REG - Tribal Group PLC - Final Results <Origin Href="QuoteRef">TRBG.L</Origin> - Part 3

TribalAnnouncement

16/03/2016 07:05

- Part 3: For the preceding part double click  ID:nRSP2167Sb 

trading performance
which has impacted on expected forecast cash flows into the future.
Additionally there have been changes to management and to the Board in the
second half of the year with the new team reconsidering the strategy of the
Group and its future forecasts in conjunction with the assessment of the
group's future funding requirements. As a result, certain modules or products
have been impaired, to align their carrying values with current expectations
relating to the ability of such modules or product to generate probable future
economic benefits.  This assessment has been based on a review of future sales
pipeline and identified opportunities, which have sufficient current
probability of deal completion to support the costs deferred on the balance
sheet. In certain cases, external factors, such as change or deferral of
government policy, have also triggered an impairment review of certain ongoing
development work. The resultant impairment charge has been recognised as
'other administrative costs' and separately disclosed given their nature and
value (see also note 3). Of the £8.0m impairment recognised, £0.6m (2014:
£0.1m) relates to costs incurred and capitalised in the current reporting
period. 
 
10. Trade and other receivables 
 
                                   2015£'000  2014£'000  
 Amounts receivable                17,700     13,217     
 Allowance for doubtful debts      (655)      (153)      
                                   17,045     13,064     
 Amounts recoverable on contracts  42         115        
 Other receivables                 263        294        
 Prepayments                       2,845      3,822      
 Accrued income                    5,790      10,842     
                                   25,985     28,137     
 
 
11. Trade and other payables 
 
                                     2015£'000  2014£'000  
 Trade payables                      2,274      2,774      
 Other taxation and social security  3,405      4,834      
 Other payables                      1,364      7,468      
                                     7,043      15,076     
 
 
12. Notes to the cash flow statement 
 
                                                           2015£'000  2014£'000  
 Operating loss from continuing operations                 (45,222)   (4,299)    
 Operating (loss)/profit from discontinued operations      (80)       79         
 Depreciation of property, plant and equipment             1,532      1,446      
 Impairment of goodwill                                    38,802     12,849     
 Amortisation and impairment of other intangible assets    13,437     8,129      
 Other non-cash items                                      (1,834)    25         
 Operating cash flows before movements in working capital  6,635      18,229     
 Decrease in inventories                                   478        177        
 Increase in receivables                                   5,701      5,780      
 Decrease in payables                                      (17,203)   (1,898)    
 Net cash (used in)/from operating activities before tax   (4,389)    22,288     
 Tax paid                                                  (1,827)    (2,571)    
 Net cash (used in)/from operating activities              (6,216)    19,717     
 
 
Net cash (used in)/ from operating activities before tax can be analysed as
follows: 
 
                                                    2015£'000  2014£'000  
 Continuing operations (excluding restricted cash)  2,045      20,401     
 (Decrease)/increase in restricted cash             (6,354)    1,853      
                                                    (4,309)    22,254     
 Discontinued operations                            (80)       34         
                                                    (4,389)    22,288     
 
 
Analysis of changes in net debt: 
 
                                                       2015£'000  2014£'000  
 Opening net debt                                      (11,678)   (4,559)    
 Net (decrease)/increase in cash and cash equivalents  (7,387)    1,955      
 Effect of foreign exchange rate changes               (222)      (165)      
 Increase in bank loans and overdrafts                 (12,912)   (8,332)    
 Loan arrangement fees and similar charges             (272)      (577)      
 Closing net debt                                      (32,471)   (11,678)   
 
 
13. Acquisition of subsidiaries 
 
On 6 March 2015, the Group acquired 100% of the issued share capital of
Callista Software Services Pty Ltd ("Callista"), a company incorporated in
Australia that is a leading provider of student management systems to the
Australian university market. 
 
This transaction has been accounted for by the purchase method of accounting.
The total expected cost of acquisition is £1.7m, with payment deferred and
payable over a three year period. 
 
The provisional carrying amount of each class of Callista Software Pty
Limited's assets before combination is set out below: 
 
                              Book value £'000  Alignment of accounting policies£'000  Provisional fair value adjustments £'000  Provisional fair value £'000  
 Intangible assets            _                 _                                      477                                       477                           
 Tangible assets              335               _                                      _                                         335                           
 Deferred tax asset           _                 316                                    _                                         316                           
 Trade and other receivables  3,176             _                                      _                                         3,176                         
 Cash and cash equivalents    1,819             _                                      _                                         1,819                         
 Trade and other payables     (3,905)           _                                      _                                         (3,905)                       
 Deferred tax liabilities     _                 _                                      (143)                                     (143)                         
 Total identifiable assets    1,425             316                                    334                                       2,075                         
 Gain on bargain purchase                                                                                                        (405)                         
 Consideration                                                                                                                   1,670                         
 Satisfied by:                                                                                                                                                 
 Initial cash consideration                                                                                                      _                             
 Deferred consideration                                                                                                          1,670                         
                                                                                                                                 1,670                         
 
 
The acquisition led to a net cash in-flow, taking into account the cash
acquired, of £1.8m and resulted in a gain on acquisition of £0.4m. This gain
reflected the low price paid for acquisition, which arose because of the
maturity of the technology which Callista supplies to its customer base. 
 
Intangible assets arising on acquisition are in respect of software (£0.3m)
and customer relationships and contracts (£0.2m). 
 
Callista Software Pty Limited contributed revenue of £6.3m and operating
profit of £0.8m to the Group for the period between the date of acquisition
and the balance sheet date. Acquisition related costs amounted to £0.2m. 
 
Had the acquisition occurred on 1 January 2015, the Group's revenue would have
increased by £1.2m and its operating profit by £0.1m. 
 
15. Post Balance Sheet Events 
 
On 29 February 2016, the Group announced that it had agreed to dispose of its
Synergy children's services management information systems business to
Servelec Group plc for total consideration of £20.25m.  It is noted that two
of the Group's directors, Richard Last and Roger McDowell, are also directors
of Servelec Group plc; given the conflict thus arising, neither directors has
participated in the Board's consideration of the disposal of Synergy.   
During 2015, the Synergy business generated revenues of £6.3m (2014: £6.6m),
of which £5.2m (2014: £5.6m) related to the Product Development and Customer
Services segment, and included £4.1m (2014: £4.0m) of recurring software
maintenance revenues.  Other revenue generated by the Synergy business of
£1.1m (2014: £1.0m) related to the Implementation Services segment. 
 
The Synergy business delivered an operating profit £2.7m in 2015 (2014:
£3.2m), stated before allocation of before allocation of costs of central
support services which will not transfer to Servelec Group plc.  These
non-transferring activities include IT services, HR, finance, legal, marketing
and head office costs.  Additionally, the operating profit for 2015 is stated
before exceptional charges of £1.0m (2014: £nil). 
 
As at the year end date, assets held in respect of the Synergy business
amounted to £0.5m of capitalised product development costs, £0.2m of property,
plant and equipment, and current assets of £1.4m. Current liabilities amounted
to £2.6m. In addition, it is anticipated that on disposal, an allocation of
goodwill arising in the PD&CS and Implementation segments will be allocated to
the Synergy business (see note 8). 
 
The disposal is expected to complete, subject to shareholder approval, by the
beginning of April 2016. 
 
This information is provided by RNS
The company news service from the London Stock Exchange