REG - Tribal Group PLC - Interim Results
24/08/2023 07:00
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RNS Number : 2701K Tribal Group PLC 24 August 2023
24 August 2023
Tribal Group plc
("Tribal" or "the Group")
Interim Results for the six months ended 30 June 2023 (unaudited)
Tribal (AIM: TRB), a leading provider of software and services to the
international education market, is pleased to announce its interim results for
the six months ended 30 June 2023.
Results 2023 H1 2022 H1 Change Change %
6 months to 30 June 2022 H1 Constant Currency(3)
Restated (2)
Revenue £43.4m £42.4m £42.7m £0.7m(3) 1.5%(3)
Adjusted Operating Profit (EBITDA) (2) £8.1m £6.5m(2) £6.7m £1.4m(3) 21.0%(3)
Adjusted Operating Profit Margin (EBITDA) (2) 18.6% 15.2%(2) 15.6% 3.0pp(3) -
Annual Recurring Revenue (ARR) £51.9m £51.2m £50.4m £1.4m(3) 2.8%(3)
at period end (1) (versus 31 Dec 2022)
Free Cash Out Flow (4) £(9.4)m £(10.0)m - £0.6m 6.0%
Net (Borrowing)/Cash £(12.9)m £(4.8)m - £(8.1)m (169%)
Statutory Profit after Tax £4.7m £1.6m - £3.1m 194%
Statutory Earnings per Share (basic) 2.2p 0.7p - 1.5p 214%
Operational Performance
· Continued good sales performance, with one new SITS:Vision logo customer and
three further Cloud contracts from existing customers, University of
Wolverhampton, University of the Arts London, and Royal Veterinary College.
· As previously announced, the contract with Nanyang Technology University "NTU"
was terminated in March. Commercial discussions are underway with NTU, but the
potential outcome is uncertain.
· First customer live on Edge Admissions, a critical system for universities,
and built as a cloud-native, next generation SaaS solution.
· Strong performance from the Education Services (ES) business, continuing its
post-pandemic growth under new leadership, including additional work with
NCETM and a number of US school districts. The Board is continuing to consider
the strategic options and opportunities for the ES business.
· Continued investment into Tribal's offering, people, and operations, to
capitalise on the growing activity within the education market, including
£4.6m investment in Edge product development.
Financial Performance (constant currency)
· Annual Recurring Revenue (ARR) of £51.9m, an increase of 2.8% since year end.
Main ARR growth coming from sales of Tribal:Cloud and Foundation software.
· Group Revenue up 1.5% to £43.4m reflecting a significant £2.6m increase in
Education Services offset by a £1.9m decline in the SIS business due to the
loss of £2.8m revenue from NTU and previously flagged tail off of legacy
contracts offset by growth in our Core revenues.
· Cloud Services revenue saw a large increase of 21% to £5.0m (H1 2022: £4.1m)
as customers continue to migrate to Tribal:Cloud.
· Education Services grew strongly at 36.7%, to £9.7m (H1:2022 £7.1m)
following sales to the UK and Middle East in the previous year.
· Adjusted EBITDA up 21.0% to £8.1m (H1 2022: £6.7m) reflecting a c£1m one
off, net positive impact from the NTU onerous contract provision release
offset by associated costs. Presentational changes have been made, in line
with FRC guidance, to move employee related share option charges, including
employer related taxes (H1 2023: £0.2m; H1 2022: £0.6m) to Adjusted EBITDA
from previously reported 'other items'. Prior year Adjusted EBITDA numbers
have been restated.
· Annual development spend on future offerings has been reduced, in line with
the Group's stated plan.
· Net borrowing of £12.9m mainly due to traditional seasonality in the first
half of the year, negative cash impact due to the NTU contract, and working
capital impacts from ES contracts in the Middle East. Management anticipates
an improved cash position by year end, although a net debt position is still
expected.
Outlook
· Group is currently trading in line with Board expectations.
· While management is focused on a negotiated settlement with NTU, the timing of
any resolution remains uncertain and in the meantime progress is being made
within the core business and focus continues on carefully managed investment.
Mark Pickett, Tribal's CEO, commented: "We continued to trade positively,
transitioning our existing customers to the cloud while securing new customers
in our key geographies. Education Services performed well during the first
half, and we expect this trend to continue.
"Overall, the picture for Tribal remains positive, with an expanding customer
base, advanced service offering and continued contract and ARR momentum."
(1)( ) Annual Recurring Revenue (ARR) at period end includes Support &
Maintenance fees, Cloud Services and Software subscription Licences
and is assessed as contracted ARR at 30 June 2023 and 31 December 2022, of
which some is still to be delivered.
(2 )Adjusted Operating Profit (EBITDA) and Adjusted Operating Margin is in
respect of continuing operations and exclude charges reported in 'Exceptional
items' of £0.4m (2022 H1: £1.3m), refer to note 4 in this report, and before
Interest, Tax, Depreciation and Amortisation.
Prior year 2022 Adjusted EBITDA numbers have been restated to include share
based payments previously shown within 'Other items' In line with FRC
guidance, refer to note 5 in this report.
(3 )2022 H1 results restated to "constant currency" using 2023 rates to
exclude foreign currency impact. All change movements are to prior year
constant currency.
(4) Free cash flow is calculated as net cash generated before dividends,
interest and finance charges, deferred consideration, and investments in
subsidiaries.
For further information, please contact:
Tribal Group plc Tel: +44 (0) 117 311 5293
Mark Pickett, Chief Executive Officer
Diane McIntyre, Chief Financial Officer & Company Secretary
Investec Bank plc (NOMAD & Joint Broker) Tel: +44 (0) 20 7597 5970
Virginia Bull, Nick Prowting, Carlo Spingardi
Singer Capital Markets Limited (Joint Broker) Tel: +44 (0) 20 7496 3000
Shaun Dobson, Tom Salvesen, Alex Bond
Alma PR Tel: +44 (0) 203 405 0205
Caroline Forde, Hannah Campbell
About Tribal Group plc
Tribal Group plc is a pioneering world-leader of education software and
services. Its portfolio includes Student Information Systems; a broad range of
education services covering quality assurance, peer review, benchmarking and
improvement; and student surveys that provide the leading global benchmarks
for student experience. Working with Higher Education, Further and Tertiary
Education, schools, Government and State bodies, training providers and
employers, in over 55 countries; Tribal Group's mission is to empower the
world of education with products and services that underpin student success.
Chief Executive's Review
Introduction
Tribal made steady progress in the first half of the year within the core
business, delivering a positive performance across both the SIS and Education
Services divisions. New customers were secured across our range of software
offerings and three new cloud migrations were secured from our existing
customers.
We continue to navigate the transition of the business to higher quality,
recurring revenues from our newer Edge and Cloud software offerings,
generating Core ARR growth of 6.3%, and overall ARR growth of 2.8% to £51.9m,
demonstrating the relevance of Tribal's next generation technology.
NTU Contract
As previously announced on 20 and 24 March 2023 the contract with Nanyang
Technological University ("NTU") has been terminated and on 28 April 2023,
Tribal received from NTU an interim demand for the payment of damages which it
rejected. Legal advice has been obtained on the matter and private settlement
negotiations directly between the parties are underway. Should these be
unsuccessful the parties are obliged under the contract to pursue potential
resolution through a mediation process ahead of any legal proceedings being
commenced. The timing and nature of conclusion though negotiated resolution or
final adjudication if necessary is presently uncertain. We will update the
market as and when appropriate. Given the present uncertainty, no provision
has been currently made for any potential litigation.
Product developments
In FY22, the Board made the decision to focus development spend in 2023 and
2024 on our existing Edge products, to ensure we are focused on maximising the
opportunity for each, targeting an overall reduction in Edge development from
2023 as the peak of development investment on the Admissions product has
passed. Our Edge products are part of the broader Student Information System
ecosystem as we modernise our SITS product and introduce the Edge platform to
provide the integration layer for SITS, Callista and our Edge products.
We see significant opportunities for our core cloud-native Edge and
SITS:Vision products in the next few years, across our key geographies as
there is an increasing appetite from the higher education sector to transition
their existing Student Information Systems to the cloud and anticipate this to
be the main driver for uptake of our current range offerings.
Student Information Systems (SIS)
Student Information Systems, our core segment which targets the further and
higher education sectors through our range of software solutions, delivered a
steady performance in the first half, growing customer numbers and revenue.
During the period, we secured a new SITS: Vision customer, adding a total of
£0.5m to ARR. This is a multi-year contract with the London School of Science
and Technology to provide an improved student experience and deliver
operational efficiencies for the university. This new business win comprises
SITS Cloud, Tribal Engage and also Tribal Dynamics Marketing &
Recruitment.
In the first half of the year, we also sold further native-cloud based Edge
modules, such as Dynamics, Engage and Tribal Data Engine (TDE), to existing
customers. Notably, Tribal Dynamics saw a number of projects go live in the
period. Early in H2, we also went live with our first Tribal Admissions
product, a next generation, native SaaS solution, built using Edge
technology. Edith Cowan university, an Australian university with around
30,000 students, is running a pilot, starting with the admission of Post
Graduate Domestic students and, over the coming year, rolling the product out
to all student admissions. This is a key milestone for Tribal, successfully
implementing a complex solution which is a critical system for a university.
With our Course & Exam Scheduling product, Semestry, we are beginning to
see the UK universities starting to come to market to select their next
generation scheduling product. Although there is a good pipeline of
opportunities, it is likely to be into early 2024 before we see those tenders
coming to market. In the meantime, we have taken the opportunity to
integrate Semestry fully into the Tribal organisation.
We signed three further Cloud contracts for existing customers, the University
of Wolverhampton, University of the Arts and Royal Veterinary College, as part
of their programme of improvement with Tribal to migrate to the Tribal:Cloud.
We secured smaller contracts across our ebs and Maytas portfolios where we
continue to see substantial opportunities for these offerings across both
existing and new customers.
We are pleased with these positive signs of potential across the Group and
although it will take time for full adoption of our solutions by our customers
due to the annual cycle of the academic year, we remain confident in the
significant long-term opportunities.
Education Services (ES)
Tribal Education Services (ES) delivers Quality Assurance services to
ministries of education and other education agencies around the world, across
a broad range of services including overall school quality, leadership and
teaching quality, as well as many specialist areas such as new teacher
competence, Early Years, literacy and numeracy.
Last year, we implemented a three-year strategy for the business, targeting
sustainable growth between FY23 - FY25. The aim of the new strategy was to
create a clear identity for the ES business and better articulate the value it
creates for our customers.
I am pleased to report the business has made good progress and will conclude
the first phase of its new strategy in Q3 this year, resetting our operating
model and bedding in new structures and processes. A principal focus has been
the strengthening of both its business development and marketing functions,
starting with the appointment of a new Director of Business Development in
January. These changes have already created growth in our pipeline depth and
quality, which in turn underscore our confidence in the division and the
services it provides. The Board is continuing to consider the strategic
options and opportunities for the ES business.
I am pleased to announce that ES has signed an expansion to its NCETM contract
with the Department for Education in England, worth £1.1m over 12 months,
providing further support for schools to improve maths teaching and
leadership. The US arm of the ES business has had a positive H1, renewing or
extending agreements with a number of School Districts and completing a
successful project with the Cayman Islands Government. In the Middle East the
team has started a small but strategic consultancy project with the Ministry
of Education in the UAE and have a large number of projects in the pipeline.
Operations and people
We continue to carefully invest in our operations and people, whilst
effectively managing our cost base as we evolve our operational model to
ensure service levels are maintained for long-term profitable growth and to
remain robust.
Our evolving operational model, which is built upon our increasing focus on
customer success and alignment to Tribal's 'as-a-service' transition,
continues to prove effective. The new target operating model is also now being
supported by the implementation of new SaaS financial systems and processes,
intended to give our customers a more personalised experience and to maximise
the value of each of the Group's products
In June 2023, Tribal Achievers was launched, a global peer to peer recognition
programme to maintain a vibrant culture as we have moved to remote working.
Our Customer Success model has successfully established itself in Further
Education, providing some impressive outcomes and establishing a clear new
revenue stream and source of value creation. We are taking those learnings
into the Higher Educations market, bringing in highly valued sector
professionals to build our advisory services and customer success offerings.
In terms of the implementation of new financial systems and processes, we have
made good progress in H1, building on momentum from the prior year. In January
2023 we welcomed a new leader for our Global Business Services organisation,
based in Philippines, who has a solid track record of leading finance and
accounting services to large global corporations and who will lead the next
phase of the Veritas programme to realise the benefits as we transform our
execution of business processes.
We remain committed to our ESG strategy and long-term goals. This year Tribal
is supporting employees volunteering with ChapterOne, an education-based
charity providing reading and literacy support to primary school aged children
living in deprived areas of the UK.
Outlook and focus for H2 2023
The resolution of the NTU contract will continue to be a key area of focus
during the second half of 2023 and we will update the market as appropriate.
The Group has traded in line with Board expectations since the start of H1 and
the Board is confident in delivering results for 2023 in line with current
Board expectations.
With a clear strategy in place and increasing proof that the education market
globally is becoming more attuned to the benefits of SaaS and cloud offerings,
we are confident in our ambition to deliver on our key strategic priorities
for the remainder of the year, and we look to the future with confidence.
Mark Pickett
Chief Executive Officer
Financial review
Results 2022 H1 2022 H1 Change Change
6 months to 30 June Restated(1) Constant Constant Constant
Currency
Currency
Currency %
£m 2023 H1
Revenue 43.4 42.4 42.7 0.7 1.5%
Student Information Systems 33.7 35.5 35.6 (1.9) (5.5%)
Education Services 9.7 6.9 7.1 2.6 36.7%
Adjusted Operating Profit 15.4 13.0 13.2 2.2 16.8%
(before Central Overheads)(2)
Student Information Systems 13.4 11.3 11.5 1.9 16.7%
Education Services 2.0 1.7 1.7 0.3 17.9%
Central Overheads(3) (7.3) (6.5) (6.5) (0.8) 12.5%
Adjusted Operating Profit (EBITDA) (2) 8.1 6.5 6.7 1.4 21.0%
Adjusted Operating Margin (EBITDA) (2) 18.6% 16.7% 15.6% 3.0pp -
(1) In line with FRC guidance, presentational changes have been made to move
employee related share option charges, including employer related taxes (H1
2023: £0.2m; H1 2022: £0.6m) to Adjusted EBITDA from previously reported
'other items'
(2) Adjusted Operating Profit and Adjusted Operating Margin is in respect of
continuing operations and exclude charges reported in 'Exceptional items',
previously known as 'other items', of £0.4m (2022 H1: £1.3m), refer to notes
4 and 5 in this report, and before Interest, Tax, Depreciation and
Amortisation.
(3) Central overheads are made up of costs that are not directly attributable
to either Student Information Systems or Education Services.
( )
Nearly 40% of Tribal's income is generated outside the UK and is therefore
subject to foreign exchange movement. Overall, there was a favourable impact
on last year's results due to foreign exchange fluctuations of £0.3m in
Revenue and £0.2m in Adjusted Operating Profit, due to the Group's exposure
to foreign exchange movements, in particular the US dollar and Singapore
dollar.
The Revenue and Adjusted Operating Profit by segment in the table shows the
reported results for 2023 H1 and 2022 H1, and the 2022 H1 results restated to
"constant currency" using 2023 rates to exclude foreign currency impact. The
growth percentages shown are on the 2022 constant currency numbers. All
comparatives reported below are on a constant currency basis.
Revenue in the six months ended 30 June 2023 was up 1.5% to £43.4m (2022 H1:
£42.7m) reflecting a significant £2.6m increase in Education Services offset
by a £1.9m decline in the SIS business due to the loss of £2.8m revenue from
NTU and previously flagged tail off of legacy contracts offset by growth in
our Core revenues. Full year revenues within 2022 for NTU were £1.3m, due to
revenue recognition movement in the second half of 2022.
Student Information Systems performance was impacted by the loss of
professional services revenue from the NTU contract, decreasing by 5.5% to
£33.7m (2022 H1: £35.6m).
Core revenue decreased 4.3% to £28.9m (2022 H1: £30.2m). Foundation Software
grew 13.4% to £3.8m (2022 H1: £3.4m) due to new customer wins and upsells
across all our Foundation products. This was offset by a reduction in our
Foundation Support & Maintenance revenue which decreased 2% to £12.3m
(2022 H1: £12.5m) with the expected exit of a Callista customer.
Cloud Services saw a large increase of 21% to £5.0m (2022 H1: £4.1m) as
customers continue to migrate to Tribal: Cloud and Edge increased to £2.8m
(2022 H1: £2.5m).
Professional Services revenue decreased 34% to £5.1m (2022 H1: £7.7m) mainly
due to lower NTU contract revenue compared to H1 2022.
Other Software and Services revenue decreased 12% to £4.8m (2022 H1: £5.4m)
mainly due to gradual reductions within the Australian Department of Education
(DoE) contract as previously flagged, and continued Schools edge churn as
expected. The DoE contract is anticipated to complete by June 2024, and
therefore the remaining £1.5m of ARR has been removed.
The Technical and Further Education colleges New South Wales, "TAFE NSW"
transition to their new provider is expected to conclude around the end of
2023 at which point no further revenue will be generated. TAFE's expected
contribution to the 2023 Group's revenue is in the region of £3m and was
removed from ARR at the end of 2022.
Education Services increased significantly by 36.7% to £9.7m (2022 H1:
£7.1m).
School Inspections and Related Services revenue increased to £8.1m (2022 H1:
£5.9m) driven by the new National Tutoring Programme "NTP" contract won in
July 2022 and the delivery of the Sharjah school inspection contract which
started in September 2022. Along with several smaller project wins with
individual US School Districts, this performance demonstrates the start of an
improved approach to business development in ES.
Surveys and Data Analytics revenue increased to £1.5m (2022 H1: £1.2m).
The revenues for Surveys have increased, as expected, due to the seasonality
of the Southern Hemisphere International Student Barometer with most
institutions participating every other year.
Adjusted Operating Profit (EBITDA) increased by 21.0% to £8.1m (2022 H1:
£6.7m) and Adjusted Operating Margin increased to 18.6% (2022 H1: 15.6%).
Student Information Systems Adjusted Operating Profit increased to £13.4m
(2022 H1: £11.5m) and Adjusted Operating Margin increased to 39.8% (2022 H1:
32.2%).
The increase in operating profit and margin is due to a c£1m positive impact
from the net impact of the release of the NTU onerous contract provisions
offset by associated costs.
Education Services Adjusted Operating Profit increased to £2.0m (2022 H1:
£1.7m) and Adjusted Operating Margin decreased to 20.8% (2022 H1: 24.1%).
The cost base has increased as we strengthened both the business development
and marketing functions in order to improve the size and quality of our sales
pipeline.
Central overheads representing costs in HR, IT, Finance, Marketing and
Management that are not directly attributable to lines of business increased
12.5% to £7.3m (2022 H1: £6.5m). The increase was due to legal costs,
unfavourable foreign exchange movements, and higher audit and global insurance
costs in line with market trends. The Group continues to focus on reducing
overhead costs and continues to identify cost saving measures to effectively
manage its cost base.
Statutory Profit After Tax was £4.7m (2022 H1: £1.6m). Statutory basic
earnings per share increased 214% to 2.2p (2022 H1: 0.7p).
Key Performance Indicators (KPIs)
The Group monitors its performance using the KPIs in the table below.
KPIs 2022 H1 2022 Change Change
6 months to 30 June Reported Constant Currency Constant Constant
Currency
Currency %
2023 H1
Revenue £43.4m £42.4m £42.7m £0.7m 1.5%
Annual Recurring Revenue (ARR) at period end(1) (versus 31 Dec 2022) £51.9m £51.2m £50.4m £1.4m 2.8%
Committed Income (Order Book) £163.7m £172.9m £170.7m (£7.0)m (4.1)%
(versus 31 Dec 2022)
Gross Revenue Retention (GRR)(2) 92% 95% - (5pp) -
Net Revenue Retention (NRR)(3) 99% 100% - (3pp) -
Gross profit margin (%) 52.4% 46.5% 46.6% 5.8pp -
Adjusted Operating Profit (EBITDA) (4,5) £8.1m £6.5m(2) £6.7m £1.4m 21.0%
Adjusted Operating Margin (EBITDA)(4,5) 18.6% 15.2%(2) 15.6% 3.0pp -
Statutory Profit after Tax £4.7m £1.6m - £3.1m 194%
Statutory Basic Earnings per Share 2.2p 0.7p - 1.5p 214%
Net Cash/(Debt) £(12.9)m £(4.8)m - £(8.1)m (169%)
Free Cash Out Flow (6) £(9.4)m £(10.0)m - £0.6m 6.0%
Operating Cash Conversion(6) 12% (14)% - 26pp -
Staff Retention 92% 92% - - -
(1) Annual Recurring Revenue (ARR) at period end is a forward-looking metric
and includes Support & Maintenance fees, Software subscription Licences,
Cloud Services and is assessed as contracted ARR at the 30 June 2023 and 31
December 2022, of which some is still to be delivered.
2 Gross Revenue Retention: Calculated as a percentage of recurring revenue
retained from existing customers at 1 January including contract expiry,
cancellations or downgrades in the year.
3.Net Revenue Retention: Calculated as a percentage of recurring revenue
retained from existing customers at 1 January including upsells as well as
contract expiry, cancellations or downgrades in the year.
(4) In line with FRC guidance, presentational changes have been made to move
employee related share option charges, including employer related taxes (H1
2023: £0.2m; H1 2022: £0.6m) to Adjusted EBITDA from previously reported
'other items'.
5 Adjusted Operating Profit and Adjusted Operating Margin is in respect of
continuing operations and exclude charges reported in 'Exceptional items',
previously known as 'other items', of £0.4m (2022 H1: £1.3m), refer to notes
4 and 5 in this report, and before Interest, Tax, Depreciation and
Amortisation.
(6) For definitions refer to Free Cash Flow sections below.
Annual Recurring Revenue (ARR) at period end, is a key forward looking metric
and continues to be an area of strategic focus. In line with our strategy, our
aim is to grow ARR in our core products through the delivery of Software as a
Service contracts, providing increased quality of earnings. ARR increased by
2.8% on a constant currency basis to £51.9m (2022 FY: £50.4m).
Cloud ARR grew by 14.5% to £11.6m (2022 FY: £10.1m) with three new Cloud
migration sales in H1 2023, and Foundation Software increased 25.0% to £6.8m
(2022 FY: £5.4m) with uplifts to the existing customer base and a new
SITS:Vision sale to London School of Science and Technology (LSST).
Other Software and Services decreased by 28.6% to £3.6m (2022 FY: 5.0m) due
to the removal of £1.5m from the Australian DoE contract which is expected to
be fully delivered by end June 2024. One remaining government contract is
expected to end June 2025, and therefore £1m of ARR will be removed in June
2024.
Committed Income (Order Book) relates to the total value of orders across SIS
and ES which have been signed off, on or before, but not delivered by 30 June
2023. This represents the best estimate of business expected to be delivered
and recognised in future periods and includes 2 years of Support and
Maintenance revenue, software licence and support and maintenance revenue,
Cloud revenues and all professional services. As of 30 June 2023, this
decreased 4.1% to £163.7m (2022 FY: £170.7m) primarily due to the delivery
of large multi-year ES renewals won during 2022.
Gross Revenue Retention (GRR) and Net Revenue Retention (NRR)
GRR has dropped to 92% from 95% in prior year, this increase in churn is
driven by the loss of NTU and lower revenues for DoE. These two customers have
dropped £2.7m in recurring revenue, equating to 4.9pp of the GRR decrease.
Aside from these customers our churn rate is slightly improved against prior
year.
NRR has dropped to 99% from 100% in prior year, despite the material drops
noted above we continue to grow revenues particularly in foundation software
and cloud as we continue upsell to customers and cloud migrations continue to
drive up recurring revenue.
Product Development Costs
The Group invested £7.4m (2022 H1: £8.1m) in product development activity,
of which £4.6m of Edge costs were capitalised (2022 H1: £5.4m). Edge
investment to date, including Dynamics and Semestry, totals £41.9m. Annual
development spend will continue to reduce from the peak in FY22 to match
product development pace with customer needs. The net P&L charge after
removing capitalised spend was £2.7m (2022 H1: £2.7m) this includes £0.7m
in respect of amortisation (H1 2022: £0.5m), as we continue to invest in our
Foundation products, adding new modules and additional functionality as well
as statutory updates.
Net (Borrowings) / Cash and Cash flow
Cash flow
6 months to 30 June 2022 H1
£m 2023 H1 Reported
Net cash (used in) operating activities before tax (3.4) (1.8)
Tax and other items (1.4) (2.8)
Capitalised product development (4.6) (5.6)
Proceeds from shares - 0.2
Free Cash Flow (9.4) (10.0)
Consideration paid for acquisitions, inc. deferred consideration (0.1) (0.8)
Loan drawdown 7.8 7.5
Net (decrease) in cash & cash equivalents (1.7) (3.3)
Cash & cash equivalents at beginning of the year 2.9 5.9
Cash & cash equivalents at end of period 1.2 2.6
Less: Effect of foreign exchange rate changes (0.1) 0.1
Cash & cash equivalents at end of period 1.1 2.7
Borrowings (excluding overdrafts) (14.0) (7.5)
Net (Borrowings) at the end of the period (12.9) (4.8)
( )
The Group used net cash of £3.4m in operating activities before tax (2022 H1:
£1.8m) from increased operating cash flows from continuing operations £7.8m
(2022 H1 £6.4m) and higher than traditional first half deterioration in
working capital £11.1m (2022 H1 £8.2m). The higher working capital movement
is mainly due to the reversal of the NTU onerous contract provision. Overall,
cash flow has been impacted by traditional seasonality with lower proportion
of renewals in the first half of the year, costs of the NTU programme team
with no associated revenue and working capital outflows from ES contracts in
the Middle East.
Tax and other items include a £1.1m reduction in net tax paid in the first
half year, with tax paid in 2023 £0.8m (2022 H1: £1.9m) as a result of
reduced overseas corporation tax payments due to lower overseas profits in
2022 compared to 2021. In addition, the net gain on forward foreign exchange
contracts increased by £0.1m in the first half of 2023 compared to 2022 H1
reflecting the trends in AUD to GBP over both periods.
In line with the Group's product investment strategy, there has been a
reduction in capitalised product development spend reducing to £4.6m (2022
H1: £5.6m). Proceeds from the issue of shares was £nil (2022 H1: £0.2m) due
to the timing of share sales related to share-based payments schemes.
Consideration paid for acquisitions, including deferred consideration,
decreased by £0.7m to £0.1m (2022 H1: £0.8m) as the final payment relating
to the Semestry Limited acquisition was made in 2022. The remaining deferred
consideration in respect of the acquisition of the assets of Eveoh BV is
£0.1m which is likely to be paid by the end of the two year earnout period
ending September 2023.
The loan drawdown increased £6.5m to £14.0m (2022 H1: £7.5m) to assist with
the working capital requirements in the first half of the year. Management
have sufficiently stress tested the latest forecasts to the point where either
the Group cannot meet its liabilities or is in breach of
banking covenants and have concluded that this position is highly unlikely,
and therefore does not have a significant impact on the Group's ability to
continue as a going concern.
Operating Cash Conversion is 12% (H1 2022: (14)%) and is calculated as net
cash (used in) / from operating activities before tax, less any significant
one off items as a proportion of adjusted operating profit (EBITDA). This is
presented excluding capitalised expenditure, as it is considered
discretionary. For H1 2022, this excluded the cash outflow of £0.8m on
the Veritas programme, which went live in January 2023 and was deemed a
one-off item. Cash conversion has been impacted by the reversal of the onerous
contract provision.
Net Borrowings and Free Cash Flow: At the end of the period, the Group had Net
Borrowings of £12.9m (2022 FY: Net Borrowings £3.4m; 2022 H1: Net Borrowings
£4.8m) and Free Cash Flow of £(9.4)m (2022 H1: £(10.0)m).
Free cash flow is included as a key indicator of the cash that is generated by
the Group and is available for acquisition related investment, interest and
finance charges and, or distribution to shareholders. It is calculated as net
cash generated before dividends, interest and finance charges, deferred
consideration, and investments in subsidiaries.
The Group has loan facilities of £17m of which £14m was drawn down as at 30
June 2023 (2022 H1: £7.5m) and continues to closely monitor its cash flows.
Management anticipates an improved cash position by year end, although a net
debt position is still expected. The current banking facilities expire in
December 2024, and negotiations for a new facility are expected to be
completed this financial year.
Items excluded from adjusted profit figures: A full explanation of
"exceptional items" is included in note 5. In line with Financial Reporting
Council (FRC) guidance, in 2023 we made a change to our accounting policy in
respect of previously reported "other items", reclassifying some items as
underlying activities. Items included are: employee related share option
charges including employer related taxes, amortisation of acquired software,
and amortisation of acquired customer contracts and relationships. Prior
periods have been restated.
The negative impact on Adjusted EBITDA has been £0.2m in H1 2023, with an
anticipated 2023 full year impact of £0.7m; £0.6m from for the six months
ended 30 June 2022 and £0.5m for the full year ended 31 December 2022.
The negative impact on previously reported operating profit before other items
(adjusted operating profit) has been £1.1m for the six months ended 30 June
2022 and £1.5m for the year ended 31 December 2022.
The exceptional items in 2023 are as follows:
· Acquisition related costs: Amounts relating to the consultancy and
legal costs of potential acquisitions in the period total £0.1m. (30 June
2022: £0.1m).
· Restructuring and associated costs relate to the restructuring of
the Group's operations, including properties. (30 June 2023: £0.3m; 30 June
2022: £0.6m).
Share Options and Share Capital: There have been no share options issued in
this period.
Dividends: The final dividend for 2022 of 0.65p was paid by the Company in
July 2023. It is Tribal's expectation that a final dividend will be paid
following the release of annual results in line with its dividend policy.
Condensed consolidated income statement
For the six months to 30 June 2023
Six months Restated* Restated*
ended Six months Year
30 June ended ended
Note 2023 30 June 31 December
£'000 2022 2022
£'000 £'000
Revenue 4 43,377 42,413 83,585
Cost of sales (20,727) (22,785) (52,250)
Gross profit 22,650 19,628 31,335
Total administrative expenses (16,704) (16,362) (30,556)
Operating profit 4 5,946 3,266 779
Analysed as:
Operating profit (before exceptional items) 6,312 4,604 2,901
Exceptional items (366) (1,338) (2,122)
Operating profit (EBIT) 5,946 3,266 779
Investment income 143 54 25
Finance costs 6 (204) (205) (417)
Profit before tax 5,885 3,115 387
Tax charge 7 (1,164) (1,546) (897)
Profit/(loss) attributable to the owners of the parent 4,721 1,569 (510)
Earnings per share
Basic 8 2.2p 0.7p (0.2)p
Diluted 8 2.2p 0.7p (0.2)p
*See note 5
All activities are from continuing operations
Condensed consolidated statement of comprehensive income and expense
For the six months to 30 June 2023
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Profit/(loss) for the period 4,721 1,569 (510)
Other comprehensive (expense)/income
Items that will not be reclassified subsequently to profit or loss:
Re-measurement of defined benefit pension schemes - - 262
Deferred tax on measurement of defined benefit pension schemes - - (66)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations (168) 811 595
Other comprehensive (expense)/income for the period net of tax (168) 811 791
Total comprehensive income for the period attributable to equity holders of 4,553 2,380 281
the parent
Condensed consolidated balance sheet
As at 30 June 2023
30 June 30 June 31 December
2023 2022 2022
Note £'000 £'000 £'000
Non-current assets
Goodwill 9 28,719 29,285 29,176
Other intangible assets 10 47,256 40,540 43,667
Property, plant and equipment 936 1,053 1,044
Right of use assets 1,033 1,188 1,435
Net investment in lease 46 93 70
Deferred tax assets 5,127 5,033 5,064
Retirement benefit scheme assets 72 - 72
Contract assets - 94 -
83,189 77,286 80,528
Current assets
Trade and other receivables 11 16,271 11,438 12,505
Net investment in lease 47 47 47
Contract assets 6,423 10,492 6,676
Current tax assets 173 136 421
Cash and cash equivalents (excluding bank overdrafts) 16 1,639 2,718 2,891
24,553 24,831 22,540
Total assets 107,742 102,117 103,068
Current liabilities
Trade and other payables 12 (5,394) (6,730) (5,788)
Contract liabilities (22,790) (22,430) (26,004)
Accruals (9,051) (7,682) (8,622)
Current tax liabilities (1,273) (1,829) (1,145)
Lease liabilities (584) (801) (728)
Borrowings 16 (519) - (35)
Provisions 13 (875) (794) (5,194)
(40,486) (40,266) (47,516)
Net current liabilities (15,933) (15,435) (24,976)
Non-current liabilities
Contract liabilities (17) (187) (141)
Retirement benefit obligations - (215) -
Lease liabilities (497) (560) (721)
Other payables 12 (168) (125) (209)
Deferred tax liabilities (2,766) (2,904) (2,930)
Borrowings 16 (14,000) (7,500) (6,250)
Provisions 13 (249) (757) (483)
(17,697) (12,248) (10,734)
Total liabilities (58,183) (52,514) (58,250)
Net assets 49,559 49,603 44,818
Equity
Share capital 14 10,611 10,534 10,611
Share premium 83 19,186 83
Other reserves 28,786 28,573 28,598
Accumulated profit/(losses) 10,079 (8,690) 5,526
Total equity attributable to equity holders of the parent 49,559 49,603 44,818
Condensed consolidated cash flow statement
for the six months to 30 June 2023
Six months ended 30 June Six months ended 30 June Year ended 31 December
2023 2022 2022
£'000 £'000 £'000
Note
Net cash (used in)/from operations 15 (4,192) (3,760) 6,106
Investing activities
Purchases of property, plant and equipment (191) (395) (716)
Expenditure on intangible assets 10 (4,635) (5,593) (10,369)
Payment of deferred contingent consideration for acquisitions 13 (46) (788) (994)
Proceeds from sub-leases 25 4 29
Net gain on forward contracts 142 54 23
Net cash outflow from investing activities (4,705) (6,718) (12,027)
Financing activities
Interest paid (166) (38) (229)
Loan arrangement fees (2) (9) (9)
Loan drawdown 16 7,750 7,500 8,500
Loan repayment - - (2,250)
Equity dividend paid - - (2,736)
Proceeds on issue of shares - 241 573
Principal paid on lease liabilities (377) (462) (943)
Interest paid on lease liabilities (21) (33) (60)
Net from/(cash used) in financing activities 7,184 7,199 2,846
Net decrease in cash and cash equivalents (1,713) (3,279) (3,075)
Net cash and cash equivalents at beginning of period 2,856 5,924 5,924
Effect of foreign exchange rate changes (23) 73 7
Net cash and cash equivalents at end of period 16 1,120 2,718 2,856
Condensed consolidated statement of changes in equity
For the six months to 30 June 2023
Note Share Capital Share Premium Other reserves Accumulated losses Total Equity
£'000 £'000 £'000 £'000 £'000
Balance at 31 December 2021 10,519 18,961 27,978 (11,118) 46,340
Profit for the period - - - 1,569 1,569
Other comprehensive income for the period - - - 811 811
Total comprehensive income for the period - - - 2,380 2,380
Issue of equity share capital 15 225 - - 240
Credit to equity for share-based payments - - 558 - 558
Tax credit on credit to equity for share-based payments - - - 48 48
Foreign exchange difference on share-based payments - - 37 - 37
Contributions by and distributions to owners 15 225 595 48 883
Balance at 30 June 2022 10,534 19,186 28,573 (8,690) 49,603
Loss for the period - - - (2,079) (2,079)
Other comprehensive expense for the period - - - (20) (20)
Total comprehensive expense for the period - - - (2,099) (2,099)
Issue of equity share capital 77 256 - - 333
Share premium capital reduction - (19,359) - 19,359 -
Equity dividend paid - - - (2,736) (2,736)
Credit to equity for share-based payments - - 31 - 31
Tax credit on credit to equity for share-based payments - - - (308) (308)
Foreign exchange difference on share-based payments - - (6) - (6)
Contributions by and distributions to owners 77 (19,103) 25 16,315 (2,686)
Balance at 31 December 2022 10,611 83 28,598 5,526 44,818
Profit for the period - - - 4,721 4,721
Other comprehensive expense for the period - - - (168) (168)
Total comprehensive income for the period - - - 4,553 4,553
Credit to equity for share-based payments - - 213 - 213
Foreign exchange difference on share-based payments - - (25) - (25)
Contributions by and distributions to owners - - 188 - 188
Balance at 30 June 2023 10,611 83 28,786 10,079 49,559
Notes to the condensed consolidated financial information
for the six months to 30 June 2023
1. General information
The condensed consolidated financial information for the six months ended 30
June 2023 was approved by the Board of Directors on 24 August 2023. This
condensed consolidated interim financial information does not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006.
Statutory accounts for the year ended 31 December 2022 were approved by the
Board of Directors on 23 March 2023. A copy of the statutory accounts for
that year has been delivered to the Registrar of Companies. The auditor
reported on those accounts: its report was unqualified, and did not contain a
statement under section 498(2) or (3) of the Companies Act 2006.
2. Accounting policies
The condensed consolidated set of financial statements included in this
half-yearly financial report has been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Services Authority.
The condensed consolidated financial information should be read in conjunction
with the annual financial statements for the year ended 31 December 2022 which
have been prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006.
In preparing these condensed interim financial statements, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were as stated within the
consolidated financial statements for the year ended 31 December 2022.
The accounting policies applied are consistent with those of the annual
financial statements for the year ended 31 December 2022, with the exception
of the change in the accounting policy for exceptional items which is detailed
in note 5.
3. Going concern
Tribal had net cash and cash equivalents of £1.1m at the end of H1 2023, and
borrowings of £14.0m. The Group has access to a £2.0m committed overdraft
facility in the UK and a $AUD 2.0m committed overdraft facility in Australia.
As at June 2023 there was $1.0m available but undrawn in respect of the AUS
overdraft facility ($1.0m (£0.5m) had been drawn down) and £2.0m available
but undrawn in respect of the UK overdraft facility. The Group has entered
into a £17m loan facility to cover temporary working capital requirements of
the Group. Tribal Group plc has undertaken to make adequate financial
resources available to the Group to meet its current and future obligations as
and when they fall due.
Tribal's main business is software related through the provision of Student
Information Systems (SIS) to education institutions globally. Revenue is
generated from the sale of software licenses and related implementation work,
and the ongoing provision of support & maintenance and cloud/hosting
services. The Group benefits from strong annual recurring revenues and cash
generation, it also has a significant pipeline of committed income for the
remainder of 2023 and into 2024 which provides a good level of protection and
certainty to the business. The Group's net current liability position has
decreased to £15.9m from £25.0m, this being driven by the release of all
contract balances including the release of the onerous contract provision, and
net current contract liabilities of £22.8m relating to deferred customer
revenue recognised in accordance with IFRS 15.
The Group had a positive start to the year, closing several significant sales
to new and existing customers, and expanding its global footprint. The
investments the Group continue to make position Tribal at the forefront of
this evolution in the industry. The start of the year has been cash depletive
and although management anticipates an improved cash position by year end, a
net debt position is still expected. Management is monitoring costs closely
and would also introduce cost saving measures to mitigate the impact on profit
and cash if necessary.
The Company has guaranteed the year-end liabilities of its subsidiaries.
In assessing the Group's going concern position the Directors have considered
all relevant facts, latest forecasts, an assessment of the risks faced by the
Group, and considered potential changes in trading performance with particular
focus on the challenges faced with the implementation of the NTU contact. In
addition, management have sufficiently stress tested the latest forecasts to
the point where either the Group cannot meet its liabilities or is in breach
of banking covenants and have concluded that this position is highly unlikely,
and therefore does not have a significant impact on the Group's ability to
continue as a going concern. Accordingly, the Directors have a reasonable
expectation that the Group and the Company have adequate resources to continue
in operational existence for at least 12 months from the date of approval of
the financial statements and the foreseeable future. Thus, they continue to
adopt the going concern basis in preparing the financial statements.
4. Segmental analysis
Information reported to the Group's Chief Executive for the purposes of
resource allocation and assessment of segment performance is focused on the
nature of each type of activity. The Group's reportable segments and principal
activities under IFRS 8 are detailed below:
· Student Information ("SIS") represents the delivery of software
and subsequent maintenance and support services and the activities through
which we deploy and configure our software for our customers, including
software solutions, asset management and information managed services; and
· Education Services ("ES") represents inspection and review
services which support the assessment of educational delivery, and a portfolio
of performance improvement tools and services, including analytics.
In accordance with IFRS 8 'Operating Segments' information on segment assets
is not shown as this is not provided to the Chief Operating decision-maker.
Inter-segment sales are charged at prevailing market prices.
Total Revenue Adjusted segment operating profit
Restated* Restated*
Six months Six months Year Six months Six months Year
ended ended ended ended ended ended
30 June 30 June 31 December 30 June 30 June 31 December
2023 2022 2022 2023 2022 2022
£'000 £'000 £'000 £'000 £'000 £000
Student Information Systems 33,707 35,470 68,161 12,369 10,235 11,876
Education Services 9,670 6,943 15,424 1,923 1,643 3,719
Total 43,377 42,413 83,585 14,292 11,878 15,595
Unallocated corporate expenses (7,618) (6,727) (11,596)
Amortisation of acquired software and customer contracts & relationships
(362) (547) (1,098)
Adjusted operating profit 6,312 4,604 2,901
Exceptional items (366) (1,338) (2,122)
Operating profit 5,946 3,266 779
* see note 5
Depreciation and amortisation is allocated to segment profits and is included
in adjusted segment operating profit as above. The amount included in SIS is
£1.0m (30 June 2022: £1.0m; 31 December 2022 £2.6m) and within Education
Services £0.1m (30 June 2022: £0.1m; 31 December 2022: £0.1m). 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.
Within Education Services revenues of approximately 8% (31 December 2022: 5%)
have arisen from the Segments largest customer: within SIS revenues of
approximately 4% (31 December 2022: 4%) have arisen from the Segments largest
customer. These percentages are calculated against total revenue.
Geographical information:
Revenue from external customers, based on location of the customer, are shown
below:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
UK 27,762 25,086 51,850
Australia 7,762 9,106 18,094
Other Asia Pacific 2,509 4,871 5.960
North America 2,238 1,880 3,616
Rest of the world 3,106 1,470 4,065
43,377 42,413 83,585
4. Alternative Performance Measures (APM)
A number of non-IFRS adjusted profit measures are used in this interim report
and financial statements. Adjusting items are excluded from our headline
performance measures by virtue of their size and nature, in order to reflect
management's view of the performance of the Group. Summarised below is a
reconciliation between statutory results to adjusted results. The Group
believes that alternative performance measures such as adjusted EBITDA are
commonly reported by companies in the markets in which it competes and are
widely used by investors in comparing performance on a consistent basis
without regard to factors such as depreciation and amortisation, which can
vary significantly depending upon accounting methods (particularly when
acquisitions have occurred), or based on factors which do not reflect the
underlying performance of the business. The adjusted profit after tax earnings
measure is also used for the purpose of calculating adjusted earnings per
share.
Restated*
Six months Six months Restated*
ended ended Year ended
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Statutory Operating profit 5,946 3,266 779
Amortisation of Development cost and acquired Intellectual Property 656 475 1,301
Amortisation of other intangibles 3 11 20
Depreciation on Property, Plant & Equipment 283 318 623
Depreciation of right-of use assets 460 512 1,036
Amortisation of acquired software 133 314 628
Amortisation of acquired customer contracts & relationships 229 233 470
Other exceptional costs 366 1,338 2,122
Adjusted Operating Profit (EBITDA) 8,076 6,467 6,979
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Adjusted EBITDA 8,076 6,467 6,979
Exceptional items (366) (1,338) (2,122)
EBITDA before exceptional items 7,710 5,129 4,857
Depreciation & amortisation (1,764) (1,863) (4,078)
Operating profit (EBIT) 5,946 3,266 779
Net financing costs (61) (151) (392)
Profit before tax 5,885 3,115 387
In previous periods adjusted measures of profits and adjustments have been
presented in a separate column in the consolidated income statements. These
adjustments were described as "Other Items" which are defined in the notes to
the financial statements as "items considered by the Directors to be not
directly related to the trading business or regarded as exceptional, or for
which separate disclosure would assist in a better understanding of the
financial performance achieved". The exclusion of certain items from adjusted
measures of profits is a policy choice and has been reviewed by Management
(see note 5). This year a decision was made to change the presentation and
classification of "Other items" and is supported by additional disclosure in
the financial statements. See below for the presentation changes.
30 June 2022 31 December 2022
Restated As Reported Restated As Reported
Adjusted Other Adjusted Other Statutory
£'000 £'000 items Statutory £'000 items £'000
£'000 £'000 £'000 £'000
Continuing operations
Revenue 42,413 42,413 - 42,413 83,585 83,585 - 83,585
Cost of sales (22,785) (22,785) - (22,785) (52,250) (52,250) - (52,250)
Gross profit 19,628 19,628 - 19,628 31,335 31,335 - 31,335
Total administrative expenses (16,362) (13,883) (2,479) (16,362) (30,556) (26,886) (3,670) (30,556)
Operating profit/(loss) 3,266 5,745 (2,479) 3,266 779 4,449 (3,670) 779
Analysed as:
Operating profit (before exceptional items)
4,604 - - - 2,901 - - -
Exceptional items (1,338) - - - (2,122) - - -
Operating profit (EBIT) 3,266 - - - 779 - - -
Investment income 54 54 - 54 25 25 - 25
Finance costs (205) (95) (110) (205) (417) (323) (94) (417)
Profit/(loss) before tax 3,115 5,704 (2,589) 3,115 387 4,151 (3,764) 387
5. Exceptional items
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Acquisition related costs (74) (67) (186)
Internal systems transformation programme "VERITAS" - (707) (1,321)
Restructuring and associated costs (292) (564) (615)
Total exceptional items (366) (1,338) (2,122)
Exceptional items are not part of the Group's underlying trading activities
and include the following:
Acquisition related costs: Amounts relating to the consultancy and legal costs
of potential acquisitions in the period total £74,000. (30 June 2022:
£67,000; 31 December 2022: £186,000).
Internal systems transformation programme "Veritas": The upgrade of the
accounting system went live in January 2023. In 2022 £1,321,000 of costs were
included as exceptional items as the upgrade was material and non-recurring in
nature. In 2023 all further costs associated with this project have been
expensed as part of the Group's underlying activities.
Restructuring and associated costs relate to the restructuring of the Group's
operations, including properties. (30 June 2023: £292,000; 30 June 2022:
£564,000; 31 December 2022: £615,000).
In 2023 we have made a change to our accounting policy in respect of
previously reported "other items". As a result, certain items of income or
expense previously included as "other items" have been classified as
underlying activities. Previously reported "other items" are now referred to
as "exceptional items". Items reclassified are employee related share option
charges, including employer related taxes (30 June 2022: £594,000; 31
December 2022: £450,000), amortisation of acquired software (30 June 2022:
£314,000; 31 December 2022: £628,000) and amortisation of acquired customer
contracts and relationships (30 June 2022: £233,000; 31 December 2022:
£470,000). Prior periods have been restated. The amount included in
underlying activities at June 2023 for employer related taxes is £207,000.
The impact on previously reported operating profit before other items
(adjusted operating profit) has been to reduce adjusted operating profit for
the six months ended 30 June 2022 by £1,141,000 and to reduce adjusted
operating profit for the year ended 31 December 2022 by £1,548,000.
6. Finance costs
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Interest on bank overdrafts and loans 165 44 229
Loan arrangement fees 2 9 9
Net interest payable on retirement benefit obligations - - 4
Interest expense on lease liabilities and dilapidation provisions 36 42 81
Unwinding of 1 110 94
discounts
Total finance costs 204 205 417
7. Tax
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Current tax
UK Corporation tax - - (1,381)
Overseas tax 1,382 1,311 1,967
Adjustments in respect of prior periods - - 483
1,382 1,311 1,069
Deferred tax
Current period (226) 170 (212)
Adjustments in respect of prior periods 8 65 40
(218) 235 (172)
Tax charge on profits 1,164 1,546 897
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 months
Six months ended Year
ended 30 June (restated)* ended
30 June 2022 31 December
2023 thousands 2022
thousands thousands
Basic weighted average number of shares in issue 213,713 211,279 211,627
Dilutive weighted average number of employee share options 3,117 3,296 3,236
Total weighted average number of shares outstanding for dilution calculations 216,830 214,575 214,863
* The June 2022 basic calculation has been re-stated to include 1,048,781
LTIP and CSOP shares that have met the vesting criteria but have yet to be
exercised. The previously reported share numbers used are as follows: Basic
weighted average shares 210,230,000; Dilutive weighted average shares
6,355,000; Total weighted average shares 216,585,000. The previously reported
Basic or diluted EPS did not change.
Diluted earnings per share only reflects the dilutive effect of share options
for which performance criteria have been met. In regards the diluted loss per
share in 2022, all potentially dilutive ordinary shares, including options,
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 3,116,783 (31 December
2022: 3,328,168). This includes 92,157 options in the 2019 SAYE Scheme (31
December 2022: 92,157).
The "adjusted" basic and diluted earnings per share figures 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 months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Net profit/(loss) 4,721 1,569 (510)
Earnings per share
Basic 2.2p 0.7p (0.2)p
Diluted 2.2p 0.7p (0.2)p
Net profit (before exceptional items)* 5,041 3,132 59
Adjusted earnings per share
Basic 2.3p 1.5p -
Diluted 2.3p 1.5p -
*Net profit (before exceptional items) is calculated as below:
Profit (before exceptional items) 6,312 4,604 2,901
Investment income 143 54 25
Finance costs (204) (205) (417)
Operating profit (before exceptional items) before tax 6,251 4,453 2,509
Tax charge (before exceptional items) (1,210) (1,321) (2,450)
Net profit (before exceptional items) 5,041 3,132 59
9. Goodwill
£'000
Cost
At 1 January 2023 110,407
Exchange differences (457)
At 30 June 2023 109,950
Accumulated impairment losses
At 1 January 2023 81,231
At 30 June 2023 81,231
Net book value
At 30 June 2023 28,719
At 31 December 2022 29,176
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
Acquired Software Acquired Customer Development Business Software Total
£'000 contracts and costs systems licences £'000
relationships Acquired intellectual property £'000 £'000 £'000
£'000 £'000
Cost
At 1 January 2023 12,582 9,902 1,873 55,314 75 44 79,790
Additions - - - 4,635 - - 4,635
Exchange differences (270) (115) - (120) - - (505)
At 30 June 2023 12,312 9,787 1,873 59,829 75 44 83,920
Amortisation
At 1 January 2023 9,283 7,189 950 18,657 - 44 36,123
Charge for the period 133 229 49 607 3 - 1,021
Exchange differences (270) (90) - (120) - - (480)
At 30 June 2023 9,146 7,328 999 19,144 3 44 36,664
Carrying amount
At 30 June 2023 3,166 2,459 874 40,685 72 - 47,256
At 31 December 2022 3,299 2,713 923 36,657 75 - 43,667
Software and customer contract and relationships have arisen from
acquisitions, and are amortised over their estimated useful lives, which are
3-8 years and 3-15 years respectively. The amortisation period for
development costs incurred on the Group's product development is 3 to 15
years, based on the expected life-cycle of the product. Amortisation and
impairment of development costs, amortisation for software, customer contracts
and relationships, intellectual property, business systems and software
licences are all included within administrative expenses.
Management have reassessed the useful economic life (UEL) of the previously
acquired software relating to the Tribal Dynamics and Semestry intangible
assets. As a result the UEL of these assets has been aligned with that of the
Tribal Edge product, reflecting the fact that these products are integral to
Edge. This has been treated as a change in accounting estimate from 1 January
2023. Prior periods have not been adjusted. The net impact of this change in
accounting estimate resulted in a reduced charge to the Income Statement of
£180,000 in the period (Charge to 30 June 2023: £145,000; under previous
estimate £325,000).
11. Trade and other receivables
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Amounts receivable for the sale of services 10,467 6,651 7,387
Less: loss allowance (203) (96) (194)
10,264 6,555 7,193
Other receivables 1,165 542 828
Prepayments 4,842 4,341 4,484
16,271 11,438
12,505
12. Trade and other payables
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Current 2,003 1,803 1,010
Trade payables
Other taxation and social security 2,646 3,050 2,498
Other payables 745 1,877 2,280
5,394 6,730 5,788
Non-current
Other payables 168 125 209
Total 5,562 6,855 5,997
13. Provisions
Deferred Contingent Consideration
Property £'000 Onerous Contracts
related £'000 Other Total
£'000 £'000 £'000
At 1 January 2023 833 184 4,497 163 5,677
Net movement in provision 16 - (3,927) 32 (3,879)
Utilisation of provision (49) (46) - - (95)
Exchange rate movement (9) - (570) - (579)
At 30 June 2023 791 138 - 195 1,124
The provisions are split as follows:
Deferred Contingent Consideration
Property related £'000 Onerous Contracts
£'000 £'000 Other Total
£'000 £'000
Within one year 542 138 - 195 875
More than one year 249 - - - 249
Total 791 138 - 195 1,124
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 estimated future dilapidation costs
arising from exiting leasehold properties, under IAS 37. This provision is
discounted by property and is between 2.65% and 5.5%.
Onerous contract provision relates to a specific contract and represents the
unavoidable costs of meeting the obligations under the contract that exceed
the economic benefit expected to be received under it.
Other provision relates to the recoverability of input VAT in the Philippines.
This provision is not discounted.
Deferred consideration reflects amounts in respect of the acquisitions of
subsidiary undertakings payable over a period of up to 2 years. Certain
amounts are contingent upon the performance of the acquired entities with
amounts reflecting management's best estimate of the future profitability of
those entities and the resultant payment due under the terms of the Sale and
Purchase Agreement. The deferred consideration is discounted at 18%.
Deferred contingent consideration reflects an amount in respect of the
acquisition of the assets of Eveoh BV. The amount has been calculated upon the
performance of the entity in the period to 30 June 2023 and the resultant
payments are due under the Sale and Purchase Agreements. As at 30 June 2023
deferred contingent consideration amounts to £138,000 for the assets of Eveoh
BV. During the period payments totalling £46,000 were made.
The remaining deferred consideration for Eveoh is to be paid in 2023.
14. Share capital
Six months Six months Six months Six months Year
ended ended ended ended ended Year ended
30 June 30 June 30 June 30 June 31 December 2022 31 December
2023 2023 2022 2022 number 2022
number £'000 number £'000 £'000
Allotted, called up and fully paid
At beginning of the period 212,221,746 10,611 210,374,373 10,519 210,374,373 10,519
Issued during the period - - 314,406 15 1,847,373 92
At end of the period 212,221,746 10,611 210,688,779 10,534 212,221,746 10,611
The Company has one class of ordinary shares of 5p which carry no right to
fixed income.
15. Notes to the cash flow statement
Six months Restated Restated
ended Six months Year
30 June ended ended
2023 30 June 31 December
£'000 2022 2022
£'000 £'000
Operating profit 5,946 3,266 779
Depreciation of property, plant and equipment 283 318 623
Depreciation of right-of-use assets 460 488 1,036
Amortisation and impairment of other intangible assets 1,021 1,033 2,419
Share based payments 213 557 589
Research and development tax credit (97) (121) (177)
Net pension credit - - (29)
Other non-cash items (44) 848 23
Operating exceptional items 366 1,338 2,122
Cash (used in)/generated from operations before exceptional items and
movements in working capital
8,148 7,727 7,385
Increase in receivables (3,436) (3,647) (808)
(Decrease)/increase in payables (7,698) (4,537) 4,252
Cash (used in)/generated from operations before exceptional items (2,986) (457) 10,829
Cashflow relating to operating exceptional items
Operating exceptional items (260) (1,362) (2,228)
Movement in working capital of exceptional items (106) 24 106
Cash outflow from exceptional items (366) (1,338) (2,122)
Net cash (used in)/from operating activities before tax (3,352) (1,795) 8,707
Net tax paid (840) (1,965) (2,601)
Net cash (used in)/from operating activities (4,192) (3,760) 6,106
Net cash (used in)/from operating activities before tax can be analysed as
follows:
Continuing operations (3,352) (1,795) 8,707
16. Analysis of net debt
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Cash and cash equivalents 1,639 2,718 2,891
Overdrafts (519) - (35)
Borrowings (14,000) (7,500) (6,250)
(12,880) (4,782) (3,394)
Net debt
Analysis of changes in net debt
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Opening net debt (3,394) 5,924 5,924
Borrowings (7,750) (7,500) (6,250)
Net decrease in cash and cash equivalents (1,713) (3,279) (3,075)
Effect of foreign exchange rate changes (23) 73 7
Closing net debt (12,880) (4,782) (3,394)
17. Contingent liabilities
The Company and its subsidiaries have provided performance guarantees issued
by their banks on their behalf, in the ordinary course of business totalling
£0.6m (30 June 2022: £1.3m, 31 December 2022: £0.8m). These are not
expected to result in any material financial loss and the likelihood of using
these guarantees is assessed as remote.
During 2022 progress was made in the Group relief claim from Care UK for the
year ended 31 March 2007, which resulted in management reducing the uncertain
tax provision previously recognised by £1.3m. A provision of £0.1m still
remains, this being calculated as the maximum adjustment that Tribal may have
to pay. Correspondence to date from HMRC does not suggest that there will be
any adjustment to the original claim Tribal submitted, however until the case
is closed HMRC's position could change. Following legal advice, Tribal signed
a further standstill agreement until 31 December 2023 and the case is yet to
be formally closed by HMRC.
The Group delivers complex multi-year projects which from time to time give
rise to significant operational and commercial risks. Such risks may, in
certain circumstances, lead to potential negotiations or disputes with
customers which may give rise to consequential financial or commercial
obligations or liabilities arising. The Group has a material contract which
has been terminated with both parties reserving rights. No legal proceedings
have been instituted (nor are they permitted to be brought) until the parties
have participated in mediation in an attempt to achieve a resolution. The
timing and outcome of that process is presently uncertain. It is possible that
there may be a significant adverse financial impact on the Group but at this
juncture the Board cannot still fully assess such potential impact, if any.
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.
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 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'000
Short-term employee benefits 1,327 965 2,601
Termination benefits - 132 202
Share-based payments 186 325 302
1,513 1,422 3,105
19. Seasonality
There is limited annual seasonality within the Group. Our SIS customers are on
an annual billing cycle with implementation projects being invoiced based on
milestones being met. There is some seasonality within the ES business as
Surveys revenue is reduced as institutions only participate in the Southern
Hemisphere International Student Barometer every other 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 2022. A list of
current Directors is maintained on the Tribal Group plc website:
www.tribalgroup.com (http://www.vernalis.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
Mark
Pickett
Chief
Executive
24 August 2023
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