REG - Tribal Group PLC - Half-year Report <Origin Href="QuoteRef">TRBG.L</Origin> - Part 2
07/09/2017 07:06
- Part 2: For the preceding part double click ID:nRSG0413Qa
9,001 7,574 12,021
i-graduate 2,498 3,039 6,702 251 447 28
QAS 11,041 11,203 22,546 3,519 2,536 7,516
Total 44,151 45,216 90,255 12,771 10,557 19,565
Unallocated corporate expenses (7,818) (9,905) (14,877)
Adjusted operating profit 4,953 652 4,688
Amortisation of IFRS 3 intangibles (see note 5) (1,028) (891) (1,912)
Other items (see note 5) (1,473) (1,687) (2,713)
Operating profit/(loss) 2,452 (1,926) 63
The accounting policies of the reportable segments are the same as the Group's
accounting policies. Segment profit represents the profit earned by each
segment, without the allocation of central administration costs, including
Directors' salaries, finance costs and income tax expense. This is the
measure reported to the Group's Chief Executive for the purpose of resource
allocation and assessment of segment performance.
Revenues of approximately 8% (31 December 2016: 7%) have arisen within our SMS
segment from the Group's largest customer and revenues of approximately 6% (31
December 2016: 13%) have arisen within our QAS segment from the Group's second
largest customer.
Geographical information:
Revenue from external customers, based on location of the customer, are shown
below:
Six monthsended30 June2017£'000 Six monthsended30 June2016£'000 Yearended31 December2016£'000
UK 20,915 25,770 46,469
Asia Pacific 16,179 14,460 31,819
North America and rest of world 7,057 4,986 11,967
44,151 45,216 90,255
5. Other items
Six monthsended30 June2017£'000 Six monthsended30 June2016£'000 Yearended31 December2016£'000
Profit on sale of Synergy - 301 301
- Repayment of Escrow (in respect of the acquisition of Human Edge) - - 357
- Movement in deferred contingent consideration* (29) (387) (607)
Acquisition related costs (29) (387) (250)
- Onerous contracts - 71 115
- Costs on closure of SLS business - (33) (33)
- Property related - 91 136
- Share based payments (including employer related taxes) (726) (196) (1,036)
- Restructuring and associated costs (718) (1,534) (1,946)
Other exceptional items (1,444) (1,601) (2,764)
Other administrative costs (1,473) (1,687) (2,713)
- Amortisation of IFRS 3 intangibles (1,028) (891) (1,912)
Total administrative costs (2,501) (2,578) (4,625)
- Unwinding of discounts (54) (169) (205)
- Bank arrangement fees written off - (244) (244)
- Fees associated with waiver of loan covenant - 51 51
Exceptional financing items (54)(2,555) (362)(2,940) (398)(5,023)
Tax on other items 570 466 596
(1,985) (2,474) (4,427)
* Included in movement in deferred contingent consideration are £42k of
professional fees incurred in relation to valuation of contingent
consideration in 2016 comparatives
IAS1, paragraph 97, requires separate disclosure of such items that are
considered material by nature or value in the financial statements. As such,
'other items' are not part of the Group's underlying trading activities and
include the following for the six months ended 30 June 2017:
Other exceptional items: amounts principally reflect the costs arising in
respect of the restructuring of the Group's operations. The restructuring
program was executed in the first half of 2017 and associated costs provided
for. Amounts include provision for redundancy costs.
Share based payments: Share based payments are now disclosed in Other Items.
The numbers include the movement in associated employers taxes accrual.
Financing charges: consistent with the treatment of movements in deferred
consideration, the unwind of the discount on deferred consideration is
separately presented as other financing costs in the income statement (30 June
2017: £0.1m; 30 June 2016 £0.2m; 31 December 2016: £0.2m).
Amortisation of IFRS3 intangibles: amortisation arising on the fair value of
intangible assets acquired is separately disclosed as other items. (30 June
2017: £1.0m; 30 June 2016 £0.9m; 31 December 2016: £1.9m).
Taxation: the tax credit arising on the above items is presented on a
consistent basis with the underlying cost or credit to which it relates and
therefore is also presented separately on the face of the income statement.
6. Finance costs
Six monthsended30 June2017£'000 Six monthsended30 June2016£'000 Yearended31 December2016£'000
Interest on bank overdrafts and loans 54 297 310
Amortisation and write off of loan arrangement fees 15 50 60
Other interest payable 11 177 225
Adjusted Financing costs 80 524 595
Unwinding of discounts 54 169 205
Bank arrangement fees written off - 244 244
Fees associated with waiver of loan covenants - (51) (51)
Other financing costs 54 362 398
Total financing costs 134 886 993
7. Tax
Six monthsended30 June2017£'000 Six monthsended30 June2016£'000 Yearended31 December2016£'000
Current tax
UK corporation tax - - 116
Overseas tax 1,066 482 690
Adjustments in respect of prior periods - - 309
Deferred tax 1,066 482 1,115
Current period (299) (725) (816)
Adjustments in respect of prior periods - - (6)
(299) (725) (822)
Tax charge/(credit) on losses 767 (243) 293
In addition to the amount charged to the income statement, a deferred tax
credit of £190,000 (30 June 2016: credit of £21,000; 31 December 2016: credit
of £54,000) has been recognised directly in equity in relation to share
schemes. A deferred tax credit of £nil (30 June 2016: credit of £212,000; 31
December 2016: credit of £290,000) has been recognised in the Consolidated
Statement of Comprehensive Income in relation to Defined Benefit pension
schemes.
The Group continues to hold an appropriate corporation tax provision in
relation to the Group relief claimed from Care UK for the year ended 31 March
2007, together with other appropriate Group provisions.
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual earnings.
8. Earnings per share
Earnings per share and diluted earnings per share are calculated by reference
to a weighted average of ordinary shares calculated as follows:
Six monthsended30 June2017000 Six monthsended30 June2016000 Yearended31 December2016000
Basic weighted average number of shares in issue 194,802 142,383 168,755
Weighted average number of Employee share options 8,031 - -
Weighted average number of shares outstanding for dilution calculations 202,833 142,383 168,755
Diluted earnings per share only reflects the dilutive effect of share options
for which performance criteria have been met. Previous share incentive
schemes vest based on cumulative EPS for a three year period with the earliest
vesting based on the Group's results for the three years to 31 December 2017.
It is unlikely at this point that any of the 447,928 remaining share options
that were issued in 2015 will meet the performance criteria.
In regards to the diluted loss per share in 2016, all potentially dilutive
ordinary shares, including options and deferred shares are anti-dilutive as
they would decrease the loss per share.
The maximum number of potentially dilutive shares, based on options that have
been granted but have not yet met vesting criteria is 9,955,608 (December
2016: 8,220,257).
The adjusted basic and diluted earnings per share figures shown on the
condensed consolidated income statement are included as the directors believe
that they provide a better understanding of the underlying trading performance
of the Group.
A reconciliation of how these figures are calculated is set out below.
Six monthsended30 June2017£'000 Six monthsended30 June2016£'000 Yearended31 December2016£'000
Net profit/(loss) 1,562 (2,551) (1,157)
Earnings per share
Basic 0.8p (1.8)p (0.7)p
Diluted 0.8p (1.8)p (0.7)p
Adjusted earnings per share
Basic 1.8p (0.2)p 1.9p
Diluted 1.7p (0.2)p 1.9p
8. Earnings per share (cont.)
Profit/(loss) for the period Earnings per share
Six monthsended30 June2017£'000 Six monthsended30 June2016£'000 Year ended31 December2016£'000 Six monthsended30 June2017£'000 Six monthsended30 June2016£'000 Year ended31 December2016£'000
Profit/(loss) for the period attributable to equity share holders 1,562 (2,551) (1,157) 0.8p (1.8)p (0.7)p
Add back:
Amortisation of IFRS 3 intangibles (net of tax) 730 633 1,354
Repayment of Escrow - - (357)
Disposal of Synergy - (301) (301)
Bank arrangement fees written off - 244 244
Share based payments 538 196 858
Unwinding of discounts 54 169 205
Other items (net of tax) 634 1,146 1,817
Movement in deferred contingent consideration 29 387 607
Total adjusted items (net of tax) 1,985 2, 474 4,427 1.0p 1.6p 2.6p
Adjusted earnings 3,547 (77) 3,270 1.8p (0.2)p 1.9p
9. Goodwill
£'000
Cost
At 1 January 2017 102,547
Exchange differences 105
At 30 June 2017 102,652
Accumulated impairment losses
At 1 January 2017 81,231
At 30 June 2017 81,231
Net book value
At 30 June 2017 21,421
At 31 December 2016 21,316
The Group tests annually for impairment, or more frequently if there are
indicators that goodwill could be impaired. At the half year, a review has
been undertaken to ascertain if any indicators have arisen of potential
impairments. Based on the review performed, no impairment indicators that
would require an impairment review have been noted.
10. Other intangible assets
Software£'000 Customercontracts andrelationships£'000 Acquired intellectual property£'000 Developmentcosts£'000 Business systems£'000 Software licences£'000 Total£'000
Cost
At 1 January 2017 7,876 7,142 - 24,479 6,470 1,404 47,371
Additions - - 1,873 947 97 58 2,975
Exchange differences 66 28 - 6 1 - 101
At 30 June 2017 7,942 7,170 1,873 25,432 6,568 1,462 50,447
Amortisation
At 1 January 2017 4,039 4,458 - 18,860 4,575 1,225 33,157
Charge for the period 770 258 - 758 244 64 2,094
Exchange differences 26 9 - 7 - - 42
At 30 June 2017 4,835 4,725 - 19,625 4,819 1,289 35,293
Carrying amount
At 30 June 2017 3,107 2,445 1,873 5,807 1,749 173 15,154
At 31 December 2016 3,837 2,684 - 5,619 1,895 179 14,214
Software and customer contract and relationships have arisen from
acquisitions, and are amortised over their estimated useful lives, which are
3-6 years and 3-12 years respectively. The amortisation period for
development costs incurred on the Group's product development is three to
seven years, based on the expected life-cycle of the product. Amortisation of
development costs is included within cost of sales; the amortisation for
software, customer contracts and relationships and business systems is
included within administrative expenses.
11. Trade and other receivables
30 June2017£'000 30 June2016£'000 31 December2016£'000
Amounts receivable for the sale of services 16,273 15,350 14,373
Allowance for doubtful debts (1,104) (722) (1,578)
15,169 14,628 12,795
Amounts recoverable on contracts - 28 -
Other receivables 734 280 209
Prepayments 2,820 2,963 2,806
18,723 17,899 15,810
12. Trade and other payables
30 June2017£'000 30 June2016£'000 31 December2016£'000
CurrentTrade payables 1,288 2,118 677
Other taxation and social security 2,474 3,082 3,309
Other payables 2,033 1,999 1,453
Deferred consideration 538 - 1,627
6,333 7,199 7,066
Non-current
Other payables 251 - -
Deferred consideration 623 - 1,026
874 - 1,026
Total 7,207 7,199 8,092
13. Provisions
Property related£'000 Onerous contracts£'000 Legal claims£'000 Restructuring£'000 Total£'000
At 1 January 2017 531 232 379 10 1,152
Increase/(release) in provision 81 (6) - 26 101
Utilisation of provision (33) (1) (19) - (53)
Transfer from accruals 24 98 - - 122
Exchange rate movement (1) - - - (1)
At 30 June 2017 602 323 360 36 1,321
The provisions are split as follows:
Property related£'000 Onerous contracts£'000 Legal claims£'000 Restructuring£'000 Total£'000
Within one year 372 323 360 36 1,091
More than one year 230 - - - 230
Total 602 323 360 36 1,321
Provisions are recognised when the Group has a present obligation as a result
of a past event, and it is probable that the Group will be required to settle
the obligation. Provisions are measured at the Directors' best estimate of
the expenditure required to settle the obligation at the balance sheet date,
and are discounted to present value where the effect is material.
Property related provision relates to the dilapidation costs arising from
exiting leasehold properties where the costs are not all expected to be
incurred during the next year.
Onerous contracts provision relates to a specific contract and represents the
unavoidable costs of meeting the obligations under the contract that exceed
the economic benefits expected to be received under it.
Legal claims provision relates to a specific contract and represents the
anticipated costs to resolve the contractual dispute.
Restructuring provision represents amounts provided in respect of the Group's
restructuring and reorganisation and principally reflect redundancy costs.
14. Share capital
Six monthsended30 June2017number Six monthsended30 June2017£'000 Six monthsended30 June2016number Six monthsended30 June2016£'000 Year ended31 Decembernumber Year ended31 December2016£'000
Allotted, called up and fully paid
At beginning of the period 195,380,299 9,769 94,849,241 4,743 94,849,241 4,743
Issued during the period 670,882 34 100,531,058 5,026 100,531,058 5,026
At end of the period 196,051,181 9,803 195,380,299 9,769 195,380,299 9,769
On 24 April 2017 670,882 shares were issued as part of the settlement of the
Campus acquisition.
15. Notes to the cash flow statement
Six monthsended30 June2017£'000 Six monthsended30 June2016£'000 Yearended31 December2016£'000
Operating profit/(loss) from continuing operations 2,452 (1,926) 63
Gain on disposal of Synergy - (301) (301)
Depreciation of property, plant and equipment 605 756 1,506
Amortisation and impairment of other intangible assets 2,094 1,627 3,651
Share based payments 538 170 876
Movement in deferred consideration 29 - 566
Other non-cash items 932 1,565 (486)
Operating cash flows before movements in working capital 6,650 1,891 5,875
Decrease/(increase) in inventories 77 (50) 50
(Increase)/Decrease in receivables (4,382) 1,341 4,139
(Decrease)/increase in payables (1,504) 1,137 (2,295)
Net cash from operating activities before tax 841 4,319 7,769
Tax (paid)/received (76) 314 505
Net cash from operating activities 765 4,633 8,274
Net cash from operating activities before tax can be analysed as follows:
Continuing operations (excluding restricted cash) 990 4,369 7,819
Decrease in restricted cash (149) (50) (50)
841 4,319 7,769
16. Analysis of net cash/net debt
30 June2017£'000 30 June2016£'000 31 December2016£'000
Cash and cash equivalents 8,368 7,186 10,260
Overdrafts (2,856) - (1,427)
Net cash & cash equivalents 5,512 7,186 8,833
Syndicated bank facility (net of bank arrangement fees) - (1,500) -
Net cash 5,512 5,686 8,833
16. Analysis of net cash/net debt (cont.)
Analysis of changes in net cash/net debt.
30 June2017£'000 30 June2016£'000 31 December2016£'000
Opening net cash/(net debt) 8,833 (32,471) (32,471)
Net (decrease)/increase in cash and cash equivalents (3,294) 5,516 6,440
Effect of foreign exchange rate changes (27) (66) 657
Decrease in bank loans and overdrafts - 33,000 34,500
Amortisation of loan arrangement fees and similar charges - (293) (293)
Closing net cash 5,512 5,686 8,833
As at 30 June 2017, cash and cash equivalents included restricted advance cash
receipts in relation to customer programmes of £0.1m (30 June 2016: £0.2m, 31
December 2016: £0.2m).
17. Contingent liabilities
From time to time the Group is subject to potential litigation claims. On the
basis of legal advice, claims are being robustly contested as to both
liability and quantum. A provision of £0.4m (30 June 2016: £0.4m, 31 December
2016: £0.4m) has been made for defending these claims, where appropriate.
At any time, the Group is overseeing a portfolio of customer implementation
projects. Such projects may be complex, multi-phase projects giving rise to
significant operational risks which the Group must manage. Such risks may, in
certain instances, lead to potential negotiations or disputes with customers
which may give rise to consequential financial or commercial obligations or
liabilities arising.
A cross-guarantee exists between Group companies in respect of bank facilities
totalling £nil (30 June 2015: £28.0m, 31 December 2016: £nil).
In addition, the Company and its subsidiaries have provided performance
guarantees issued by their banks on their behalf, in the ordinary course of
business totalling £5.0m (30 June 2016: £6.9m, 31 December 2016: £4.2m).
These are not expected to result in any material financial loss.
18. Related party disclosures
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note.
On 30 June 2017, Tribal Group plc ("the Company") granted nil-cost options
over a total of 1,339,286 ordinary shares (representing approximately 0.68% of
the Company's issued shares) to the vendors of Sky Software Pty as part of the
deferred consideration payable. On the same day a further 596,065 nil-cost
options (representing approximately 0.3% of the Company's issued shares) were
granted to Ian Bowles and Mark Pickett under the terms of its 2010 Long Term
Incentive. All of the awards are subject to a performance condition measured
over a maximum of a 3 year period ending on 30 June 2020.
The remuneration of the key management personnel of the Group is set out below
in aggregate for each of the categories specified in IAS 24 'Related Party
Disclosures'. The members of the Group Board and the Group's Executive Board
are considered to be the key management personnel of the Group.
30 June2017£'000 30 June2016£'000 31 December2016£'000
Short-term employee benefits 1,324 1,211 3,458
Termination benefits 165 - 454
Share-based payments1 538 171 874
2,027 1,382 4,786
1Remuneration in respect of share based payments reflects the IFRS2 charge to
the income statement during the relevant period in respect of the directors'
outstanding share options and share matching plans.
19. Seasonality
The overall performance for the second half of the year will be lower than for
the first half as a result of phasing of QAS school inspections. In addition,
i-graduate revenues and profit are skewed to the fourth quarter of the
calendar year, in line with the start of the academic year.
Responsibility statement
The Directors' confirm that these condensed interim financial statements have
been prepared in accordance with the Disclosure and Transparency Rules (DTR)
of the Financial Services Authority and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8,
namely:
• An indication of important events that have occurred during the first six
months and their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the remaining six
months of the financial year; and
• Material related-party transactions in the first six months and any material
changes in the related-party transactions described in the last annual report
The Directors of Tribal Group plc are listed in the Tribal Group plc Report
and accounts for the 12 month period ended 31 December 2016. A list of
current Directors is maintained on the Tribal Group plc website:
www.tribalgroup.com.
The Directors are responsible for the maintenance and the integrity of the
Group's website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
By order of the Board
Ian Bowles
Mark Pickett
Chief Executive
Chief Financial Officer
07 September 2017
This information is provided by RNS
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