationships. As such, debtor recovery has been reliable and predictable with a low exposure to bad debts. For the year ended 31 March 2023, the Group has not utilised any external debt or the current finance facility. The going concern assessment considered a number of realistic scenarios covering the period ending 30 September 2024, including the ability of future client acquisition, and the impact of the reduction in services of key clients upon future cash flows. In addition, in the most severe scenario possible, a reverse stress test was modelled which included all current client contracts discontinued at expiry with no extension or replacement and with no cost mitigation. Even in the most extreme scenario, the Group has enough liquidity and long- term contracts to support the business through the going concern period. The Directors have concluded from these assessments that the Group would have sufficient headroom in cash balances to continue in operation. Triad Group Plc Annual Report and Accounts 2023 | 15 Directors’ report Further information in relation to the Directors’ consideration of the going concern position of the Group is contained in the Viability statement on page 9. After making enquiries, including a review of the wider economy including Brexit, inflationary pressures and the Ukraine conflict, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and at least twelve months from the date of approval of the financial statements. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts. Auditor 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. Statement of Directors’ responsibilities The Directors are responsible for preparing the annual report and the financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and 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 Parent Company financial statements in accordance with UK adopted international accounting standards (‘IFRS’). 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 for that period. In preparing these financial statements, the Directors are required to: select suitable accounting policies and then apply them consistently; • • • • • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the Company will continue in business; prepare a directors’ report, a strategic report and directors’ 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. 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 that the annual report and accounts, taken as a whole, are fair, balanced, and understandable and provides the information necessary for shareholders to assess the group’s performance, business model and strategy. Website publication 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. Directors’ responsibilities pursuant to DTR4 The directors confirm to the best of their knowledge: • • The financial statements have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit and loss of the group and company. The annual report includes a fair review of the development and performance of the business and the financial position of the Group and Company, together with a description of the principal risks and uncertainties that they face.. make judgements and accounting estimates that are reasonable and prudent; By order of the Board state whether they have been prepared in accordance with UK adopted international accounting standards (‘IFRS’), subject to any material departures disclosed and explained in the financial statements James McDonald Company Secretary 9 June 2023 16 | Triad Group Plc Annual Report and Accounts 2023 Corporate governance report The Board has considered the principles and provisions of the UK Corporate Governance Code 2018 (“the Code”) applicable for this financial period. The changes made in the revised Code attempt to improve corporate governance processes and encourage companies to demonstrate how good governance contributes to the achievement of long-term success for stakeholders. The Group keep governance matters under constant review. Despite the changes in the Code requiring a review of processes, there has not been a requirement to make fundamental changes to strategy or working practices. 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 Board is responsible for the long-term and sustainable success of the business, and considers all opportunities and risks as set out in the principal risks and uncertainties on page 6. Further, the Board considers how good governance can assist in promoting the delivery of the strategy, by reference to strong stakeholder engagement. Details of how the Board drive this engagement can be found within the S172 statement on page 7. The Directors who held office during the financial year were: Executive Directors Dr John Rigg, Chairman Adrian Leer, Managing Director James McDonald, Finance Director Tim Eckes, Client Services Director Independent non-Executive Directors Alistair Fulton, senior independent non-Executive Director Chris Duckworth Charlotte Rigg On 1 June 2023 the Board was consolidated and strengthened by the appointment of non-Executive Director Charlotte Rigg to her new role as Deputy Executive Chairman. On the same date, Alison Lander was appointed to the Board as non-Executive Director. Current directorships are as follows: 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. Adrian Leer is Managing Director. He was appointed to the Board on 3 March 2015. He initially joined Triad in 2009 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, he became General Manager of Zubed Geospatial. Adrian became Commercial Director of Triad Consulting & Solutions in 2012. Tim Eckes is Client Services Director. He was appointed to the Board on 1 January 2020. Tim Eckes joined Triad in 1991 as a graduate software engineer before moving into a number of technical and commercial roles. He has multi- sector experience, having been involved in engagements across finance, telecoms, travel and central government. In 5 years preceding his appointment to the Board, as Managing Consultant he played a significant role in growing the business, through the development of long lasting and profitable relationships with key clients. Alistair Fulton is a non-Executive Director. He is a Chartered Engineer and member of the British Computer Society. He was the founding Managing Director of Triad. He continued in this role until February 1997 when he became non-Executive Chairman, a position he retained until June 1999, when he took up his present position. He was a board member of CSSA for 15 years, President in 2000/2001, and has recently served as the Master of the Worshipful Company of Information Technologists, the 100th Livery Company of the City of London. Chris Duckworth was appointed on 1 July 2017 as a non- Executive Director. He has held numerous positions within public and private companies as Finance Director, Managing Director, non-Executive Director and Chairman. He was a founding shareholder and from 1989 to 1994 was Finance Director of Triad where he remained as a non-Executive Director until 1999. From 1989 to 1994 he was Finance Director of Vega Group PLC after which he served as a non- Executive Director until 1997. He was a founding shareholder and Chairman of Telecity PLC in May 1998 and subsequently acted as a non-Executive Director until August 2001. Triad Group Plc Annual Report and Accounts 2023 | 17 Corporate governance report Charlotte Rigg is Deputy Executive Chairman and was appointed to this position on 1 June 2023. She was appointed to the Board as non-Executive Director on 1 January 2020. Charlotte Rigg’s experience is both extensive and diverse. Over the last 25 years she has built an internationally recognised stud farm and runs a sizeable upland grazing farm in Cumbria where the stud is based. In addition, Charlotte runs a successful and expanding investment property portfolio which has been established for over 20 years. James McDonald is Finance Director and was appointed to the Board on 16 June 2020. He joined the Company in February 2020 and, in March 2020, assumed the position of Company Secretary and acting Finance Director. He is a Chartered Certified Accountant and has previously held a senior finance position at Foxtons Group plc, prior to which he was Group Finance Director and Company Secretary at Brook Street Bureau Plc. He qualified with EY in London. Alison Lander is a non-Executive Director and was appointed to this position on 1 June 2023. She is a science graduate with many years’ experience of working with blue- chip organisations within the IT sector, including Vickers Shipbuilding, Fokker Space and Triad Group Plc. She has also had a continuous relationship with the Group, assisting the Chairman and Board for over 20 years. The Board exercises full and effective control of the Group and has a formal schedule of matters specifically reserved to it for decision making, including responsibility for formulating, reviewing and approving Group strategy, budgets and major items of capital expenditure. Regularly the Board will consider and discuss matters that include, but are not limited to: Strategy; Shareholder value; • • • Financial performance and forecasts; • Alignment of culture to Group values; • Employee engagement; • 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. 18 | Triad Group Plc Annual Report and Accounts 2023 Employee engagement is taken very seriously by the Board, and the need to engage with the workforce is even more important since the onset of the pandemic. Bi-weekly Group- wide communication meetings chaired by the Managing Director take place where there is a forum available for all staff to participate and contribute directly with management. Senior management meet daily to discuss the business and create appropriate communications that predominantly seek to enhance the well-being of staff, but also look to align Group values to strategy. Further, on-line platforms exist that enable constructive discussions concerning operational delivery and best practice. Given the size of the Group, it is not appropriate to develop any sub-committees for this purpose and direct Group forums encourage all staff to participate without dilution of message. In a competitive marketplace for talent, the Board ensure further engagement via regular pay reviews and formal staff development processes, which enable training and career aspirations to be discussed along with the facilitation of individual career paths. The Board are firmly of the view that the culture centred around the recruitment and retention of quality staff, their wellbeing, development and future career and remuneration aspirations will drive the strategic aims of the business and drive stakeholder value in the long-term. 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 that preserve Group values and are sustainable over the long-term. 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 business commitments outside the Group. Alistair Fulton is the nominated senior independent non- Executive Director. Charlotte Rigg is Deputy Executive Chairman and both Chris Duckworth and Alison Lander are non-Executive Directors. All have long-standing experience as company directors and are free from any business or other relationship that could materially interfere with the exercise of their independent judgement. The Board benefits from their experience and independence, when they bring their judgement to Board decisions. The Board considers that all continue 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 Chris Duckworth. The Committee is chaired by Alistair Fulton. The Board has a Remuneration Committee, comprised of the Executive Chairman John Rigg, the independent non- Executive Director Alistair Fulton and Deputy Executive Chairman Charlotte Rigg. No third-party advisors have a position on the committee or have provided services to the Committee during the year. 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 2023 and shows that the Board are able to allocate sufficient time to the company to discharge their responsibilities effectively. Board Audit Committee Remuneration Committee Number of meetings held 14 Number of meetings attended Executive Directors: John Rigg (Chairman) Adrian Leer Tim Eckes James McDonald Non-Executive Directors: Alistair Fulton Chris Duckworth Charlotte Rigg Audit Committee 14 14 13 14 11 11 14 1 1 – – – 1 1 – 2 2 – – – 2 – 2 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 the external auditor 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 projects during, and active at the end of the financial year to ensure revenue has been recognised correctly. Furthermore, the Committee has also assessed whether the Group is acting as agent or principle in a transaction. IFRS 16 ‘Leases’: The Committee have considered the accounting treatment with respect to the critical accounting estimates. Dilapidations provisions: The Committee have considered the accounting treatment with respect to the critical accounting estimates. Going concern: The Committee has reviewed budgets, deferred tax calculations 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 auditor and senior finance team Members of the Audit Committee met with the senior finance team in advance of their meeting with the auditor, prior to commencement of the year-end audit to discuss; • Audit scope, strategy and objectives • Key audit and accounting matters • Independence and audit fee The members of the Audit Committee are shown above. The Board believe that John Rigg, a Chartered Accountant with broad experience of the IT industry, Alistair Fulton, who has been a Director of companies in the IT sector for over 30 years and Chris Duckworth, with many years of experience in senior finance positions in listed companies, have recent and relevant financial experience, as required by the Code. A meeting was held prior to the completion of the audit with the senior finance team and the auditor 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 Triad Group Plc Annual Report and Accounts 2023 | 19 Corporate governance report 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. 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. 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 auditor has 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 auditor is required to rotate the audit partner responsible for the Group audit every five years. Non-audit fees During the year the Group did not engage its auditor for any non-audit work. The Committee is responsible for reviewing any non-audit work to ensure it is permissible under EU audit regulations and that fees charged are justified, thus ensuring auditor independence is preserved. Appointment of external auditor BDO LLP was reappointed external auditor in 2017 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. Mandatory rotation of the auditor is required for the year ending 31 March 2025 and the Board are preparing to apply the appropriate tendering and selection process to appoint a new auditor. 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 size of the Group. The Group is certified to ISO 9001:2015 and ISO 27001:2013. 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 and emerging 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 FRC guidance on risk management, internal control and related financial and business reporting. The Board is responsible for the Group's 20 | Triad Group Plc Annual Report and Accounts 2023 In compliance with the Code, the Audit Committee regularly reviews the effectiveness of the Group's systems of internal financial control and risk management. The Board’s monitoring covers all controls, including financial, operational and compliance controls and risk management. It is based principally on reviewing reports from management to consider whether significant weaknesses and risks are effectively managed and, if applicable, considering the need for more extensive monitoring. The Board has also performed a specific assessment for the purpose of this annual report. This assessment considers all significant aspects of internal control and risk management arising during the period covered by the report. The key elements of the internal control and risk management systems are described below: • • • • • • Clearly documented procedures contained in a series of manuals covering Group operations and management, which are subject to internal project audit and external audit as well as regular Board review. The Group’s controls include appropriate segregation of duties which are embedded in the organisation The Group has a formal process for planning, reporting and reviewing financial performance against strategy, budgets, forecasts and on a monthly, bi-annual and annual basis. 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 Directors 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 Corporate governance report remuneration package of Directors. The Committee also takes into account the general workforce remuneration awards when setting Director remuneration. The Directors’ remuneration report can be found on page 22. Provisions 17/23 Whistleblowing Staff may contact the senior independent non-Executive Director, in confidence, to raise genuine concerns of possible improprieties in financial reporting, or employee related matters. Board evaluation 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. The Executive Chairman continuously evaluates the ability of the Board to perform its duties and recognises the strengths and addresses any weaknesses of the Board. In addition, 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. Provision 18 Provision 19 Provision 20 Provisions 21/23 Private shareholders are invited to attend and participate at the Annual General Meeting. Provision 24 Terms of reference The terms of reference of the Audit and Remuneration Committees are available on request from the Company Secretary. DTR 7.2.8 ARR 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: Provision 9 The roles of chairman and chief executive should not be exercised by the same individual. John Rigg is the Executive Chairman. Adrian Leer is Managing Director. 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. 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. All directors 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. The chair should not remain in post beyond nine years from the date of their first appointment to the board. The Board considers that because of its size and critically, due to the experience of the Executive Chairman, this would not be appropriate. The Board believe that re- election in accordance with the Company’s Articles of Association is sufficient. Open advertising and/or an external search consultancy should generally be used for the appointment of the chair and non-executive directors. The Board has a strong culture of promoting from within with relevant experience to the Group. 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. The chair of the board should not be a member of the audit committee. The Board considers that because of its size, and the relevant knowledge and experience of the Executive Chairman, that this is not appropriate. The requirement to detail performance against a diversity policy. The Group has a diversity policy which meets our legal requirements. The monitoring of performance against this policy is an area which the Board take very seriously and continuously look to improve. The size of the Group and the long tenure of senior staff provide constraints to improving ratios in the short-term. By order of the Board James McDonald Company Secretary 9 June 2023 Triad Group Plc Annual Report and Accounts 2023 | 21 Directors’ remuneration report On the following pages we set out the remuneration report for the year ended 31 March 2023. The members of the Remuneration Committee are shown in the Corporate Governance report on page 17. This report has been prepared in accordance with the Companies Act 2006 and is split into two sections as follows; 1. The Directors’ remuneration policy. 2. The Annual report on remuneration. This will be subject to an advisory shareholder vote at this year’s Annual General Meeting. During the year the Committee carefully reviewed Directors’ remuneration. Given the continued positive trajectory under strong strategic and operational guidance, the Committee awarded salary increases to the Board that would be effective in the next financial year. Directors’ remuneration policy The remuneration policy sets out the framework within which the Company remunerates its Directors. The Company’s remuneration report was put to a shareholder vote at the 2022 Annual General Meeting of the Company and was approved by 99.97% of shareholders with no votes withheld. See page 14 of the Directors’ report for further details of voting rights. The Committee welcomed the unanimous approval of the shareholders, which represented 43% of the total shareholding. The Committee aims to align meaningful remuneration with Group financial performance by taking into account the difficult trading environment, and to ensure the long-term health of the business. The performance of the Directors has been deemed by the Committee to be more than satisfactory, with progression on key strategic objectives and a return to profitability. The Committee therefore concludes that the remuneration is fair and appropriate but will continue to seek shareholder feedback. The remuneration policy will be put to a shareholder vote every three years unless any changes to the policy are proposed before then. The Committee intends to implement the Directors’ remuneration for the following year as agreed at the 2023 General Meeting. 22 | Triad Group Plc Annual Report and Accounts 2023 Directors’ remuneration report Policy table – Executive Directors Element & purpose Operation Maximum payable Performance metrics Base salary Reflects the individual’s skills, responsibilities and experience. Supports the recruitment and retention of Executive Directors. Benefits in kind Protects the well- being of Directors and provides fair and reasonable market competitive benefits. Reviewed annually taking into consideration market data, business performance, external economic factors, the complexity of the business and the role, cost, and the incumbent’s experience and performance as well as the wider employee pay review. Ordinarily, salary increases will be in line with average increases awarded to other employees in the Company. In certain circumstances, such as a change in responsibility or development in role increases beyond this may be made subject to the factors mentioned in the Operation column None, although individual performance is considered when setting salary levels. Benefits are set at a level considered to be appropriate taking into account individual circumstances. None. Benefits in kind include company cars or allowances, private medical insurance, life cover and permanent health insurance. Benefits are reviewed periodically. The Remuneration Committee retains discretion to provide other benefits depending on the circumstances which may include but are not limited to relocation costs or allowances to facilitate recruitment. Pension Provides competitive post-retirement benefits to support the recruitment and retention of Executive Directors. The Company pays contributions into a personal pension scheme or cash alternative. The Company matches individual contributions up to a maximum of 5%. None. This limit is in line with the limits available for all employees. All employee share scheme To provide employees with the opportunity to own shares in the Company. Executive Directors shall be eligible to participate in any future all employee share schemes (e.g. Save-as-you-earn or Share Incentive Plan) if adopted by the Company. The limits will be in line with the HMRC limits for the relevant schemes. Any conditions shall be in line with HMRC guidance for such schemes and there may be no performance conditions if appropriate. Share option scheme Encourages share ownership amongst employees and aligns their interests with the shareholders. The Company operates an EMI share option scheme. Discretionary awards are made in accordance with the scheme rules. The potential value of options held rises as the Company’s share price increases. Specific performance criteria are specified at the time of awarding the share options to ensure alignment with the interests of shareholders. Triad Group Plc Annual Report and Accounts 2023 | 23 Directors’ remuneration report Element & purpose Operation Maximum payable Performance metrics The maximum award that may be granted shall be 200% of salary. Awards may have performance conditions attached. The Remuneration Committee has discretion to determine appropriate measures, targets and ranges in respect of each award when made. The Remuneration Committee may also adjust the formulaic outcome of awards where it deems that it is not reflective of overall business performance. Employee Share Incentive Plan Incentivises long- term value creation, aligning the interests of Executives and shareholders through share awards The Remuneration Committee may make share awards annually under the Plan. The Plan will give the Remuneration Committee flexibility to make awards in the form of conditional awards (performance share award). Performance share awards shall have a performance period of at least 3 years. Awards shall not vest in full any earlier than 3 years, but the Remuneration Committee retains discretion to vest in tranches. Awards made to Executive Directors will have an additional post-vesting holding period of 2 years during which shares cannot be sold other than to settle tax liabilities which may arise. Malus and clawback provisions apply. The award of shares under the Plan or EMI scheme is at the sole discretion of the Remuneration Committee: there is no contractual entitlement for any Director to receive an award annually or otherwise. The Group does not believe that a performance related annual cash bonus is appropriate at the present time and that solely equity-based incentives are a more appropriate mechanism for incentivising, rewarding and retaining Executive Directors. Shareholding Guidelines The Remuneration Committee is introducing shareholding guidelines in order to encourage a build-up of shares over time for the Executive Directors. Whilst there is no formal requirement beyond the 2 year post-vesting holding period, the Remuneration Committee expects that a substantial portion of shares earned from incentive arrangements will continue to be held by the Executive Directors in the longer term. Policy table – non-Executive Directors Element Fees Relevance to short and long-term strategic objectives Competitive fees to attract experienced Directors. Operation Maximum payable Performance metrics Reviewed annually. Not applicable. In general, the level of fee increase for the non- Executive Directors will be set taking account of any change in responsibility. The remuneration of the non-Executive Directors is agreed by the Board. However, no Director is involved in deciding their own remuneration. 24 | Triad Group Plc Annual Report and Accounts 2023 Directors’ remuneration report Malus and Clawback provisions The Plan contains malus and clawback provisions which may trigger in exceptional circumstances and which include: material misstatement of company accounts; fraud, gross misconduct or misbehaviour; • • • materially mistaken, misrepresented or incorrect information has been used to assess the value of an award; • an error in assessing or setting performance conditions; • material reputational damage or • a downturn in financial performance or corporate failure for which the relevant individual is responsible or has significantly contributed to. Malus may apply until settlement, and clawback may apply after vesting for up to 2 years, and these provisions allow the Remuneration Committee to recover value delivered in connection with awards and amend or reduce awards in the above circumstances (potentially to nil).. Discretion The Remuneration Committee has discretion in several areas of the remuneration policy as set out in this report. The Remuneration Committee may also exercise operational and administrative discretions under relevant plan rules approved by shareholders as set out in those rules. In addition, the Remuneration Committee has the discretion to amend the remuneration policy in respect of minor or administrative matters where it would be, in the opinion of the Remuneration Committee, disproportionate to seek or await shareholder approval. As noted, the Remuneration Committee reviews all incentive outturns to assess whether they align to the overall performance of the business and the experience of its key stakeholders over the period e.g., shareholders and employees. The Remuneration Committee retains discretion to adjust the formulaic outcome of incentives upwards or downwards to reflect its judgement. Any such exercise of discretion will be disclosed in the relevant annual report. Pre-existing remuneration arrangements and minor changes The Remuneration Committee may make remuneration payments outside of the terms of this remuneration policy where the terms of the payment were agreed prior to the introduction of this or prior remuneration policies, provided the terms were in line with the remuneration policy in place at that time, or where the terms were agreed prior to the relevant Director being a member of the Board. Any such payments may be satisfied in line with the terms agreed. 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 Remuneration 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 The Remuneration Committee may determine that an initial salary positioning below market is appropriate and in those circumstances, may in the years following appointment award increases greater than levels awarded to the wider workforce in the short-term. Incentive levels will be in line with the limits for Executive Directors and the structure will be as permissible under the policy. If applicable, relocation allowances may be made in line with the policy. The Company may offer to buy out incentives which have been forfeited from a previous employer. Where such awards are made, they will seek to match the value and time horizons of foregone awards and will reflect any performance conditions attached. The Company will not make any sign-on bonuses or “golden hello” payments when appointing Executive Directors. Triad Group Plc Annual Report and Accounts 2023 | 25 Directors’ remuneration report Directors’ service contracts and policy The details of the Directors’ contracts are summarised as follows: J C Rigg A M Fulton A Leer C J Duckworth T J Eckes C M Rigg J McDonald A J Lander Date of contract Notice period 01/07/1999 19/02/1997 03/03/2015 01/07/2017 01/01/2020 01/01/2020 16/06/2020 01/06/2023 1 month 1 month 6 months 1 month 6 months 1 month 6 months 1 month 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. Policy on payment for loss of office The primary principle underpinning the determination of any payments on loss of office is that payments for failure will not be made. Contracts and incentive plan rules have been drafted in such a way that the Remuneration Committee has the necessary powers to ensure this. 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. In relation to the Plan, awards will normally lapse for a leaver and the plan rules contain Good Leaver provisions that shall determine the treatment of awards in the following cases: ill-health, injury, disability • death, • • • any other reason at the discretion of the Remuneration Committee the employing company / business / part of the business being transferred outside of the Group or In such cases: Awards will ordinarily be pro-rated based on time served over the vesting period. • • Vesting will normally occur at the normal time except upon death where vesting may be accelerated. • Performance conditions shall still apply. The Remuneration Committee reserves discretion however to determine the exact treatment of awards having due regard to the circumstances at the relevant time. Consideration of employment conditions elsewhere in the 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. No consultation has been held with employees in respect of Executive Directors’ remuneration. 26 | Triad Group Plc Annual Report and Accounts 2023 Directors’ remuneration report Consideration of shareholders’ views The Remuneration Committee considers the views of institutional investors and published guidelines of its shareholders when making remuneration decisions. Furthermore, the Remuneration Committee is open to conversations with shareholders on the design of the policy and any remuneration decisions made concerning Executive Directors. 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 A Leer T J Eckes J McDonald Non-Executive A M Fulton C J Duckworth C Rigg Total Director Executive J C Rigg A Leer ¹ T J Eckes ² J McDonald ³ Non-Executive A M Fulton C J Duckworth C Rigg Total 2023 Basic salary and fees Benefits in kind Pension Total Fixed Pay One-time Discretionary payment Total Variable Pay Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 60 180 145 153 40 35 35 648 – 19 2 – – – – 21 – 33 25 16 – – – 74 60 232 172 169 40 35 35 743 – – – – – – – – – – – – – – – – 60 232 172 169 40 35 35 743 Basic salary and fees Benefits in kind 2022 Pension Total Fixed Pay Other Total Variable Pay Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 60 163 133 139 40 35 35 605 – 18 2 – – – – 20 – 30 21 14 – – – 65 60 211 156 153 40 35 35 690 – 161 64 64 – – – – 161 64 64 – – – 289 289 60 372 220 217 40 35 35 979 ¹ Adrian Leer’s basic salary was increased from £175,000 to £200,000 p.a. with effect from 1 January 2022. ² Tim Eckes’ basic salary was increased to £150,000 p.a. with effect from 1 January 2022. ³ James McDonald’s basic salary was increased to £150,000 p.a. with effect from 1 January 2022. Triad Group Plc Annual Report and Accounts 2023 | 27 Directors’ remuneration report Other Remuneration In November 2021, the Executive Directors were awarded a one-time discretionary payment for their commitment and contribution during a very challenging year as follows: Adrian Leer £160,500, Tim Eckes £64,200 and James McDonald £64,200. Other than vesting conditions in relation to outstanding share award schemes (see note 20), no performance measures or targets were in place for either the year ended 31 March 2023 or any prior financial year, upon which any variable pay elements could become payable during the year. Benefits in kind include the provision of company car and medical insurance. Pension includes a 5% employer contribution together with contributions made under an employee salary sacrifice scheme. Three Directors are members of a money purchase pension scheme into which the Group contributed during the year. 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. 1 April 2022 31 March 2023 A M Fulton J C Rigg A Leer C J Duckworth T J Eckes C M Rigg J McDonald Total 337,040 4,594,400 305,379 22,026 120,374 112,000 27,600 5,518,819 337,040 4,794,400 305,379 22,026 120,374 312,000 27,600 5,918,819 Since the year end, A M Fulton’s shareholding increased to 497,780 ordinary shares. A J Lander (appointed to the Board on 1 June 2023) holds 134,545 ordinary shares. 28 | Triad Group Plc Annual Report and Accounts 2023 Directors’ remuneration report Directors’ share options EMI scheme The interests of Executive Directors in the EMI share option scheme were as follows: At 1 April 2021 Exercised during year At 31 March 2022 At 31 March 2023 Exercise price Exercise period A Leer: granted 09.03.18 150,000 (150,000) T J Eckes: granted 09.03.18 60,000 (60,000) 210,000 (210,000) – – – – – – 53.5p 09.03.21 to 09.03.28 53.5p 09.03.21 to 09.03.28 No EMI options were available to the Directors during the year ended 31 March 2023 (2022: 210,000) As the performance conditions were met all 210,000 above were exercisable on 1 April 2021 and were subject to relevant close period. Share options are exercisable provided that the relevant performance requirement has been satisfied. For options granted on 9 March 2018: The vesting date was set at 31 March 2021 and the exercise period ends on 9 March 2028, and 100% of the shares granted under an Option will vest if the Company’s share price at 31 March 2021 has increased by 30% or more from the share price as at the date of grant. 50% of shares granted under an Option will vest if the Company’s share price at 31 March 2021 has increased by 15% from the share price as at the date of grant. Between these upper and lower thresholds, awards vest on a straight-line basis. The total share-based payment expense recognised in the year in respect of Directors’ EMI share options is nil (2022: nil). The total cash remitted to the Company by the Directors to exercise share options during the year was nil (2022: £112k). Restricted Stock Units On 30 March 2022 the Committee awarded the Executive Directors the following restricted stock units (RSUs): Director Adrian Leer Tim Eckes James McDonald Date award made Number 30 March 2022 30 March 2022 30 March 2022 60,000 60,000 60,000 Performance condition 135.0p 135.0p 135.0p Vesting date 30 March 2025 30 March 2025 30 March 2025 The Award will Vest if the Board determines that the Market Value of a Share on the third anniversary of the Award Date is equal to or greater than the Market Value of a Share on the Award Date. The market value at the Award Date is 135p. The total share-based payment expense recognised in the year in respect of Directors’ RSU share options is £53,447 (2022: £114). Malus, clawback and hold over periods are as per the Plan. The market price of the Company’s shares was 137.5p at 31 March 2023 and the range during the year was between 81p and 145p. Further details relating to share awards can be found in note 20. Triad Group Plc Annual Report and Accounts 2023 | 29 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 Fledgling Index Fledging Triad 500 450 400 350 300 250 200 150 100 50 x e d n I Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 Mar 19 Mar 20 Mar 21 Mar 22 Mar 23 Chief Executive remuneration For the financial year ended 31 March 2023 the salary of the Executive Chairman was £60,000 (2022: £60,000). Employee salaries increased, on average, by 6.5% in the year (2022: 3.8%). The remuneration paid to the Executive Chairman for the financial years 2014 to 2023 were as follows: 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 £25,000 £25,000 £25,000 £25,000 £60,000 £60,000 £60,000 £60,000 £60,000 £60,000 The annual amounts paid above relate to salary only. The Executive Chairman did not receive any discretionary payments during these periods. Relative importance of spend on pay The total dividends or other cash distributions to shareholders during the year was £995k (2022: £653k), see note 9. The total employee remuneration (including Directors) during the year was £10.028m (2022: £8.620m). 30 | Triad Group Plc Annual Report and Accounts 2023 Directors’ remuneration report Percentage change in Directors’ remuneration The tables below show the change in Directors’ remuneration compared to the employees of the company, where Directors and employees have been employed by Triad for the full relevant financial years (2021: 41 employees, 2022: 43 employees, 2023: 57 employees). Basic salary and fees J C Rigg A Leer T J Eckes J McDonald A M Fulton C J Duckworth C Rigg Employees of the company Benefits in kind ¹ J C Rigg A Leer T J Eckes J McDonald A M Fulton C J Duckworth C Rigg 2021 0% 0% n/a n/a 0% 0% n/a 3.7% 2021 n/a (1.7%) n/a n/a n/a n/a n/a 2022 0% 3.6% 0.1% 9.4% 0% 0% 0% 3.8% 2022 n/a 19.9% ² (23.4%) n/a n/a n/a n/a 2023 0% 10.3% 10.3% 10.6% 0% 0% 0% 6.5% 2023 n/a 2.3% 4.6% n/a n/a n/a n/a Employees of the company (5.7%) (18.3%) (7.1%) ¹ The negative values in this table represent a reduction in costs for the provision of identical benefits ² Represents the increase in provision of company car Other (includes commission and bonus payments) J C Rigg A Leer T J Eckes J McDonald A M Fulton C J Duckworth C Rigg Employees of the company ³ Represents back pay paid in 2020 ⁴ Represents cessation of a commission scheme for a small number of employees 2021 n/a n/a n/a n/a (100%) ³ n/a n/a 2022 n/a 100% 100% 100% n/a n/a n/a 2023 n/a (100%) (100%) (100%) n/a n/a n/a (9.5%) (44.3%) ⁴ (88.2%) ⁴ The Group is exempt from disclosing data with respect to the CEO pay ratio due to employee numbers being less than 250. Consideration of matters related to Directors’ remuneration During the financial year, the Remuneration Committee met twice to discuss Directors’ remuneration. No external advice was sought in relation to matters discussed at this meeting. Alistair Fulton Chairman, Remuneration Committee 9 June 2023 Triad Group Plc Annual Report and Accounts 2023 | 31 Independent auditor’s 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 of the Parent Company’s affairs as at 31 March 2023 and of the Group’s and Parent Company’s profit for the year then ended; • have been properly prepared in accordance with UK adopted international accounting standards; and • have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements of Triad Group Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended 31 March 2023 which comprise the Group and Company Statements of comprehensive income and expense, Group and Company Statements of changes in equity, Group and Company Statements of financial position, Group and Company Statements of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the audit committee. Independence Following the recommendation of the audit committee, we were appointed by the Directors to audit the financial statements for the year ended 31 March 2006 and subsequent financial periods. The period of total uninterrupted engagement including retenders and reappointments is 18 years, covering the years ended 31 March 2006 to 31 March 2023. We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard were not provided to the Group or the Parent Company. Conclusions relating to going concern In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of accounting included: • We considered the nature of the Group, its business model and related risks to going concern arising. • We evaluated the Directors’ assessment of the Group’s ability to continue as a going concern, including challenging the underlying data in the forecasts by comparing it to actual performance in the current financial year, client contracts and comparing it to post year-end financial performance. • We challenged the rationale for the key assumptions, using our knowledge of the business and the sector, corroborating to supporting documentation where appropriate. • We examined the forecasts and stress tests provided by the Group and the appropriateness of the assumptions made. • We tested the integrity of the models by checking the formulae, the arithmetic accuracy and any hard coding. • Enquires were made of management as to any future events or conditions that may affect the Group’s ability to continue as a going concern, we have also inspected the minutes of Board meetings to support our enquiries. • We obtained confirmation of the financing facilities available to the Group and assessed the availability of cash to the Group over the forecast period and the level of headroom available. • Reviewing post-balance sheet results, specifically the cash flow position against that budgeted; and • Considering the adequacy of the disclosures in the financial statements against our knowledge of the Group, the Directors’ going concern assessment and the requirements of the accounting standards. 32 | Triad Group Plc Annual Report and Accounts 2023 Independent auditor’s report to the members of Triad Group Plc Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Overview Coverage 100% (2022: 100%) of the Group profit before tax Key audit matters Revenue recognition 2023 X 2022 X Materiality Group financial statements as a whole £74k (2022: £85k) based on 0.5% (2022: 0.5%) of revenue An overview of the scope of our audit Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. The Group operates solely in the United Kingdom. The Group consists of six companies, five which are dormant, with the Parent Company being the only trading entity and significant component. The Group engagement team performed a full scope audit of the Parent Company. Climate change Our work on the assessment of potential impacts on climate-related risks on the Group’s operations and financial statements included: • • • • • Enquiries and challenge of management to understand the actions they have taken to identify climate-related risks and their potential impacts on the financial statements and adequately disclose climate-related risks within the annual report; Our own qualitative risk assessment taking into consideration the sector in which the Group operates and how climate change affects this particular sector; Review of the minutes of Board and Audit Committee meeting and other papers related to climate change and performed a risk assessment as to how the impact of the Group’s commitment as set out in Corporate social responsibility may affect the financial statements and our audit; We challenged the extent to which climate-related considerations, including the expected cash flows from the initiatives and commitments have been reflected, where appropriate, in the Directors’ going concern assessment and viability assessment; and We also assessed the consistency of managements disclosures included as ‘Other Information’ on page 11 with the financial statements and with our knowledge obtained from the audit. Based on our risk assessment procedures, we did not identify there to be any Key Audit Matters materially impacted by climate-related risks. Triad Group Plc Annual Report and Accounts 2023 | 33 Independent auditor’s report to the members of Triad Group Plc Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter Revenue recognition As detailed in note 1 and 4 to the financial statements. We considered there to be a significant risk of material misstatement due to fraud relating to the existence of revenue around year end (cut-off) and overstatement of revenue. We considered that this fraud risk could arise through: • • • • • fictitious contractor/ candidates; manipulation of cut-off through revenue not being recognised appropriately in line with their respective performance obligations; manipulation of revenue through journal entries; inappropriate recognition of accrued income; and manipulation of contractor accrual. In view of the significance of revenue recognition to the financial statements and the potential for fraud this was considered to be key audit matter. How the scope of our audit addressed key audit matter We performed testing on a sample basis over the revenue postings pre and post year end, agreeing the posting to supporting documentation, checking that the transaction has been recorded in the correct period and revenue has been recognised appropriately. We performed testing on a sample basis over the contractor costs incurred before and after the year end, agreeing these to supporting documentation and checking that the revenue associated with these has been recorded in the correct period. We tested a sample of credit notes recognised post year end to supporting documentation to confirm recognition in the correct period. We performed testing on a sample basis over the timecards received either side of the year end, agreeing them to sales invoices to check that these have been recorded in the correct period. We performed testing on a sample basis over the revenue postings throughout the year, agreeing the postings to payment, timecard, confirmation of charge out rate and sales invoice as appropriate, checking that the transactions exist and are recorded in line with the accounting policy and in the correct accounting period. We tested a sample of journal postings to revenue, agreeing the posting to supporting documentation to assess the validity thereof. We tested a sample of year end accrued and deferred income balances and agreed them to sales invoices, bank payment where appropriate and timecards. We agreed a sample of new customers and contractors during the period to supporting documentation to confirm existence. Key observations: Based on the procedures performed we did not identify any matters to indicate that revenue recognition was inappropriate. 34 | Triad Group Plc Annual Report and Accounts 2023 Independent auditor’s report to the members of Triad Group Plc Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: Materiality Group and Parent Company financial statements 2023 £k 74 2022 £k 85 Basis for determining materiality 0.5% of revenue 0.5% of revenue Rationale for the benchmark applied We consider revenue to be the most appropriate benchmark as it is one of the principal considerations for users of the financial statements in assessing the financial performance and development of the Group and Parent Company. We consider revenue to be the most appropriate benchmark as it is one of the principal considerations for users of the financial statements in assessing the financial performance and development of the Group and Parent Company. Performance materiality 55 64 Basis for determining performance materiality 75% of materiality – the threshold was selected to reflect the number of balances subject to estimation, the amount of audit differences historically arising and the mainly substantive approach to the audit. 75% of materiality – the threshold was selected to reflect the number of balances subject to estimation, the amount of audit differences historically arising and the mainly substantive approach to the audit. Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £4k (2022: £4k). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Triad Group Plc Annual Report and Accounts 2023 | 35 Independent auditor’s report to the members of Triad Group Plc Corporate governance statement The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Parent Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit. Going concern and longer-term viability • • The Directors' statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on page 15; and The Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate set out on page 9. Other Code provisions • Directors' statement on fair, balanced and understandable set out on page 14; • • Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 6; The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 20; and • The section describing the work of the audit committee set out on page 19. Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit: • • 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; and the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report. Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us 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. 36 | Triad Group Plc Annual Report and Accounts 2023 Independent auditor’s report to the members of Triad Group Plc Responsibilities of Directors 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, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: Non-compliance with laws and regulations Based on our understanding of the regulatory and legal framework applicable to the Group and Parent Company and the industry in which it operates, we considered the risk of acts by the Group and Parent Company which were contrary to applicable laws and regulations, including fraud. These included but were not limited to compliance with the applicable accounting framework, Companies Act 2006, UK Corporate Governance Code, the UK listing rules and UK tax legislation. Our procedures in respect of the above included: • agreement of the financial statement disclosures to underling supporting documentation; • review of any correspondence with regulators and legal advisors for any instances of non-compliance with laws and regulations; • • • • review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations; involvement of tax specialists in the audit; review of legal expenditure accounts to understand the nature of expenditure incurred; and enquiries made of management and those charged with governance regarding any instances of non-compliance with laws and regulations. Triad Group Plc Annual Report and Accounts 2023 | 37 38 | Triad Group Plc Annual Report and Accounts 2023 Independent auditor’s report to the members of Triad Group Plc Fraud We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included: • Enquiry with management and those charged with governance regarding any known or suspected instances of fraud; • Obtained an understanding of the Group’s policies and procedures relating to; – Detecting and responding to the risks of fraud; and – Internal controls established to mitigate risks related fraud; • Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud; and • Discussion amongst the engagement team as to how and where fraud might occur in the financial statements. Based on our risk assessment, we considered that fraud risks could arise in the existence of revenue through fraudulent journal postings to revenue; incorrect revenue recognition at year end; fictitious contractors or customers; manipulation of contractor accruals; and manipulation of accrued income as well as management override of controls. The audit procedures performed in relation to revenue recognition are documented in the key audit matter section of our audit report. In response to the risk of management override of controls, we tested the appropriateness of journal entries and other adjustments on a sample basis to supporting documentation. We also assessed whether the judgements made in making accounting estimates were indicative of a potential bias and evaluated the business rationale of any significant transactions that were unusual or outside the normal course of business. We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non- compliance with laws and regulations throughout the audit. Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. James Fearon (Senior Statutory Auditor) 9 June 2023 For and on behalf of BDO LLP, Statutory Auditor London, UK BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). Triad Group Plc Annual Report and Accounts 2023 | 39 Statements of comprehensive income and expense for the year ended 31 March 2023 Group and Company Revenue Cost of sales Gross profit Administrative expenses Profit from operations Finance income Finance expense Profit before tax Tax (Charge)/Credit (Loss)/Profit for the year and total comprehensive income attributable to equity holders of the parent Basic (loss)/earnings per share Diluted (loss)/earnings per share All amounts relate to continuing activities. Note 4 5 13 6 8 10 10 2023 £’000 14,858 (11,354) 3,504 (3,469) 35 17 (43) 9 (53) (44) (0.27p) (0.27p) 2022 £’000 17,015 (12,231) 4,784 (3,676) 1,108 10 (37) 1,081 88 1,169 7.16p 7.04p 40 | Triad Group Plc Annual Report and Accounts 2023 The notes on pages 44 to 62 form part of the financial statements. Statements of changes in equity for the year ended 31 March 2023 Group At 1 April 2021 Profit for the year and total comprehensive income Ordinary shares issued Dividend paid (note 9) Share-based payments At 1 April 2022 Loss for the year and total comprehensive income Ordinary shares issued Dividend paid (note 9) Share-based payments Share Capital £’000 160 – 5 – – 165 – 1 – – Company At 1 April 2021 Profit for the year and total comprehensive income Ordinary shares issued Dividend paid (note 9) Share-based payments At 1 April 2022 Loss for the year and total comprehensive income Ordinary shares issued Dividend paid (note 9) Share-based payments Share Capital £’000 160 – 5 – – 165 – 1 – – Share premium account Capital redemption reserve Retained earnings Total £’000 666 £’000 104 104 4,869 6,018 £’000 4,353 £’000 5,283 1,169 1,169 – (653) – 219 (653) – (44) – (995) 200 4,030 (44) 15 (995) 200 5,194 £’000 4,348 £’000 5,278 1,169 1,169 – (653) – 219 (653) – (44) – (995) 200 4,025 (44) 15 (995) 200 5,189 – – – – – – – – – – – – – – – – 104 4,864 6,013 – 214 – – 880 – 14 – – – 214 – – 880 – 14 – – At 31 March 2023 166 894 104 Share premium account Capital redemption reserve Retained earnings Total £’000 666 £’000 104 At 31 March 2023 166 894 104 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. The notes on pages 44 to 62 form part of the financial statements. Triad Group Plc Annual Report and Accounts 2023 | 41 Statements of financial position at 31 March 2023 Non-current assets Intangible assets Property, plant and equipment Right-of-use assets Finance lease receivables Trade and other receivables Deferred tax Current assets Trade and other receivables Finance lease receivables Cash and cash equivalents Total assets Current liabilities Trade and other payables Short term provisions Lease liabilities Non-current liabilities Trade and other payables Long term provisions Lease liabilities Total liabilities Net assets Shareholders’ equity Share capital Share premium account Capital redemption reserve Retained earnings Total shareholders’ equity Registered number 02285049 Group Company Note 2023 £’000 2022 £’000 2023 £’000 2022 £’000 11 12 13 13 15 8 15 13 16 17 18 13 17 18 13 19 1 199 572 396 – 108 1,276 2,541 94 4,795 7,430 8,706 (2,269) – (292) (2,561) – (197) (754) (951) (3,512) 5,194 166 894 104 4,030 5,194 2 278 345 – 130 161 916 2,554 84 5,325 7,963 8,879 (2,134) (61) (269) (2,464) (104) (136) (157) (397) (2,861) 6,018 165 880 104 4,869 6,018 1 199 572 396 – 108 1,276 2,541 94 4,795 7,430 8,706 (2,274) – (292) (2,566) – (197) (754) (951) (3,517) 5,189 166 894 104 4,025 5,189 2 278 345 – 130 161 916 2,554 84 5,325 7,963 8,879 (2,139) (61) (269) (2,469) (104) (136) (157) (397) (2,866) 6,013 165 880 104 4,864 6,013 The financial statements on pages 40 to 63 were approved by the Board of Directors and authorised for issue on 9 June 2023 and were signed on its behalf by: Adrian Leer Director James McDonald Director Triad Group Plc is registered in England and Wales with registered number 02285049 42 | Triad Group Plc Annual Report and Accounts 2023 The notes on pages 44 to 62 form part of the financial statements. Statements of cash flows for the year ended 31 March 2023 Group and company Cash flows from operating activities Profit for the year before taxation Adjustments for: Depreciation of property, plant and equipment Amortisation of right of use assets Amortisation of intangible assets Interest received Finance expense Share-based payment expense Changes in working capital Decrease/(Increase) in trade and other receivables Increase/(Decrease) in trade and other payables Cash generated by operations Foreign exchange gain Net cash inflow from operating activities Investing activities Finance lease interest received Finance lease payments received Purchase of intangible assets Purchase of property, plant and equipment Net cash used in investing activities Financing activities Proceeds of issue of shares Lease liabilities principal payments Lease liabilities interest payments Dividends paid Net cash outflow from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period Note 2023 £’000 9 87 185 1 (17) 43 200 143 32 683 1 684 17 102 – (9) 110 15 (300) (44) (995) (1,324) (530) 5,325 4,795 12 13 11 13 6 13 13 11 12 13 13 9 16 2022 £’000 1,081 79 187 5 (10) 35 – (169) (11) 1,197 1 1,198 10 109 (1) (132) (14) 220 (307) (37) (653) (777) 407 4,918 5,325 The notes on pages 44 to 62 form part of the financial statements. Triad Group Plc Annual Report and Accounts 2023 | 43 Notes to the financial statements for the year ended 31 March 2023 1. Principal accounting policies Basis of preparation for Group and Company 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 UK adopted International Financial Reporting Standards (IFRSs) and the provisions of the Companies Act 2006. These financial statements have been prepared on a historical cost basis and are presented in pounds sterling, generally rounded to the nearest thousand, the presentational currency of the Group. 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 and Parent Company, its cash flows, liquidity position and borrowing facilities are described in the Strategic report. 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. The Group and Parent Company meets their day to day working capital requirements through cash reserves and an invoice finance facility (which is currently unutilised). The Group and Parent Company operates an efficient low- cost and historically cash generative model. The client base generally consists of large blue-chip entities, particularly within the public sector, enjoying long-term and productive client relationships. As such, debtor recovery has been reliable and predictable with a low exposure to bad debts. For the year ended 31 March 2023, the Group and Parent Company have not utilised any external debt or the current finance facility. The going concern assessment considered a number of realistic scenarios covering the period ending 30 September 2024, including the ability of future client acquisition, and the impact of the reduction in services of key clients upon future cash flows. In addition, in the most severe scenario possible, a reverse stress test was modelled which included all current client contracts discontinued at expiry with no extension or replacement and with no cost mitigation. Even in the most extreme scenario, the Group and Parent Company has enough liquidity and long-term contracts to support the business through the going concern period. The Directors have concluded from these assessments that the Group and Parent Company would have sufficient headroom in cash balances to continue in operation. Further information in relation to the Directors’ consideration of the going concern position of the Group is contained in the Viability statement on page 9. After making enquiries, including a review of the wider economy including Brexit, inflationary pressures and the Ukraine conflict, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and at least twelve months from the date of approval of the financial statements. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts. 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 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. Depreciation is charged to administrative expenses in the statement of comprehensive income and expense. The principal annual rates used for this purpose are: Computer hardware Fixtures and fittings Motor vehicles Leasehold improvements % 25-33 10-33 25-33 10-33 44 | Triad Group Plc Annual Report and Accounts 2023 Notes to the financial statements for the year ended 31 March 2023 Intangible assets 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 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 Impairment of non-financial assets % 25–33 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 initially recognised at fair value plus transaction costs, and subsequently measured at amortised cost using the effective interest method, less provision for impairment. At each reporting date an amount of impairment is recognised as lifetime expected credit losses (lifetime ECL’s). Lifetime ECL’s are calculated using a provision matrix that groups trade receivables according to the time past due, and at provision rates based on historical observed default rates, adjusted for forward looking estimates. At every reporting date, the historical observed default rates and forward- looking estimates are updated. Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprises cash held on demand with banks. The carrying amount of these assets is equal to their fair value. Trade and other payables Trade and other payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method. Leases The Group as Lessee: All leasing arrangements, where the Group is the lessee (defined as leases that last more than one year or of a high value), are recognised as a lease liability and corresponding right-of-use asset. Lease liability: The lease liability is calculated as the discounted total fixed payments for the lease term, termination payments, exercise price of purchase options, residual value guarantee and certain variable payments. An interest charge is recognised in the statement of comprehensive income and expense on the lease liability at an incremental borrowing rate. The lease liability is presented across separate lines (current and non-current) in the statement of financial position. The lease liability increases to reflect the interest charge on the lease liability, at an incremental borrowing rate. The lease liability reduces over the period of the lease as payments are made. The lease liability is re- calculated if there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment to purchase the underlying assets. Right-of-use assets: The right-of-use asset is calculated as the original lease liability, initial direct costs and amounts paid upfront. The right of use asset is subsequently measured at cost less accumulated amortisation. The amortisation is charged on a straight-line basis over the life of the lease. The Group as lessor: For the year ended 31 March 2023 lessor arrangements follow the accounting treatment ‘IFRS 16 Leases’. Where the lease indicates a finance lease a lease receivable is recognised. The lease receivable is calculated as the discounted total lease receipts for the lease term. Interest income is subsequently recognised in the statement of comprehensive income and the payment received against the lease receivable. The balance reduces over the lease term as receipts are received. Foreign currencies Assets and liabilities expressed in foreign currencies are translated into sterling at the exchange rate ruling on the date of the statement of financial position. 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. Triad Group Plc Annual Report and Accounts 2023 | 45 Notes to the financial statements for the year ended 31 March 2023 Revenue Revenue recognised in any financial period is based on the delivery of performance obligations and an assessment of when control is transferred to the customer. Revenue is either recognised at a ‘point in time’ when a performance obligation has been performed, or ‘over time’ as control of the performance obligation is transferred to the customer. The majority of the Group’s revenue is derived from the provision of services under time and materials contracts. Performance obligations under such contracts relate to the provision of staff to customers. The transaction price of the performance obligation is determined by reference to charge-out rates for supplied staff specified in the contract and any recoverable expenses. Since the customer simultaneously receives and consumes the benefits of the Group’s performance obligations under such contracts, revenue is recognised over time using the output method which uses a direct measurement of value to the customer of the services transferred to date. Where temporary workers are supplied to customers, the associated revenue is recognised gross (inclusive of the cost of the temporary workers) since the Group is acting as principal. Under IFRS 15, in order to be recognised as principal, there must be a transfer of control between the vendor and the customer. Where the Group provides temporary contractors, it is acting as principal since it receives resourcing requirements directly from the customer, has prime responsibility to find suitable candidates and negotiate pay rates with them, and delivers the resources to the client including acceptance that the service provided meets the client’s expectations. Revenue is therefore recognised as the gross amount invoiced to customers. In relation to time and materials contracts, since it has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Group’s performance completed to date, the Group recognises revenue in the amount to which it has a right to invoice. Revenue from fixed price contracts, which may include software and product development or support contracts, is determined by reference to those fixed prices, agreed at inception of the contract. For fixed price contracts revenue is recognised on an over time basis using the input (percentage completion) method. Percentage completion is calculated as the total hours worked as at the statement of financial position date divided by the total expected hours to be worked to complete the project. Revenue for permanent recruitment services is based on a percentage of a successful candidate’s remuneration package, as agreed with the customer at inception of the contract. Revenue is recognised at a point in time when the performance obligation has been satisfied at the time the candidate commences employment and subject to a provision for clawback of fees for candidates that leave prior to the notice period ending. 46 | Triad Group Plc Annual Report and Accounts 2023 Revenue from licences is recognised net at the point of transaction. The Group enters into a distinct contract with a client for the licences. The Group acts as a reseller and the Client is bound by the terms and conditions of the end user agreement of the licence provider. As control of the licences are transferred to the client at contract agreement, the Group is acting as agent which enables the recognition of revenue at the point of transaction. The Company has taken advantage of the practical exemption not to disclose the value of unfilled performance obligations as the contracts ongoing at the period end are for less than 12 months. 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 statement of financial position date. Full provision is made for deferred tax on all temporary differences resulting from the difference between the carrying value of an asset or liability and its tax base, and on tax losses carried forward indefinitely. 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 and conditional share incentive award scheme. Both awards 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. The Group has provided for property dilapidation as detailed in note 18. Notes to the financial statements for the year ended 31 March 2023 New standards and interpretations Dilapidation provisions: Climate change accounting In preparing the Consolidated financial statements management has considered the impact of climate change, particularly in the context of the disclosures included in the Strategic Report. These considerations did not have a material impact on the financial reporting judgements and estimates. A number of amendments to existing standards have been issued but which are not yet mandatory, and have not been adopted by the Group in these financial statements. The Directors do not anticipate that their adoption in future periods will have a material impact on the financial statements of the Group. 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. 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. Key judgements and sources of estimation uncertainty IFRS 16 leases A right-of-use asset of £0.6m (2022: £0.3m), a total lease liability of £1.0m (2022: £0.4m) and a finance lease receivable of £0.5m (2022: £0.1m) have been recognised in accordance with the accounting policies on page 45 with respect to IFRS 16 ‘Leases’. During the year, a lease break option was not enacted on a property lease, which resulted in an increase to the right of use asset (£412k), the lease liability (£920k) and the finance lease receivable (£508k). The Directors have made the following critical accounting estimates and judgements in relation to these balances: • • Lease term: The Directors are of the opinion that property lease assets and liabilities should generally be calculated with relation to the first available break date as the expectation is that the lease break may be taken. During the lease break review period, trading and market conditions will be taken into account and assets and liabilities will be calculated. Incremental borrowing rate (IBR): The Directors have calculated the IBR at 5%, based upon readily available credit facilities and Bank of England base rate, covering a time frame commensurate with the time to the first available break date. The Directors have recognised a dilapidation provision for both the leases held totalling £197,000 (2022: £197,000). The provision is required to recognise the costs of restoring the properties to their original state at the end of the lease period. The provision has been calculated based upon industry accepted averages on floor space by price per square meter and the Directors’ experience with the landlords, as well as experience in similar negotiations. Deferred taxation: The Directors have recognised a deferred tax asset of £108k (2022: £161k). This asset is to recognise the expectation that corporation tax losses brought forward will be utilised against future taxable profits. The Directors’ have based this upon a conservative estimation of the level of taxable profits in the medium-term. 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. 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 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 the trading Company’s functional currency of sterling there are the following foreign currency net assets: Group and company Note 2023 £'000 2022 £'000 Currency: Euros Cash and cash equivalents Trade and other receivables 16 15 18 – 18 86 (10) 76 Any change in currency rates would have no significant effect on results. Triad Group Plc Annual Report and Accounts 2023 | 47 Notes to the financial statements for the year ended 31 March 2023 Interest rate risk 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 £2.6m. The facility may be terminated by the bank and Group with one and three month’s written notice respectively. The Board receives regular cash flow and working capital projections to enable it to monitor its available headroom under this facility. At the statement of financial position 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 note 17. Capital risk management The Group’s capital comprises of 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 Group has access to a financing facility with a major UK bank. At the balance sheet date in the current or prior year this facility has not been utilised. The facility borrowing rate is 1.75% above base rate and so when required to be utilised, this represents an interest rate risk. 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. There were no borrowings, aside from lease liabilities arising from the application of IFRS 16, during the year. 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 credit losses. The amount credited to the income statement during the year in respect of expected credit losses was £9,000 (2022: credited to the income statement £5,000). The Group is also exposed to credit risk from contract assets, being revenue earned but not yet invoiced (note 15). The Group also has credit risk from cash deposits with banks (note 16). The Group’s maximum exposure to credit risk is: Finance lease receivable Trade and other receivables Contract assets Other debtors Cash and cash equivalents Note 2023 £'000 2022 £'000 13 15 15 15 16 490 84 2,001 2,113 225 – 212 208 4,795 5,325 7,511 7,942 48 | Triad Group Plc Annual Report and Accounts 2023 Notes to the financial statements for the year ended 31 March 2023 4. Revenue The Group operates solely in the UK. All material revenues are generated in the UK. The largest single customer contributed 32% of Group revenue (2022: 35%) and was in the public sector. Four other customers contributed more than 10% of Group revenue (2022: two). Disaggregation of revenue In accordance with IFRS 15, the Group disaggregates revenue by contract type as management believe this best depicts how the nature, timing and uncertainty of the Group’s revenue and cash flows are affected by economic factors. Accordingly, the following table disaggregates the Group’s revenue by contract type: Group and company Time and materials Fixed price Permanent recruitment fees Licences 2023 £'000 14,386 442 18 12 2022 £'000 16,593 118 211 93 14,858 17,015 The Group also disaggregates revenue by operating sector reflecting the different commercial risks (e.g. credit risk) associated with each. Group and company Public sector Private sector Contract balances 2023 £'000 11,597 3,261 14,858 2022 £'000 11,090 5,925 17,015 For all contracts, the Group recognises a contract liability to the extent that payments made are greater than the revenue recognised at the period end date. When payments are made less than the revenue recognised at the period end date, the Group recognises a contract asset for the difference. Contract assets and contract liabilities are included within ‘trade and other receivables’ and ‘trade and other payables’ respectively on the face of the statement of financial position. Contract assets Contract liabilities Group and company At 1 April Transfers in the period from contract assets to trade receivables Excess of revenue recognised over cash (or right to cash) being recognised in the period Amounts included in contract liabilities that was recognised as revenue in the period Cash received in advance of performance and not recognised as revenue in the period 2023 £’000 471 (471) 375 – – 2022 £’000 170 (170) 471 – – At 31 March 375 471 There is no expectation of a material expected lifetime credit loss arising in relation to contract assets. 2023 £’00 (116) – – 116 (37) (37) 2022 £’000 (256) – – 256 (116) (116) Triad Group Plc Annual Report and Accounts 2023 | 49 Notes to the financial statements for the year ended 31 March 2023 5. Profit from operations Profit from operations is stated after charging: Depreciation of owned assets (note 12) Amortisation of right of use assets (note 13) Amortisation of intangible assets (note 11) Auditor remuneration: Audit of financial statements: Group and Company Non-audit services 6. Finance expense Interest expense on lease liability Net foreign exchange gain Total finance expense 7. Employees and Directors Group and company Average number of persons (including Directors) employed Senior management Fee earners Sales Administration and finance The number of permanent fee earners as at 31 March 2023 was 96 (2022: 95). Staff costs for the above persons (including Directors) Wages and salaries Social security costs Defined contribution pension costs Equity settled share-based payments 50 | Triad Group Plc Annual Report and Accounts 2023 2023 £'000 2022 £'000 87 185 1 94 – 2023 £'000 44 (1) 43 79 187 5 66 2 2022 £'000 37 – 37 2023 Number 2022 Number 9 93 8 5 115 2023 £'000 7,907 981 940 200 10,028 10 77 8 9 104 2022 £'000 6,995 827 798 – 8,620 Notes to the financial statements for the year ended 31 March 2023 Directors Emoluments Benefits in kind Money purchase pension contributions Total remuneration Social security costs 2023 £'000 648 21 74 743 85 828 2022 £'000 894 20 65 979 115 1,094 Three Directors (2022: 3) had retirement benefits accruing under money purchase pension schemes. Key management personnel are considered to be the Directors. Further information on Director’s remuneration can be found on page 22. 8. Tax charge/(credit) Current tax Current tax on profits for the year Deferred tax Decrease/(Increase) in recognised deferred tax asset Change in tax rate Total tax charge/(credit) for the year 2023 £'000 – 40 13 53 2022 £'000 – (85) (3) (88) The differences between the actual tax charge for the year and the standard rate of corporation tax in the UK applied to profits for the year are as follows: Profit before tax Profit before tax multiplied by standard rate of corporation tax in the UK of 19% (2022: 19%) Expenses not deductible for tax purposes Allowances recognised Derecognition/(Recognition) of deferred tax on losses Change in tax rate Prior year adjustments Tax charge/(credit) for the year 2023 £'000 9 2 4 (13) 58 13 (11) 53 2022 £'000 1,081 205 8 (91) (220) (3) 13 (88) Triad Group Plc Annual Report and Accounts 2023 | 51 Notes to the financial statements for the year ended 31 March 2023 Deferred tax asset The movement in deferred tax is as follows: At beginning of the year Reversal of previously (recognised)/unrecognised deferred tax on losses Tax rate changes At end of the year 2023 £'000 161 (40) (13) 108 2022 £'000 73 85 3 161 Deferred tax assets have been recognised in respect of tax losses where the Directors believe it is probable that the assets will be recovered. This expectation of recovery is calculated by modelling estimates of future taxable profits that can be offset with historic trading losses brought forward. A deferred tax asset amounting to £484,000 (2022: £473,000) has not been recognised in respect of trading losses of £1,934,000 (2022: £1,892,000), which can be carried forward indefinitely. Deferred tax assets have not been recognised for potential temporary differences arising from unexercised share options and Restricted stock options of £130k (2022: £22k) and general provisions of £21k (2022: £42k) as the Directors believe it is not certain these assets will be recovered. The UK Budget on 3 March 2021 announced an increase in the UK corporation tax rate from 19% to 25% with effect from 1 April 2023. The effect of the rate increase is reflected in the consolidated financial statements as has been substantively enacted at the balance sheet date. 9. Dividends Final dividend for the year ended 31 March 2022 – 4p (2021: 2p) per share (declared and paid in the following year) Interim dividend for the year ended 31 March 2023 – 2p (2022: 2p) per share Total dividend paid 2023 £'000 663 332 995 2022 £'000 323 330 653 The Directors propose a final dividend of 4p per share (2022: 4p per share), bringing the total dividend to 6p for the financial year (2022: 6p per share). 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: (Loss)/Profit for the year Average number of shares in issue Effect of dilutive options Average number of shares in issue plus dilutive options Basic (loss)/earnings per share Diluted (loss)/earnings per share 52 | Triad Group Plc Annual Report and Accounts 2023 2023 (£44,000) 16,565,870 – 16,565,870 (0.27p) (0.27p) 2022 £1,169,000 16,325,415 288,934 16,614,349 7.16p 7.04p Notes to the financial statements for the year ended 31 March 2023 11. Intangible assets Group and Company Cost At 31 March 2021 Additions Disposals At 31 March 2022 Additions Disposals At 31 March 2023 Accumulated amortisation/impairment At 31 March 2021 Charge for the year Disposals At 31 March 2022 Charge for the year Disposals At 31 March 2023 Net book value At 31 March 2023 At 31 March 2022 Purchased software £'000 127 1 – 128 – – 128 121 5 – 126 1 – 127 1 2 Triad Group Plc Annual Report and Accounts 2023 | 53 Notes to the financial statements for the year ended 31 March 2023 12. Property, plant and equipment Group and company Computer hardware £'000 Fixtures & fittings £'000 Motor vehicles £'000 Total £'000 Cost At 31 March 2021 Additions Disposals At 31 March 2022 Additions Disposals At 31 March 2023 Accumulated depreciation At 31 March 2021 Charge for the year Disposals At 31 March 2022 Charge for the year Disposals At 31 March 2023 Net book value At 31 March 2023 At 31 March 2022 13. Leases The Group as a lessee: 219 43 (26) 236 7 (2) 241 162 28 (26) 164 30 (1) 193 48 72 509 89 (8) 590 2 – 592 341 51 (8) 384 57 – 441 151 206 4 – – 4 – – 4 4 – – 4 – – 4 – – 732 132 (34) 830 9 (2) 837 507 79 (34) 552 87 (1) 638 199 278 The Group has lease contracts for its office premises with terms remaining ranging from 1 to 5 years. The lease liability has been calculated on the basis of the termination option being taken. There are no other future cash outflows in relation to the lease to which the Group is potentially exposed. Each lease is represented on the balance sheet as a right of use asset and a lease liability. Short-term leases are not recognised and expensed to the profit and loss statement. 54 | Triad Group Plc Annual Report and Accounts 2023 Notes to the financial statements for the year ended 31 March 2023 Right-of-use assets During the year, a lease break option on one lease was not enacted, and the lease now continues until 27th March 2028. As of this date, the total asset value has been increased by £412,000. The carrying amounts of the right-of-use assets are as follows: At 31 March 2021 Opening position Amortisation At 31 March 2022 Change in lease term Amortisation At 31 March 2023 Lease liabilities Land and buildings £'000 532 (187) 345 412 (185) 572 Total £'000 532 (187) 345 412 (185) 572 During the year, the lease break option on one lease was not enacted, and the lease now continues until 27th March 2028. As of this date, the total lease liability has increased by £920,000. The carrying amount of the lease liabilities recognised are as follows: At 31 March 2021 Opening position Interest expense Lease payments At 31 March 2022 Change in lease term Interest expense Lease payments At 31 March 2023 Land and buildings £'000 733 37 (344) 426 920 44 (344) 1,046 Total £'000 733 37 (344) 426 920 44 (344) 1,046 At the balance sheet date, the Group had outstanding commitments for future lease payments as follows: At 31 March 2022 Discounted lease liabilities Undiscounted lease liabilities At 31 March 2023 Discounted lease liabilities Undiscounted lease liabilities Up to 3 months £’000 81 86 Up to 3 months £’000 72 86 Between 3 and 12 months Between 1 and 2 years Between 2 and 5 years £'000 188 204 £'000 121 129 £'000 36 38 Between 3 and 12 months Between 1 and 2 years Between 2 and 5 years £'000 220 258 £'000 215 253 £'000 539 591 Triad Group Plc Annual Report and Accounts 2023 | 55 Notes to the financial statements for the year ended 31 March 2023 The Group as a lessor: Finance lease receivables The Group has entered into a lease arrangement considered to be a finance lease, representing rentals payable to the Group for a rental of a proportion of a leased property. During the year, a lease break option on one lease was not enacted by a tenant, and the lease now continues until 23rd March 2028. As of this date, the total finance lease receivable has increased by £508,000. The carrying amounts of the lease receivable asset are as follows: At 31 March 2021 Opening position Interest income Payments received At 31 March 2022 Change in lease term Interest income Payments received At 31 March 2023 At the balance sheet date, the Group had future lease receivables as follows: At 31 March 2022 Discounted lease receivables Undiscounted lease receivables Land and buildings £'000 193 10 (119) 84 508 17 (119) 490 Total £'000 193 10 (119) 84 508 17 (119) 490 Up to 3 months £’000 28 30 Between 3 and 12 months £'000 56 59 At 31 March 2023 Up to 3 months £'000 Between 3 and 12 months Between 1 and 2 years Between 2 and 5 years Discounted lease receivables Undiscounted lease receivables 23 30 71 89 99 119 £'000 £'000 £'000 297 326 The total lease receivable of £490k (2022: £84k) is disclosed as non-current assets of £396k (2022: £nil) and current assets of £94k (2022: £84k). 56 | Triad Group Plc Annual Report and Accounts 2023 Notes to the financial statements for the year ended 31 March 2023 14. 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 including 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. The registered office of Triad Special Systems is Huxley House, Weyside Park, Catteshall Lane, Godalming, Surrey GU7 1XE. The registered office of the other subsidiaries is 3 Caldecotte Lake Business Park, Caldecotte Lake Drive, Caldecotte, Milton Keynes MK7 8LF. 15. Trade and other receivables Group and company Trade receivables Less: provision for expected credit losses Trade receivables-net Contract assets Unbilled income Other debtors Trade and other receivables Prepayments Analysed as: Non-current asset: unbilled income Current asset Total 2023 £'000 2,006 (5) 2,001 225 150 – 2,376 165 2,541 – 2,541 2,541 2022 £'000 1,868 (14) 1,854 212 259 208 2,533 151 2,684 130 2,554 2,684 Other debtors of £nil (2022: £208k) is with respect to legal costs recoverable and accrued interest thereon with a shareholder who holds more than 20% of the company’s issued share capital. The fair value of trade and other receivables approximates closely to their book value. Unbilled income is in respect to the billing profile of a licence agreement. Triad Group Plc Annual Report and Accounts 2023 | 57 Notes to the financial statements for the year ended 31 March 2023 The lifetime expected credit losses on trade receivables as at 31 March 2023 is calculated as follows: Group and company Expected default rate Gross carrying amount Credit loss allowance Current Up to 30 days past due Up to 60 days past due Over 60 days past due (A) % 0.25 – – 5.0 (B) £'000 1,988 14 2 2 2,006 (A x B) £'000 5 – – – 5 No provision has been recognised for contract assets and other debtors as they are expected to be fully recovered. The lifetime expected credit losses on trade receivables as at 31 March 2022 were calculated as follows: Group and company Expected default rate Gross carrying amount Credit loss allowance Current Up to 30 days past due Movements on the provision for expected credit loss are as follows: Group and company At beginning of the year Credited to income statement At end of the year (credit loss allowance) (A) % 0.75 5.0 (B) £'000 1,856 12 1,868 2023 £'000 14 (9) 5 The carrying amount of the Group’s trade and other receivables are denominated in the following currencies: Group and company Sterling Euros 2023 £'000 2,376 – 2,376 (A x B) £'000 13 1 14 2022 £'000 19 (5) 14 2022 £'000 2,543 (10) 2,533 58 | Triad Group Plc Annual Report and Accounts 2023 Notes to the financial statements for the year ended 31 March 2023 16. Cash and cash equivalents Group and company Cash available on demand 2023 £'000 4,795 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 2023 £'000 4,777 18 4,795 2022 £'000 5,325 2022 £'000 5,239 86 5,325 For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash, as detailed above. The Group has access to a financing facility with a major UK bank. At the balance sheet date in the current or prior year this facility has not been utilised. The facility borrowing rate is 1.75% above base rate 17. Trade and other payables Trade payables Accruals Owed to subsidiary Contract liabilities Other taxation and social security Analysed as: Current liability Non-current liability: accruals Total Group Company 2023 £’000 666 335 – 1,001 37 1,231 2,269 2,269 – 2,269 2022 £’000 667 525 – 1,192 116 930 2,238 2,134 104 2,238 2023 £’000 666 335 5 1,006 37 1,231 2,274 2,274 – 2,274 2022 £’000 667 525 5 1,197 116 930 2,243 2,139 104 2,243 The majority of trade and other payables are settled within three months from the year end. The fair value of trade and other payables approximates closely to their book value. Triad Group Plc Annual Report and Accounts 2023 | 59 Notes to the financial statements for the year ended 31 March 2023 The carrying amount of trade and other payables is denominated in the following currencies: Sterling 18. Provisions Group and company At 1 April 2022 Additions Charged to income statement Utilised in year At 31 March 2023 Group Company 2023 £’000 1,001 1,001 2022 £’000 1,192 1,192 2023 £’000 1,006 1,006 2022 £’000 1,197 1,197 Provision for property dilapidation £’000 197 – – – 197 2022 £'000 61 136 The maturity profile of the present value of provisions is as follows: Group and company Current Provision for property dilapidation Non-current Provision for property dilapidation 2023 £'000 – 197 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 2023 2022 16,582,663 £165,827 16,539,579 £165,396 During the year 43,084 1p ordinary shares were issued as a result of the exercise by employees of share options: Number Option price Increase in Increase in share capital Increase in Increase in share premium 20,000 23,084 43,084 11.0p 53.5p £200 £231 £431 £2,000 £12,119 £14,119 60 | Triad Group Plc Annual Report and Accounts 2023 Notes to the financial statements for the year ended 31 March 2023 20. Share-based payments At 31 March 2023, 184,916 options granted under employee share option schemes remain outstanding: Date option granted 18 September 2014 9 March 2018 Number 50,000 134,916 Exercise price Period options exercisable 11.0p 53.5p 18 September 2017 to 18 September 2024 1 April 2021 to 9 March 2028 Under the terms of the scheme, options vest after a period of three years continued employment and are subject to the following performance conditions: For options granted on 9 March 2018: 100% of the shares granted under an option will vest if the Company’s share price at 31 March 2021 has increased by 30% or more from the share price as at the date of grant. 50% of shares granted under an option will vest if the Company’s share price at 31 March 2021 has increased by 15% from the share price as at the date of grant. Between these upper and lower thresholds, awards vest on a straight-line basis. These options vested on 31 March 2021. For options granted on 18 September 2014: in at least one financial year after the date of grant, 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. These options vested on 17 September 2017. Options have been valued using the Black-Scholes option-pricing model. No performance conditions were included in the fair value calculations. No options were granted during the year (2022: nil). In March 2022 a number of restricted stock units (RSUs) were granted under the new Triad Employee Share Incentive Plan, and remain outstanding as follows: Date award made 30 March 2022 Number 750,000 Performance condition 135.0p Vesting date 30 March 2025 The Award will vest following 3 years continuous employment and if the Board determines that the Market Value of a Share on the third anniversary of the Award Date is equal to or greater than the Market Value of a Share on the Award Date. The market value at the Award Date is 135.0p. The RSUs have been valued using the Monte Carlo pricing model. No performance conditions were included in the fair value calculations. The total expense recognised in the year is £200,128 (2022: £476). No RSUs were granted during the year (2022: 750,000). Triad Group Plc Annual Report and Accounts 2023 | 61 Notes to the financial statements for the year ended 31 March 2023 A reconciliation of the total share award movements over the year to 31 March 2023 is shown below: Outstanding at start of year Granted Exercised Forfeited Outstanding at end of year Exercisable at end of year 2023 2022 Number of options 978,000 – (43,084) – 934,916 184,916 Weighted average exercise price Pence 10.2 – 33.8 – 9.4 Number of options 739,000 750,000 (511,000) – 978,000 42.0 228,000 Weighted average exercise price Pence 42.2 1.0 43.0 – 10.2 40.5 There were 43,084 share options exercised during the year. In the reconciliation above, there are no share options and a total of 180,000 restricted stock units (RSUs) held by Directors. Transactions with Directors are set out in the Directors’ remuneration report on page 29. The options exercisable of 184,916 relate to the 2014 and 2018 grants which have all vested (2022: 228,000 all vested). The weighted average share price at the date of exercise for share options exercised during the period was 113.5p (2022: 118.2p). The options outstanding as at 31 March 2023 had an exercise price of 11.0p or 53.5p, and with respect to the RSUs, 135.0p. The weighted average remaining contractual life of 2.4 years (2022: 3.4 years). The inputs into the share-based payments model to calculate the RSU awards were as follows: Expected volatility Expected life Risk-free rate Exercise price Valuation Dividend Yield 77% 3 years 1.4% 1p 135p 4.4% 21. Related party transactions and ultimate control The Group and Company rents one of its offices under a lease with a sub-tenant in occupation on one floor. During the year, the Group did not take advantage of a lease break and the lease now expires in March 2028. The current annual rent of £215,000 was fixed, by independent valuation, at the last rent review in 2008. J C Rigg, a Director, has notified the Board that he has a 50% beneficial interest in this contract. The balance owed at the year-end was £nil (2022: £nil). There is no ultimate controlling party. 62 | Triad Group Plc Annual Report and Accounts 2023 Five year record For the accounting period commencing 1 April 2019 changes were made due to the introduction of IFRS 16. Therefore the accounting policies over the period detailed below will vary and be inconsistent. Consolidated income statement Years ended 31 March Revenue Gross profit Profit/(Loss) before tax Tax (charge)/credit (Loss)/Profit after tax Retained (loss)/profit for the financial year Basic (loss)/earnings per share (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 Equity shareholders’ funds 2023 £’000 14,858 3,504 9 (53) (44) (44) (0.27) 2023 £’000 1,276 7,430 2022 £’000 17,015 4,784 1,081 88 1,169 1,169 7.16 2022 £’000 916 7,963 2021 £’000 17,815 3,810 644 41 685 685 4.28 2021 £’000 921 7,540 2020 £’000 19,354 2,854 (602) (159) (761) (761) (4.76) 2020 £’000 1,236 6,581 2019 £’000 22,713 4,376 1,017 (132) 885 885 5.60 2019 £’000 411 7,937 (2,561) (2,464) (2,555) (2,399) (2,483) (951) 5,194 166 894 104 4,030 5,194 (397) 6,018 165 880 104 4,869 6,018 (623) 5,283 160 666 104 4,353 5,283 (863) 4,555 160 660 104 3,631 4,555 (99) 5,766 160 659 104 4,843 5,766 Triad Group Plc Annual Report and Accounts 2023 | 63 Shareholders’ information and financial calendar Share register EQ maintain the register of members of the Company. If you have any questions about your personal holding of the Company’s shares, please contact: EQ Highdown House Yeoman Way Worthing West Sussex BN99 3HH Telephone: 0371 384 2486 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 that 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: James McDonald Triad Group Plc Weyside Park Catteshall Lane Godalming Surrey GU7 1XE Telephone: 01908 278450 Email: investors@triad.co.uk Website: www.triad.co.uk Financial calendar Annual General Meeting The date of the AGM is to be confirmed. Financial year ended 31 March 2024: expected announcement of results Half-year Full-year November 2023 June 2024 64 | Triad Group Plc Annual Report and Accounts 2023 Corporate information Executive Directors John Rigg, Chairman Charlotte Rigg, Deputy Executive Chairman Adrian Leer, Managing Director Tim Eckes, Client Services Director James McDonald, Finance Director Non-Executive Directors Alistair Fulton Chris Duckworth Alison Lander Secretary and registered office James McDonald Triad Group Plc Weyside Park Catteshall Lane Godalming Surrey GU7 1XE Telephone: 01908 278450 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 02285049 Registered Auditor BDO LLP 55 Baker Street London W1U 7EU Brokers Zeus Capital Ltd 125 Old Broad Street London EC2N 1AR Solicitors Freeths Davy Avenue Knowlhill Milton Keynes MK5 8HJ Bankers Lloyds Bank plc City Office 11–15 Monument Street London EC3V 9JA Registrars EQ Highdown House Yeoman Way Worthing West Sussex BN99 3HH Triad Group Plc Annual Report and Accounts 2023 | 65 Godalming office: Huxley House Weyside Park Catteshall Lane Godalming Surrey GU7 1XE Milton Keynes office: Building 3 Caldecotte Lake Business Park Caldecotte Lake Drive Milton Keynes MK7 8LF 01908 278450 www.triad.co.uk