REG - Tribal Group PLC - Preliminary Results
17/03/2022 07:00
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RNS Number : 0597F Tribal Group PLC 17 March 2022
17 March 2022
Tribal Group plc
("Tribal" or "the Group")
Preliminary Results for the year ended 31 December 2021
Tribal (AIM: TRB), a leading provider of software and services to the
international education market, today announces its preliminary results for
the year ended 31 December 2021.
Financial highlights
· Annual Recurring Revenue ("ARR") committed at the period end
increased 7% to £50.3m (2020: £47.0m constant currency), providing strong
visibility and basis for future profitable growth
· Group revenue increased 11% to £81.1m (2020: £73.4m constant
currency), reflecting strong performance across the business and following the
Semestry acquisition
· Adjusted EBITDA growth of 9% to £16.6m (2020: £15.2m constant
currency)
· Statutory Profit before tax for the year increased to £8.6m
(2020: £8.5m constant currency)
· Strong operational cash conversion of 104% (2020: 97%), with
positive free cash flow of £5.4m (2020: 5.4m)
· Net cash of £5.9m (2020: £9.5m) after net capitalised
development costs of £10.2m, net payment on acquisitions and deferred
consideration of £6.4m and dividends paid of £2.5m
· Progressive annual dividend payment with the Board proposing 1.3p
per share (2020:1.2p) representing an 8% increase, expected to be paid at the
end of July 2022
Operational highlights
· Acquisition of Semestry Ltd and Eveoh's "My Timetable" each
complement our existing portfolio and form part of our Edge offering
· Three major new Tribal:Cloud sales in the year, University of
Warwick, University College London and Universiti Teknologi Petronas
· Two new SITS:Vision customers, Solent University and University
of West London
· Nine customers on the Callista Software platform have elected to
renew for a 5-year term
· Considerable progress with Tribal Edge, the Group's
next-generation cloud solutions:
o Four early adopters signed up to Admissions
· Investment in Global Delivery Centre in Kuala Lumpur to focus
global delivery to customers
Outlook
· The Group has traded in line with Board expectations since the
start of the new financial year and is seeing continued positive sales
momentum. While cognisant of inflationary cost pressures, the Board remains
confident in delivering results for 2022 in line with current expectations
Mark Pickett, Chief Executive, commented:
"2021 was a year of positive strategic and financial progress, in which we
delivered against key milestones in our transition to a pure SaaS business,
while investing in new products and services to maintain our market leading
position in our core geographic markets and support our growing customer base.
We have a record sales pipeline as we enter the current financial year, giving
us the confidence to continue to invest in our product expansion strategy to
drive profitable growth and achieve our long-term financial goals. With the
education market globally becoming more sophisticated and attuned to the
benefits of SaaS and cloud offerings, we remain confident in our ambition and
ability to deliver on our growth strategy."
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
Sara Hale, Virginia Bull, Will Godfrey
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.
This Statement has been prepared for and is addressed only to our shareholders
as a whole and should not be relied on by any other party or for any other
purpose. Tribal, its directors, employees, agents or advisers do not accept
or assume responsibility to any other person to whom this Statement is shown
or into whose hands it may come and any such responsibility or liability is
expressly disclaimed. This Statement may contain forward-looking
statements. Any forward-looking statement has been made by the directors in
good faith based on the information available to them up to the time of
approval of this Statement and should be treated with caution due to the
inherent uncertainties, including both economic and business risk factors,
underlying such forward-looking information. To the extent that this
Statement contains any statement dealing with any time after the date of its
preparation, such statement is merely predictive and speculative as it relates
to events and circumstances which are yet to occur and therefore the facts
stated and views expressed may change. Tribal undertakes no obligation to
update these forward-looking statements.
Chairman's statement
I am pleased to report another year of significant progress at Tribal. We are
successfully delivering on our transition to an "as-a-service" provider of
cloud focussed software and solutions to the global education market, growing
our engagements with existing customers while generating significant new wins,
both in the UK and internationally. These successes are flowing through into
growth in our Annual Recurring Revenue (ARR) and provide the Board with
confidence to continue investment in our technology, people and operations to
ensure we are well-positioned to capitalise on the continuing evolution of the
global education market.
During the year, we launched our new five-year objectives for the business,
targeting a doubling of ARR, both organically and through select strategic
acquisitions, an improving EBITDA margin, delivery of all major Edge modules,
entry into new geographies through the Edge offering, and significant
expansion of the customer base. We have seen good progress in the year against
these objectives and with an increasing frequency of new business wins.
During the year Tribal acquired two businesses; Semestry Ltd and Eveoh's "My
Timetable" for a combined consideration of £6.8m. These businesses complement
our existing portfolio and form part of our Edge offering to the Higher
Education market.
We continue to invest in the development of Edge and have made positive
progress on the Admissions module for which we have four universities taking
the product as early adopters.
Financial performance
Tribal has seen another year of considerable progress against our key
performance indicators.
Closing ARR committed as at 31 December 2021 increased by 7% to a record high
of £50.3m (2020: £47.0m constant currency, £47.5m reported), revenue for
the year increased by 10.6% to £81.1m (2020: £73.4m constant currency,
£73.0m reported) and Adjusted EBITDA increased by 9.2% to £16.6m (2020:
£15.2m constant currency, £14.9m reported). Our Cloud and Edge products
delivered substantial organic revenue growth of 31% and 50% respectively.
Committed sales order book as at 31 December 2021 amounted to £172.5m (2020:
£142.6m constant currency, £144.4m reported). Diluted earnings per share for
the year grew to 3.2 pence per share compared to 3.1 pence per share in 2020.
Tribal's Statutory Profit before tax remained stable at £8.6m (2020: £8.5m
reported).
The Group's cash balance remained strong with net cash of £5.9m at year end
(2020: £9.5m) after net capitalised development costs of £10.2m, the net
payment of £6.4m on acquisitions and deferred consideration payments and
£2.5m of dividends paid, with no debt drawn at the end of the year.
Dividend
Tribal remains committed to a continuing dividend policy and the Board is
pleased to propose a final dividend in respect of the year ended 31 December
2021 of 1.3p which is expected to be paid at the end of July 2022.
Environment, Social and Governance (ESG)
Tribal is committed to activities that benefit the environment and society,
underpinned by good governance. As part of our journey to continually improve
our approach and performance in these areas, we formed an ESG Committee in
2020, chaired by Non-Executive Director, Nigel Halkes. The ESG Committee
identified six priority focus areas for the Group for 2021, each with key
initiatives and objectives for the year and appropriate ownership from across
our Executive Management Team. While we are still at the early stages of the
implementation of many of these programmes, we are committed to their
sustained delivery and will continue to build on our activities in 2022. You
can read a full report on these priority areas within the ESG section of the
Annual Report.
People
The progress we have made is a tribute to our employees' talent, expertise and
belief in our proposition, and this year, this has never been more true. Their
energy and commitment to providing world-class education software and services
throughout the pandemic has not wavered and I would like to thank all our
staff across the globe for their hard work. As we move into what we hope to be
a post-pandemic environment our priority remains on ensuring the wellbeing of
each employee and we will continue to invest in our people, providing them
with the tools, training and support to allow them to realise their potential.
Janet Tomlinson, Head of Tribal Education Services retired on 9 December 2021,
we would like to thank her for her many years of excellent service, and we
wish her well for the future.
Ukraine
The Directors have considered the impact of the ongoing situation in Ukraine
and have concluded there is currently minimal risk to business continuity as
we do not have a presence in the region. The group continues to support all
colleagues who are directly impacted by the conflict and will monitor the
situation closely.
Outlook
The market appetite for our leading solutions continues to be positive, and
the growing portfolio of Tribal products from our core student management
systems, to Tribal:Cloud and Edge is resonating well with both our existing
and new customers. We are focused on delivering our newly launched 5 year
plan, however, as previously reported, over the next two years we are likely
to experience lower levels of growth as historic contracts draw to a close but
we continue to see opportunities to drive ARR growth.
Notwithstanding this, with a growing number of new customer wins, contract
extensions, cross sell opportunities and a clear strategy and record sales
pipeline, the Board believes that the opportunities for Tribal are significant
and we view the future positively.
Richard Last
Chairman
Chief Executive's review
2021 was a year of positive strategic and financial progress, in which we
delivered against key milestones in our transition to a SaaS business, while
maintaining our market leading position in our core geographic markets and
supporting our growing customer base.
With an increasing rate of new wins and customer extensions, we are starting
to see the benefits of the investments we have made in the evolution and
expansion of our offering, positioning Tribal at the forefront of the evolving
education industry and providing for an exciting future.
Our areas of focus in 2021 were to grow ARR, secure more Tribal:Cloud
contracts, migrate more customers to our cloud services, and launch Edge
Admissions - all of which have been achieved. We also continued to benefit
from strong customer retention and cash generation, providing us with a robust
financial platform from which to invest in capturing our expanding
opportunity.
Throughout the year we invested in our people and operations to deliver on
Tribal's growing customer footprint across the globe; we have evolved our
operational model to ensure service levels are maintained and scalability for
long term growth.
This positive progress and the move of the education sector towards the SaaS
delivery model, means we have entered the new year with a record sales
pipeline, reflecting the continuing investment by the education sector and our
expanded offering.
Market drivers
The higher education market continues to evolve as anticipated and the drivers
of this evolution, heightened by the pandemic, remain the same, providing a
positive backdrop for our evolving product offering.
The education sector is now becoming increasingly competitive, efficient and
adaptable, with organisations needing to compete for students. The
expectations of students are rising, particularly in the areas of wellbeing
and mental health. Institutions increasingly need to consider elements such as
blended learning and the remote delivery of services. This emergence of online
and collaborative learning has led to the significant expansion of the higher
education market in recent years, which has ultimately provided greater
opportunities and offerings to students worldwide. As such, it is now
necessary for a business to introduce its innovative solutions to market at
speed in order to capture the expanding market opportunity.
The Tribal:Cloud and Edge family of modules specifically address each of these
issues, enabling education institutions to focus less on maintaining legacy IT
hardware and software, and more time focusing on the recruitment, engagement
and success of their students.
2021 has demonstrated there is a clear market appetite for our solutions and
the full proposition of Tribal products is resonating well with our customers.
Through the investment in the expansion of our offering, Tribal is well placed
to meet these evolving market needs and grow market share globally.
Strategy
Our objective is to provide education technology solutions to customers
globally, as-a-service. Transitioning to the delivery of a broader set of
solutions, via the 'as-a-service' model will increase our addressable market
across a greater number of geographies, drive revenue and margin expansion,
while enabling universities to focus on the delivery of exceptional education
to their students.
As a demonstration of our ambition, in 2021, we launched our new five-year
objectives:
1. Double the Group's ARR (2020: £47.5m) which includes
1-2 bolt-on acquisitions and key partnerships per year and revenues from new
target addressable markets, including 15% ARR CAGR over the period,
2. Improve EBITDA margin to low-30% (2020: 20.4%) with
increased scale efficiencies and SaaS margins in line with general industry
norms,
3. Deliver all major modules of Edge and conclude
elevated Product Development investment,
4. Double the number of Higher Education markets,
aiming to achieve 10% of revenue from new global territories; and
5. Continue to build customer position by doubling the number
of Higher Education customers and share of wallet; with all customers on
Tribal:Cloud and/ or adopting Edge.
To achieve these ambitious targets, our strategy has four growth pillars:
Innovating with our existing products; delivering our existing products
"as-a-service" in the Tribal Cloud; developing a next-generation, modular
cloud-native product set, Edge; and complementing organic growth with
selective M&A.
We have made positive progress in each of these areas, including the winning
of further SITS:Vision customers, our existing market leading software, the
successful transition of an additional two flagship customers into the
Tribal:Cloud, the marketing launch of Admissions, including the winning of
four Admissions customers, and the successful acquisition of two additional
cloud modules to add to our Edge product family.
The growth in ARR was 7% in the year. We are pleased with these positive signs
of potential 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.
Geographic expansion
We have leading market shares in the geographies in which we operate. In the
UK over 65% of all Higher Education institutions use our student management
systems, in Australia we support one-third of universities, and in New Zealand
three of the eight universities. In Southeast Asia, we support the largest
public and the largest private universities in Malaysia, and this year we have
expanded further with new customer wins including Middlesex University in
Dubai and Universiteit Leiden in The Netherlands.
We will continue to focus on growth in these geographies and we anticipate
Edge will allow us to expand further into new geographies once the modules are
released, due to its more easily digestible modular approach.
Semestry and Eveoh Acquisitions
We were pleased to complete two small acquisitions in the year.
In April 2021 we acquired Semestry, a supplier of cloud based scheduling
software to the higher education market, expanding the Group's Edge family of
products and taking the business into new geographies. Semestry services over
20 customers across five countries in Europe. Since acquisition, Semestry has
secured 8 new customers, growing Semestry ARR by 37%, representing an
acceleration of its historic growth rate.
The module was further enhanced in November with the acquisition of Eveoh's
"My Timetable". The platform allows institutions to publish personalised
student and staff timetables, via the web or their mobile device and is
currently in use at more than forty institutions in Europe and the UK.
The products can be sold across Tribal's extensive customer base, as
universities seek to increase engagement with their students and offer more
personalised experiences.
We continue to explore investment opportunities to scale the business and
enter into new geographies and expand our Edge family.
2021 Operational Review
People
Tribal relies on the talent and expertise of its people. Our success as a
growing international business is a tribute to our people's energy, commitment
and know-how. Their depth of domain knowledge in the sector over three decades
is unrivalled and we have an innate understanding of the education market,
developed through working in partnership with our customers and operating in
senior roles for leading education institutions. We continue to invest in our
people, providing them with the tools and training to support and allow them
to realise their potential, with clear alignment to our Group objectives.
The key initiatives enabling our people to develop their true potential
includes, our bespoke competency framework, which underpins a range of Career
Pathways. Through our framework, we aim to help each employee understand how
they can develop in their current role as well as plan for their future growth
and development.
We also run remote business development programmes focusing on the expansion
of our Manager Academy. The Academy broadens the skills and commercial
awareness of our leaders and future leaders and supports our Digital Learning
strategy.
As well as focusing on the performance, development and success of our
existing people, a key part of our people strategy involves investing in early
talent programmes across the business; bringing in new recruits who learn and
work in some of our key job families including Product Development and
Customer Support. This included between 25 and 30 active or former apprentices
who have secured formal qualifications whilst at the same time establishing a
solid foundation of practical work experience from which to build their career
with us and contribute to our ongoing success.
Communication with our people and maintaining wellbeing is crucial, especially
as we continue to feel the impact of the pandemic. We have focused on
supporting all aspects of our people's health and wellbeing providing ongoing
and additional support through our Employee Assistance Programme.
We have now reopened our offices and following consultation with our
employees, the teams are embracing the new form of hybrid working.
Student Information Systems (SIS)
Student Information Systems, our core segment which targets the further and
higher education sectors through our range of software offerings, delivered a
positive performance in the year, growing customer numbers, revenue, and
profits, and has entered the new financial year with a record pipeline of
opportunities. We continue to win new customers for our existing on premise
offering, transition existing customers into our cloud offerings, and sign the
first contracts for our Edge offerings.
Key new customers include University of West London and Southampton Solent
University in the UK, and internationally: Te Whare Wānanga o Awanuiārangi
in New Zealand, Middlesex University in Dubai and Universiteit Leiden in The
Netherlands.
We were delighted to close a number of significant sales to existing
customers, transitioning their existing on-premise Tribal SITS software,
SITS:Vision, into the Tribal:Cloud, a managed cloud environment. These
include five-year contracts with the University College London for £3m
and The University of Warwick for £3.5m. We continue to have positive
conversations across our extensive customer base as they explore the benefits
a move to the cloud can bring their organisation and are confident of
continued uptake.
Our largest SITS deal to date, worth approximately £17m over eight years,
with Nanyang Technology University launched in early 2021 and project
implementation will continue to progress throughout 2022. The partnership
encompassing SITS:Vision, Tribal:Cloud and Edge products, demonstrates the
relevance of Tribal's broad suite of offerings.
We also completed the first sales of our newly developed Cloud-based Edge
Admissions module, to Aberystwyth University and the University for the
Creative Arts. The solution can be integrated with the SITS Student Management
System, or any other SMS, providing the Group with a significant addressable
market. Sales of the Dynamics based Edge Student Recruitment and Student
Welfare modules have developed and have a growing pipeline.
In December, we concluded contract renewal discussions with our Australian
university customers on the Callista Software platform. Of the eleven
universities, nine have elected to renew. The five-year agreements provide an
evolutionary path towards the Edge, Cloud delivered SaaS ecosystem and provide
a strong foundation of long-term visible revenue, with £5.8m ARR, in the
Australian market.
As the Group transitions to a SaaS delivery model, we have introduced some
additional metrics to measure progress towards our key objectives.
£'m 2021 2020 Change %
Constant currency
Annual Recurring Revenue (ARR)(4) 50.3 47.0 7%
Monthly Recurring Revenue (MRR)(1) 4.3k 3.7k 16%
Gross Revenue Retention (GRR)(2) 93% 92% 1%
Net Revenue Retention (NRR)(3) 106% 103% 3%
(1. Calculated as the monthly recurring revenue as at 31 December)
(2. Calculated as a percentage of recurring revenue retained from
existing customers at 1 January including contract expiry,
cancellations or downgrades in the year)
(3. 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. ARR is a forward looking metric representing committed revenues
as at 31 December 2021 and includes Support & Maintenance fees paid on all
software, License sold on a subscription basis, Cloud services and Edge
sales.)
MRR has increased 16% to £4.3k (2020: £3.7k). 20pp of the increase is driven
by the acquisitions of Semestry and Eveoh's "My Timetable", the remaining
increase is organic growth from significant new wins including Nanyang
Technological University, Te Whare Wanaga o Awanuiarangi, Solent University
and University of West London.
GRR has increased 1pp to 93% (2020: 92%). In 2021 and 2020, a third of the
movement relates to churn on SchoolEdge customers. We have also seen a decline
in some of our other services as customers move away from our bespoke
products.
NRR increased by 3pp to 106% (2020: 103%). This growth is predominantly due to
cloud migrations sold to Kings College London, University of Warwick,
University College London and Universiti Teknologi Petronas and Dynamics sales
made to 8 existing customers. Annual inflationary increases applied to
customer renewals also contribute to NRR growth.
Education Services (ES)
Education Services trading performance remained stable throughout the year,
despite the impact of the ongoing pandemic. The team continued remote delivery
of the key assurances, training, and inspections in the UK, US and New
Zealand. The business has a good pipeline of opportunities for the new
financial year which will enable Education Services to deliver new revenue in
2022.
In the UK, the main contracts continued to operate at consistent levels. Work
on the National Professional Qualifications (NPQ) moderations, Advanced
Mathematics Support Programme (AMSP) and National Centre for the Excellence of
Teaching Mathematics (NCETM), professional development and training all
continued to be successfully delivered remotely with the gradual return of
some face-to-face events in the second half of the year. These contracts are
subject to retender in 2022.
School closures in the US continued to hamper business development
opportunities. The New York State Education Department (NYSED) contract had a
solid performance as we worked closely with NYSED to ensure continued delivery
despite the restrictions from the pandemic.
In the Middle East, the ADEK contract resumed at a reduced level in the final
quarter of 2021 compared to three months full delivery in early 2020. No
further revenues are expected from the ADEK contract as this has now come to
an end. The decrease in ADEK revenues were offset with smaller contract wins
in Bahrain, however due to the flexible cost model and variable cost base our
margin was somewhat protected.
2022 Areas of focus
We anticipate 2022 will be a pivotal year for Tribal, as we see momentum
building in our pipeline and across our industry as it moves towards SaaS and
cloud offerings. We will focus on transitioning more of our existing customers
to the Tribal:Cloud, the sale of further Edge modules and the delivery of our
first early adopter Admissions customers. We will also continue to develop new
customer relationships globally and look for complementary partnerships and
acquisitions, to accelerate our expansion.
We are transitioning to a new target operating model which will underpin the
structures and capabilities required of a SaaS business. This includes the
introduction of two new executive roles focusing on Customer Success and
Service Delivery. The new target operating model will be supported by the
implementation of new SaaS financial systems and processes.
2022 outlook
We have a strong sales pipeline as we enter the current financial year, giving
us the confidence to continue to invest in our product expansion strategy to
achieve our long-term financial goals. The Group has traded in line with Board
expectations since the start of the new financial year and is seeing continued
positive sales momentum. We expect continuing revenue growth in our strategic
products with improving margins over time as we gain scale, but this will be
offset in the next couple of years by declining revenues from our higher
margin, historic Australian government contracts and non-core schools systems
contracts. While cognisant of inflationary cost pressures, the Board remains
confident in delivering results for 2022 in line with current expectations.
We believe the education market globally is becoming more attuned to the
benefits of SaaS and cloud offerings and presents a supportive market
backdrop, as we release new offerings to the market and increase our sales and
marketing activities.
The Group remains focused on its key strategic priorities during 2022 and we
remain confident in our ambition and ability to deliver on our growth
strategy.
Mark Pickett
Chief Executive Officer
Financial review
Results
£m 2021 Constant Currency 2020(3) Change constant currency Change constant currency %
2020
Reported
Revenue 81.1 73.0 73.4 7.7 10.6%
Student Information Systems 67.3 59.4 60.0 7.3 12.1%
Education Services 13.8 13.5 13.4 0.4 3.5%
Gross Profit 41.8 38.6 38.9 2.9 7.4%
Gross Profit Margin 51.5% 53.0% 53.1% (1.5)pp
Adjusted Operating Profit (EBITDA) (1, 2) 25.8 24.5 24.8 4.0%
(Before Central Overheads) 1.0
Student Information Systems 23.6 22.3 22.9 0.7 3.1%
Education Services 2.2 2.1 1.9 0.3 15.8%
Central Overheads (4) (9.2) (8.8) (8.8) (0.4) (4.0)%
Net foreign exchange gain/(losses) 0.1 (0.8) (0.8) 0.9 112.5%
Adjusted Operating Profit (EBITDA) (1, 2) 16.6 14.9 15.2 1.4 9.2%
Adjusted Operating Margin (EBITDA) (1, 2) 20.5% 20.4% 20.8% (0.3)pp
Statutory Profit before Tax 8.6 8.5 8.5 0.1 0.7%
Statutory Profit after Tax 7.0 6.4 6.4 0.6 8.6%
Annual Recurring Revenue 50.3 47.5 47.0 3.3 7.0%
(1. Adjusted Operating Profit and Adjusted Operating Margin are in respect
of continuing operations and excludes charges reported in "Other items" of
£5.4m (2020: £3.0m), refer to note 6 in the Financial Statements.)
(2. EBITDA is calculated by taking the Adjusted Operating Profit after the
allocation of Central Overheads and excludes Interest, Tax, Depreciation and
Amortisation. )
(3. 2020 results adjusted are updated for constant currency - the Group
has applied 2021 foreign exchange rates to 2020 results to present a constant
currency basis, when applied to 2020 results there is an increase in Revenue
of £0.4m, an increase to Adjusted Operating Profit (before Central Overheads)
of £0.3m and Adjusted Operating Profit of £0.3m.)
(4. Central Overheads are made up of costs that are not directly
attributable to either Student Information Systems or Education Services.)
The financial review presents the reported results for 2021 and 2020, and the
2020 results restated to "constant currency" using 2021 rates to exclude
foreign currency impact. The change percentages and comparatives are shown on
the 2020 constant currency numbers. The presentation disclosed as "constant
currency" is an alternative performance measure and not a statutory reporting
measure prepared in line with International Financial Reporting Standards
(IFRS) and disclosed as "reported". The Group has chosen to present its
results on a constant currency basis to reflect the year-on-year performance
and account for the impact of foreign exchange movements in the year.
Revenue
Revenue in the year increased 10.6% to £81.1m (2020: £73.4m constant
currency, adjusted for the impact of foreign exchange of £0.4m; £73.0m as
reported). On a like for like basis, excluding Semestry revenue of £1.2m
(2020: £nil), the increase in total revenue was 8.9%.
The Group's Student Information Systems segment performed well, increasing by
12.1% to £67.3m (2020: £60.0m constant currency; £59.4m reported). 10.1pp
of the increase was driven by a strong performance due to new customer wins
across a range of offerings, the remaining 2.0pp was attributable to Semestry
revenue.
Education Services revenue increased by 3.5% to £13.8m (2020: £13.4m
constant currency; £13.5m reported) as a result of projects gaining momentum
as the impact of the pandemic eased.
Approximately 40% of Tribal's revenue in the year was generated outside the UK
and is therefore subject to foreign exchange movement.
Gross Profit has increased 7.4% to £41.8m (2020: £38.9m constant currency,
£38.6m reported) whilst the margin percentage has decreased to 51.5% (2020:
53.1% constant currency, 53.0% reported). The margin percentage decrease is
due to an increase in sales of our Edge products which have a lower initial
margin whilst we build scale and invest in sales teams and due to low margins
from the Nanyang Technological University (NTU) contract implementation phase.
Adjusted Operating Profit (EBITDA)
The Adjusted Operating Profit (EBITDA) increased £1.4m to £16.6m (2020:
£15.2m constant currency; £14.9m reported). The Adjusted Operating Margin
(EBITDA) decreased to 20.5% (2020: 20.8% constant currency; 20.4% reported).
Central Overheads, representing costs in HR, IT, Finance, Marketing and
Management that aren't directly attributable to lines of business increased by
£0.4m to £9.2m (2020: £8.8m constant currency; £8.8m reported). The
increase was primarily due to additional property costs as offices gradually
re-opened in 2021 following the easing of pandemic restrictions and increased
global insurance costs in line with market trends. Margins will continue to be
under pressure next year due to the impact of inflation on salaries and global
insurance is expected to continue to rise in 2022.
We continue to focus on reducing overhead costs and have continued to grow our
Manila office in the Philippines to support central back office functions,
product development, ebs and SchoolEdge product support and other business
services. The Group continues to identify cost saving measures and effectively
manage its cost base.
Statutory Profit after Tax
The Statutory Profit after tax for the year increased by 8.6% to £7.0m (2020:
£6.4m reported). Excluding the costs of the Veritas Programme, a one off
project, in year of £1.7m, the underlying profit increase was 35.9%. The tax
charge reduced to £1.6m (2020: £2.1m reported) due to the release of
uncertain tax provisions previously required, the effective tax rate before
these releases was 19% (2020: 25%).
Segmental performance
The Group provides software and non-software related services to the
international educational market. These services are managed across two
divisions, Software Information Systems (SIS) and Education Services.
As the Group's explicit strategy is to transition to a pure cloud-based SaaS
business, we have enhanced our segmental revenue disclosure to highlight our
Edge and Cloud services. In addition, we now differentiate "Other software and
services" which will continue to be supported but where further investment
will be limited and mainly consists of historic Australian Government
contracts with bespoke software and services.
Student Information Systems (SIS)
£m 2021 Constant Currency 2020 Change constant currency %
Change constant currency
2020
Reported
Foundation Support & Maintenance 26.0 25.2 25.5 0.5 1.9%
Foundation Software 5.4 4.4 4.5 0.9 21.3%
Cloud Services 6.8 5.2 5.2 1.6 31.5%
Edge 3.4 1.7 1.7 1.7 101.9%
Professional Services 12.7 9.2 9.3 3.4 36.8%
Core Revenue 54.2 45.7 46.0 8.2 17.8%
Other Software & Services 13.1 13.7 14.0 (0.9) (6.3)%
Total Revenue 67.3 59.4 60.0 7.3 12.2%
Adjusted Operating Profit 23.6 22.3 22.9 0.7 3.1%
Adjusted Operating Margin 35.0% 37.6% 38.1% (3.1)pp
Student Information Systems focusses on software related solutions to the
Higher Education, Further Education, Colleges and Employers (referred to in
Australia as VET), and Schools sectors across the main geographic markets
being the UK, Australia, New Zealand, Singapore, Malaysia, Netherlands and
Canada.
SIS revenue increased by 12.2% to £67.3m (2020: £60.0m constant currency;
£59.4m reported). We note that 2021 and 2020 reported numbers now include
revenue and costs of Asset Management, Software Solutions and Information
Managed Services, which were previously in Education Services, as it more
closely aligns to the Software segment, of which revenue was 2021:£2.7m,
(2020:£2.6m constant currency and reported) and associated operating margin
was 2021: £1.6m, (2020: £1.3m constant currency and reported). Revenue
generated from our core product offerings increased 17.8% to £54.2m (2020:
£46.0m constant currency, £45.7m reported) however revenue from our other
software and services declined 6.3% to £13.1m (2020: £14.0m constant
currency, £13.7m reported) as discussed below.
The Group secured multiple new customer wins throughout the year across
Tribal's range of software, reflecting the evolving product suite, technology
leadership and increasing activity levels within the education sector
globally.
Foundation Support & Maintenance fees in the period on our Foundation
products (SITS, Callista, ebs, Maytas, K2 and SID) increased 1.9% in the
period reflecting strong retention rates in our customer base and new
customers in the year.
Foundation Software includes the sale of new perpetual and subscription
software licenses on our Foundation products. Revenue in the period increased
21.3% to £5.4m (2020: £4.5m constant currency, £4.4m reported). Under
IFRS15 license revenue is recognised as the software is implemented on a
percentage complete basis, resulting in the revenue from larger
implementations taking more than two years to recognise. Key new customers
include University of West London and Southampton Solent University in the UK,
and internationally: Te Whare Wānanga o Awanuiārangi in New Zealand,
Middlesex University in Dubai and Universiteit Leiden in the Netherlands.
Cloud Services cover the provision of Tribal:Cloud fully managed public cloud
services and hosting services supporting Tribal products, either on-premise in
a private cloud, or more increasingly in a public cloud.
Cloud revenues have continued to increase and are up 31.5% to £6.8m (2020:
£5.2m constant currency and reported). The main cloud hosting services
revenue increased as the Group closed a number of significant sales to
existing customers, transitioning their existing on-premise Tribal SITS
software, SITS:Vision, into the Tribal:Cloud, a managed environment. Notably
five-year contracts with University College London and The University of
Warwick which demonstrates interest in moving to the public cloud from
customers across all markets remains high. We continue to have positive
conversations across our extensive customer base as they explore the benefits
a move to the cloud can bring to their organisation and are confident of
continued uptake.
Edge revenues saw a significant increase of 102% to £3.4m (2020: £1.7m
constant currency, £1.7m reported). The main contribution to the increase in
revenue was generated from the successful acquisition of Semestry and Eveoh's
"My Timetable", contributing 50pp of the increase in total Edge revenue. In
addition, Dynamics had a strong year closing eleven new deals in the UK and
three in APAC, including Te Whare Wānanga o Awanuiārangi in New Zealand,
Brunel University, and the University of St Andrews in the UK, highlighting
the relevance of Edge products globally. The Group also completed the first
sales of its newly developed Cloud-based Edge Admissions module, including
Aberystwyth University and the University for the Creative Arts. Admissions is
the first significant module on the Edge platform. The solution can be
integrated with the SITS Student Management System, or any other SMS,
providing the Group with a significant addressable market.
Professional Services includes the implementation of all our software products
at customer sites, typically working alongside customer teams. Implementation
projects vary in length and complexity, ranging from a small number of days to
more than two years for complex projects. Revenues are typically based on a
day rate fee, although some contracts are performed under a fixed fee for
defined implementation scope. Professional services have continued to be
delivered remotely and the team has been bolstered by the Global Delivery
Centre (GDC) in Kuala Lumpur, Malaysia.
Revenue increased by 36.8% to £12.7m (2020: £9.3m constant currency, £9.2m
reported) primarily as result the NTU contract in Singapore which was won in
late December 2020.
Other Software & Services declined 6.3% to £13.1m (2020: £14.0m constant
currency, £13.7m reported). These revenues include historic Australian
government contracts, SchoolEdge, Data Managed Services, Software Solutions
and Information Managed Services. In the year increased revenues from
Software Solutions offset a decline in SchoolEdge revenues. While these
products will continue to be supported, they have limited investment plans and
revenues will reduce over time.
Adjusted Operating Profit increased by 3.1% to £23.6m (2020: £22.9m constant
currency; £22.3m reported) and Adjusted Operating Margin decreased to 35.0%
(2020: 38.1% constant currency; 37.6% reported). SIS margin reduced due to a
product mix impact, with increased Edge sales which have a lower initial
margin whilst we build scale and invest in sales teams and low margins from
the NTU contract implementation phase due to its size and complexity.
Annual Recurring Revenue (ARR)
£m 2021 2020 Constant
Reported Currency Change Change %
2020
Foundation Support & Maintenance 24.7 25.9 25.7 (1.0) (3.9)%
Foundation Subscription 3.8 2.5 2.5 1.3 53.8%
Cloud Services 8.2 6.6 6.6 1.6 24.1%
Edge 4.5 1.9 1.8 2.6 138.9%
Core product ARR 41.2 36.9 36.7 4.5 12.4%
Other Software & Services 9.1 10.6 10.3 (1.2) (12.0)%
Total ARR 50.3 47.5 47.0 3.3 7.0%
ARR is a key forward looking financial metric of the Group and is an area of
strategic focus. 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 7% to £50.3m (2020: £47.0m constant currency, £47.5m
reported). 4% of the growth is organic and the remaining 3% of the growth is
due to the successful acquisition of Semestry and Eveoh's "My Timetable".
The 4% organic revenue growth is driven by 9pp of new software sales and the
successful migration of key customers to the Tribal: Cloud, offset by a 5pp
decrease which is largely attributable to the loss of two Callista customers
and reduction in historic Government contracts.
In December 2021, we concluded contract renewal discussions with our eleven
Australian university customers on the Callista Software platform, of which
nine have elected to renew. The five-year agreements provide a pathway to
integrate the established Callista software with Edge. While this represents a
£1.0m drop in ARR, these multi-year renewals provide a strong base of
long-term committed revenue.
Education Services (ES)
£m 2021 Constant Currency 2020 Change constant currency Change constant currency %
2020
Reported
School Inspections & Related Services 11.1 11.4 11.2 (0.1) (1.1)%
I-graduate - Surveys & Data Analytics 2.7 2.1 2.2 0.5 27.4%
Total Revenue 13.8 13.5 13.4 0.4 3.5%
Adjusted Operating Profit 2.2 2.1 1.9 0.3 15.8%
Adjusted Operating Margin 16.3% 15.7% 14.5% 1.7% 170bps
Education Services (ES) provides non-software related solutions globally
across the same market sectors. The core offerings are inspection and review
services which support the assessment of educational delivery, performance
benchmarking, student surveys, and data analytics.
Education Services revenue increased by 3.5% to £13.8m (2020: £13.4m
constant currency; £13.5m reported).
The revenue from School Inspections & Related Services decreased by 1.1%
to £11.1m (2020: £11.2m constant currency; £11.4m reported).
In the UK, the main contracts continued to operate at consistent levels
largely delivered remotely. Revenue from the National Professional
Qualifications (NPQ) contract was somewhat reduced in 2021 because of the
phasing of the contract being weighted more toward 2020, this was offset by
the increase in National Centre for the Excellence of Teaching Mathematics
(NCETM) revenue because of the recovery from Covid-19 allowing face-to-face
events to resume in 2021.
The New York State Education Department (NYSED) contract had a solid
performance as we worked closely with the NYSED to ensure activity continued
over the summer in 2021 ensuring some of the contract value lost due to
Covid-19 in 2020 was recovered in year. The Performance Review Program for
Initial License (PRPIL) picked up in the year with a significant increase in
licenses sold in 2021 compared to 2020 as a result of schools re-opening in
the US.
In the Middle East, the ADEK contract resumed at a reduced level in the final
quarter of 2021 compared to three months full delivery in early 2020. No
further revenues are expected from the ADEK contract. The decrease in ADEK
revenues were offset by smaller one-off contract wins in Bahrain however due
to the flexible cost model and variable cost base our margin was somewhat
protected.
The revenue for Surveys & Data Analytics increased by 27.4% to £2.7m
(2020: £2.1m constant currency; £2.1m reported). The volume of benchmarking
projects recovered slightly from the impact of Covid-19 as the International
Student Barometer for the Southern Hemisphere, delayed from 2020 was delivered
in 2021, albeit with lower participant numbers than normal, as a direct impact
of reduced numbers of international students in the Southern Hemisphere.
The Adjusted Operating Profit in Education Services increased by 15.8% to
£2.2m (2020: £1.9m constant currency; £2.1m reported), the Adjusted
Operating Margin also increased 1.7pp to 16.3% (2020: 14.5% constant currency;
15.7% reported), this increase is largely due to the variable cost model it
operates and the mix of higher margin contracts offsetting the impact of the
lower margin ADEK contract which was completed at the end of 2021.
Mapping of Revenue Streams
The table below highlights how previously reported revenue streams have been
updated to show more detail and moved to provide clarity. Foundation products
include SITS, Callista, ebs, Maytas and SID. Edge products include Admissions,
Submissions, Engage, Dynamics and Semestry. Bespoke Software relates to
historic Australian government contracts.
Segment Previous reported revenue streams Sub Sections Changes
Student Information Systems (SIS) License & Development Fees Foundation Software Shown as new separate line
Edge Shown as new separate line
Bespoke Software and SchoolEdge Moved to Other Software & Services
Support & Maintenance Foundation Support and Maintenance Shown as new separate line
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Product Development
£m 2021 2020 Reported Change
Product Development 15.9 11.6 27%
Of which capitalised 10.2 6.8 33%
Edge 10.1 6.8 33%
Other Products 0.1 - 100%
Of which expensed 5.8 4.8 17%
Foundation Products 2.9 2.8 3%
Edge 2.2 1.3 40%
Other Products 0.7 0.6 -
Amortisation 0.9 1.2 (25%)
The Group spent £15.9m on Product Development, of which £10.1m was
capitalised in relation to Edge, including Dynamics and Semestry. (2020:
£11.6m spent, £6.8m capitalised, £4.8m expensed) and £0.1m (2020: £nil)
was capitalised in relation to E-Evidence, a new application for Education
Services to streamline inspections.
Our continued investment in Edge saw the marketing launch of Admissions in
July 2021 and the first sales began to come through. Capitalised Product
Development spend increased to £10.1m (2020: £6.8m) as the Edge development
team increased in size in the year. A review of the Group's capitalisation
to date has been undertaken resulting in £0.9m of pre-2021 capitalised costs
being expensed as we have clarity on our future Edge offering, increasing the
net P&L charge to £5.8m (2020: £4.8m). We continue to invest in our
Foundation products, adding new modules and additional functionality as well
as statutory updates, the costs of which are expensed.
We continued to deliver on our Edge strategy, which provides a compelling
vision to new and existing customers to embrace our next-generation,
best-of-breed, cloud native SIS solutions. As a cloud native SIS, Edge
provides a competitive differentiator in targeting and acquiring new
customers. In addition, it protects Tribal's customer base by providing the
most efficient, lowest cost route to achieve a comprehensive, integrated,
open-standards SIS which maximises the student experience and reduces the
technical complexity and IT cost for our customers.
Key Performance Indicators (KPIs)
£m 2021 2020 2020 Constant Currency
Reported Change constant currency Change constant currency %
Revenue 81.1 73.0 73.4 7.8 10.6%
- Student Information Systems 67.3 56.9 60.0 7.3 12.1%
- Education Services 13.8 16.1 13.4 0.5 3.5%
Adjusted Operating Profit (EBITDA)(1) 16.6 14.9 15.2 1.4 9.2%
Adjusted Operating Margin(1) 20.5% 20.4% 20.8% - (0.3)pp
Annual Recurring Revenue (ARR) 50.3 47.5 47.0 3.2 7%
Committed Income (Order Book) 172.5 144.4 142.6 29.8 20.9%
Operating Cash Conversion 104% 97% 97% - 7pp
Free Cash Flow(3) 5.4 5.4 5.4 - 0.2%
Staff Retention 86.9% 92.3% - - -
Revenue/Average Operational FTE(2) £100.1k £99.2k £99.8k £0.3k 0.3%
(1. Adjusted Operating Profit and Adjusted Operating Margin are in
respect of continuing operations and excludes charges reported in "Other
items" of £5.4m (2020: £3.0m), refer to note 6 in the Financial
Statements. EBITDA is calculated by taking the Adjusted Operating Profit
after the allocation of Central Overheads and excludes Interest, Tax,
Depreciation and Amortisation.)
(2. Revenue/Average Operational FTE is the average FTE for the year
excluding average FTE associated with capitalised Product Development. In 2021
126.1 FTE were capitalised (2020: 96.6))
(3. Comparative restated - refer to Free Cash Flow section below.)
The above Alternative Performance Measures (AMP) are not Statutory
Accounting Measures and are not intended as a substitute for statutory
measures. A reconciliation of Statutory Operating Profit and Adjusted
Operating Profit (EBITDA) has been provided in the financial statements.
Committed Income (Order Book)
The Committed Income (Order Book) relates to the total value of orders across
SIS and ES, which have been signed on or before, but not delivered by 31
December 2021. This represents the best estimate of business expected to be
delivered and recognised in future periods and includes 2 years of Support
& Maintenance revenue. At 31 December 2021 this increased to £172.5m
(2020: £144.4m reported). 76% of the increase relates to the 5-year contract
extension with nine universities within the Callista group in Australia. The
remainder of the increase is attributable to Semestry.
Operating cash conversion
Operating cash conversion is calculated as net cash from operating activities
before tax as a proportion of adjusted operating profit (EBITDA) excluding the
cash outflow of £1.7m on the Veritas programme. In 2021, operating cash
conversion was 104% (2020: 97% reported). In prior years' operating cash
conversion was calculated using EBITA rather than EBITDA, this has been
changed to align more closely with the most relevant profit measure. The
2020 comparison has been restated and excludes the one-off settlement of the
platform dispute payment of £8.1m as disclosed in 2020.
Free cash flow
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. Free cash flow in 2021 and
2020 was consistent at £5.4m, investment in product development increased
£3.1m however was offset with £3.0m proceeds on shares sold to satisfy
exercises of share-based payment schemes. In prior years' free cash flow was
calculated based on net cash from operating activities less capital
expenditure and less capitalised development costs (excluding acquired
intellectual property), the prior year comparative has been restated to
reflect the change in definition. In 2020, free cash flow excluded the one-off
settlement of the platform dispute of £8.1m.
Net of cash acquired, the Group paid £4.1m as initial consideration of
Semestry Limited, which included £0.8m of deferred consideration paid in
October 2021. The final deferred consideration relating to the Dynamics
acquisition of £1.3m was paid in March 2021.
Full Time Equivalent (FTE) and staff retention
2021 2020 Change
UK 651 587 64
Asia Pacific 317 282 35
Rest of world(1) 14 10 4
Full Time Equivalent (FTE) 982 879 103
(1. Including USA, Canada and Middle East)
Our overall workforce has increased by 11.7% to a total FTE of 982 from 879 at
31 December 2020. This is after adding an additional 35 heads following the
acquisition of Semestry Limited and Eveoh's "My Timetable" an increase of 15
FTE in our Global Delivery Centre in Malaysia and 30 additional FTE in our
Edge team as we accelerate delivery in line with the product development
roadmap.
On an operational FTE basis (excluding Capitalised Product Development), the
revenue per average operational FTE increased to £100.1k (2020: £99.8k
constant currency, £99.2k reported).
We note, though, that despite the extent of change within the Group, our staff
retention has only decreased to 87.0% (2020: 92.3%).
Items excluded from adjusted profit figures
The Group has adopted a policy of disclosing separately on the face of its
Group income statement the effect of any components of financial performance
considered by the Directors to be not directly related to the trading business
or regarded as exceptional, and for which separate disclosure would assist in
a better understanding of the financial performance achieved. A full
explanation of "Other Items" is included in note 6 of the Financial Statements
however the main items are as follows:
• Employee related share option charges:
In 2021, share based payment charges (including employer related taxes)
totalled £1.6m (2020: £1.8m), and are excluded from the Adjusted operating
profit. On 28 June 2021, 479,591 nil-cost share options were granted to Mark
Pickett (275,510) and Diane McIntyre (204,081) under the terms of the 2010
Long-Term Incentive Plan.
• Amortisation of IFRS 3 intangibles:
The amortisation charge in relation to IFRS 3 intangible assets of £0.9m
(2020: £1.0m) arose from separately identifiable assets recognised as part of
previous acquisitions. The assets principally relate to software and customer
relationships and are amortised over their expected life which was determined
in the year the acquisition took place.
• Internal Systems Transformation Programme "Veritas":
During 2020 and 2021 the Group has been running the Veritas Programme. This
includes an upgrade to its accounting system (Microsoft Dynamics D365) and is
part of a wider implementation of a new target operating model and processes
to provide greater operating efficiencies and reporting functionalities.
Following clarified guidance issued in relation to IAS 38, £1.7m of costs
that would have previously been capitalised do not meet the criteria to be
capitalised as a software intangible and have been expensed to the income
statement, of which £0.2m was incurred in 2020.
Net cash and cashflow
£m 2021 2020 Change
Net cash flow from operating activities 13.9 5.5 8.4
Net cash outflow from investing activities (16.9) (9.2) (7.7)
Net cash outflow from financing activities (0.4) (3.3) 2.9
Net (decrease)/increase in cash & cash equivalents (3.4) (7.0) (3.5)
Cash & cash equivalents at beginning of the year 9.5 16.5 (6.9)
Cash & cash equivalents at end of period 6.1 9.5 (3.4)
Less: Effect of foreign exchange rate changes (0.2) - (0.2)
Net cash & cash equivalents at end of period 5.9 9.5 (3.6)
Cash and cash equivalents at 31 December 2021 were £5.9m (2020: £9.5m).
Operating cash inflow for the period was £13.9m (2020: £5.5m). Excluding the
one-off settlement of £8.2m in 2020 the cash inflow would have been £13.7m
compared to £5.5m. The working capital movement in year increased to £1.4m,
(2020: £0.4m excluding the one-off settlement of £8.2m) due to strong
collection of trade debtors at year end.
Cash outflow from investing activities was £16.9m (2020: £9.2m). The
increased headcount has seen an increase in capital expenditure spend on
equipment costs (2021: £0.6m; 2020: £0.4m). Spend on product development
increased to £10.2m (2020: £7.1m) in line with the Group's product
investment programme. The Group made a payment of £2.1m for deferred
consideration (2020: £1.7m), of which £1.3m was the final earn-out from the
Dynamics acquisition, the remaining £0.8m was an initial earn out payment for
Semestry. The Group made an upfront net payment of £4.2m in respect of the
acquisition of Semestry Limited in April 2021.
Cash outflow from financing activities decreased to £0.4m (2020: 3.3m). The
Group paid a final dividend of 1.2p per share in the year with £2.5m returned
to shareholders. Bank loan arrangement fees and interest in the period
totalled £0.2m (2020: £0.2m). This is offset with the proceeds from the
issue of shares totalling £3.2m (2020: £0.2m) to satisfy exercises of
share-based payment schemes.
Funding arrangements
On 21 January 2020 the Group entered into a 3 year £10m multicurrency
revolving facility with HSBC with the option to extend by a further 2 years.
The first option to extend was approved by HSBC on 15 March 2021, the second
extension was approved by HSBC on 5 January 2022, effective 21 January 2022.
The facility was put in place to cover general corporate and working capital
requirements of the Group, as at 31 December 2021 none of the loan was
utilised. The Group had a £2m committed overdraft facility in the UK and a
AUD$2m committed overdraft facility in Australia, both facilities are
committed for a 12-month period ending August 2022 and October 2022
respectively. At 31 December 2021 both overdrafts were available but
undrawn. To offset the impact of movements in foreign exchange the Group
entered into three forward contracts to hedge the movement between AUD:GBP and
USD:GBP. These contracts expired in the year and generated a net change in
fair value of £0.2m (2020: £0.1m). The Group will continue to manage foreign
exchange exposure during 2022.
Shareholders returns and dividends
Tribal remains committed to a progressive dividend policy and the Board is
pleased to propose a final dividend in respect of the year ended 31 December
2021 of 1.3p, pending approval at the AGM on 4 May 2022. The anticipated
payment date is 28 July 2022, with an associated record date of 24 June 2022
and ex-dividend date of 23 June 2022. In July 2021 Tribal paid a final
dividend of 1.2p per share in recognition of the year ended 31 December 2020.
The Board intends to continue a progressive dividend policy, with a single
dividend payment each year following annual results.
Going concern
Tribal had cash and cash equivalents of £5.9m at the end of 2021 plus access
to an undrawn UK and Australian overdraft of £2.0m and $AUD 2.0m
respectively. 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 by entering a £10m facility to cover corporate merger
and acquisition activity and, if required, temporary working capital
requirements of the Group.
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 as it
enters 2022 which provides a good level of protection and certainty to the
business. While the Group's net current liability position has increased to
£20.9m from £16.2m in 2020, it is still being driven by the recognition of
IFRS 16 lease liabilities as current liabilities of £0.9m, the deferred
consideration recognised relating to the Semestry and Eveoh acquisitions of
£1.3m and net current contract liabilities of £17.4m relating to deferred
customer revenue recognised in accordance with IFRS 15.
The Group had a positive end to the year, closing several significant sales to
new and existing customers, and expanding its global footprint. The
financial impact of the pandemic and the changing expectations of students,
means that never has the need for cloud-based solutions for the Education
market been more pressing. The investments the Group continue to make position
Tribal at the forefront of this evolution in the industry.
In assessing the Company's going concern position and the Group's ability to
provide the necessary financial support, the Directors have considered all
relevant facts and latest forecasts and assessment of the risks faced by the
Group, considering reasonably possible changes in trading performance. 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 so remote it
does not have a significant impact on the Group's ability to continue as a
going concern. Accordingly, after making enquiries and receiving
confirmation of Group support as set out above, the directors have a
reasonable expectation that the Company has 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.
Taxation
The corporation tax on continuing operations was £2.2m (2020: £3.1m) and the
adjusted effective tax rate was 16% (2020: 27%). The decrease was due to the
release of uncertain tax provisions previously required, the effective tax
rate before these releases was 19% (2020: 25%).
As the Group continues to operate in international jurisdictions with a higher
rate of corporation tax, it is anticipated that the tax charges on profits in
the near- to medium-term future is likely to be higher than the standard rate
of UK corporation tax.
Share options and share capital
On 28 June 2021, 479,591 share options were granted to Mark Pickett (275,510)
and Diane McIntyre (204,081) as part of their ongoing remuneration.
The shares issued during the year in order to satisfy exercises of share-based
payment schemes totalled 4,676,064. The exercise cost of 5p, 79.6p and 80p per
share for the LTIP's resulted in cash receipts of £3.2m.
Earnings per share (EPS)
Adjusted basic earnings per share from continuing operations before other
costs and intangible asset impairment charges and amortisation, which reflects
the Group's underlying trading performance, increased by 39% to 5.7p (2020:
4.1p) due to the increase in adjusted profit before tax and the reduced tax
charge in the year.
Statutory basic earnings per share increased by 10% to 3.4p (2020: 3.1p) as a
result of the statutory profit increase in the year to £7.0m (2020: statutory
profit £6.4m).
Pension obligations
At 31 December 2021, the Group operated two defined benefit pension schemes
for the benefit of certain deferred employees of its subsidiaries in the UK
which are closed to new members. These schemes are administered by separate
funds that are legally separated from the Parent Company and relate to a
historic contract within Education Services. The trustees of the pension funds
are required by law to act in the interest of the funds and of all relevant
stakeholders in the schemes. The trustees of the pension funds are responsible
for the investment policy with regard to the assets of the funds.
Across the pension schemes, the combined deficit calculated under IAS19 at the
end of the year reduced 78% to £0.2m (2020: deficit of £0.9m), with gross
assets of £8.8m and gross liabilities of £9.0m (2020: £8.3m and £9.3m
respectively). Total actuarial gains/(losses) recognised in the consolidated
statement of comprehensive income are £0.7m (2020: (£0.4)m).
Diane McIntyre
Chief Financial Officer
Consolidated income statement
For the year ended 31 December 2021
Note Adjusted Other items (see Note 6) £'000 Year ended 31 December 2021 Adjusted Other items (see Note 6) £'000 Year ended 31 December 2020
£'000
£'000
Total Total
£'000 £'000
Continuing operations
Revenue 2 81,148 - 81,148 72,954 - 72,954
Cost of sales (39,335) - (39,335) (34,322) - (34,322)
Gross profit 41,813 - 41,813 38,632 - 38,632
Total administrative expenses (27,846) (5,079) (32,925) (26,831) (2,693) (29,524)
Operating profit/(loss) 13,967 (5,079) 8,888 11,801 (2,693) 9,108
Investment income 5 255 - 255 53 - 53
Finance costs 6 (230) (299) (529) (345) (307) (652)
Profit/(loss) before tax 13,992 (5,378) 8,614 11,509 (3,000) 8,509
Tax (charge)/credit 7 (2,240) 619 (1,621) (3,156) 1,005 (2,151)
Profit/(loss) attributable to 11,752 (4,759) 6,993 8,353 (1,995) 6,358
the owners of the parent
Earnings per share
Basic 9 5.7p (2.3)p 3.4p 4.1p (1.0)p 3.1p
Diluted 9 5.5p (2.3)p 3.2p 4.0p (0.9)p 3.1p
All activities are from continuing operations.
Consolidated statement of comprehensive income
For the year ended 31 December 2021
Note Year ended Year ended
31 December 2021
31 December 2020
£'000 £'000
Profit for the year 6,993 6,358
Other comprehensive (expense)/income:
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit pension schemes 728 (438)
Deferred tax on measurement of defined benefit pension schemes (131) 89
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations (917) 1,120
Other comprehensive (expense)/income for the year net of tax (320) 771
Total comprehensive income for the year attributable 6,673 7,129
to equity holders of the parent
Consolidated balance sheet
As at 31 December 2021
Note 2021 Restated*
£'000
2020
£'000
Non-current assets
Goodwill 10 28,582 26,661
Other intangible assets 11 35,947 24,376
Property, plant and equipment 962 1,069
Right-of-use assets 2,309 3,342
Net investment in lease - 174
Deferred tax assets 5,233 4,243
Contract assets 1,610 22
74,643 59,887
Current assets
Trade and other receivables 12 10,602 11,036
Net investment in lease - 46
Contract assets 6,178 3,951
Cash and cash equivalents 15 5,924 9,520
22,704 24,553
Total assets 97,347 84,440
Current liabilities
Trade and other payables 13 (6,081) (4,660)
Accruals (9,253) (7,480)
Contract liabilities (23,571) (23,078)
Current tax liabilities (2,456) (2,861)
Lease liabilities (878) (1,020)
Provisions (1,349) (1,657)
(43,588) (40,756)
Net current liabilities (20,884) (16,203)
Non-current liabilities
Other payables 13 (131) (40)
Deferred tax liabilities (2,953) (1,250)
Contract liabilities (1,864) (330)
Retirement benefit obligations (215) (958)
Lease liabilities (1,449) (2,551)
Provisions (807) (923)
(7,419) (6,052)
Total liabilities (51,007) (46,808)
Net assets 46,340 37,632
Equity
Share capital 10,519 10,285
Share premium 18,961 15,951
Other reserves 27,978 26,926
Accumulated losses (11,118) (15,530)
Total equity attributable to equity holders of the parent 46,340 37,632
* Refer to Annual Report notes 20 and 21
Consolidated statement of changes in equity
For the year ended 31 December 2021
Note Share Share premium Other reserves Accumulated losses Total
capital
£'000
£'000
£'000
equity
£'000
£'000
Balance as at 31 December 2019 9,979 15,539 26,029 (20,228) 31,319
Profit for the year - - - 6,358 6,358
Other comprehensive income for the year - - - 771 771
Total comprehensive income for the year - - - 7,129 7,129
Issue of equity share capital 239 - - - 239
Equity dividend paid - - - (2,254) (2,254)
Credit to equity for share-based payments - - 1,339 - 1,339
Share options exercised 67 412 (479) - -
Foreign exchange difference on share-based payments - - 37 - 37
Tax credit on credit to equity for share-based payments - - - 409 409
Contributions by and distributions to owners 306 412 897 (1,845) (230)
Balance at 31 December 2020 as previously reported 10,285 15,951 26,926 (14,944) 38,218
Impact of prior year adjustment* - - - (586) (586)
Balance at 31 December 2020 restated 10,285 15,951 26,926 (15,530) 37,632
Profit for the year - - - 6,993 6,993
Other comprehensive expense for the year - - - (320) (320)
Total comprehensive income for the year - - - 6,673 6,673
Issue of equity share capital 234 3,010 - - 3,244
Equity dividend paid - - - (2,505) (2,505)
Credit to equity for share-based payments - - 1,078 - 1,078
Foreign exchange difference on share-based payments - - (26) - (26)
Tax credit on credit to equity for share-based payments - - - 244 244
Contributions by and distributions to owners 234 3,010 1,052 (2,261) 2,035
At 31 December 2021 10,519 18,961 27,978 (11,118) 46,340
* Refer to Annual Report note 21
Consolidated cash flow statement
For the year ended 31 December 2021
Note Year ended Restated*
31 December 2021
Year ended
£'000
31 December 2020
£'000
Net cash from operating activities 15 13,889 5,461
Investing activities
Interest received - 6
Purchases of property, plant and equipment (563) (356)
Expenditure on intangible assets (10,224) (7,129)
Payment of deferred consideration for acquisitions (2,180) (1,732)
Acquisition of investments in subsidiaries - cash consideration (4,512) -
Acquisition of investments in subsidiaries - cash acquired 317 -
Net gain on forward contracts 249 41
Net cash outflow from investing activities (16,913) (9,170)
Financing activities
Interest paid (165) (259)
Loan arrangement fees (45) (65)
Loan drawdown 15,000 10,000
Loan repayment (15,000) (10,000)
Proceeds on issue of shares 3,244 239
Payment of lease liabilities (987) (980)
Proceeds from sub-leases 52 52
Equity dividend paid (2,505) (2,254)
Net cash used in financing activities (406) (3,267)
Net decrease in cash and cash equivalents (3,430) (6,976)
Cash and cash equivalents at beginning of year 9,520 16,463
Effect of foreign exchange rate changes (166) 33
Cash and cash equivalents at end of year 5,924 9,520
* Refer to Annual Report note 19
Notes to the financial statements
1. General information
The basis of preparation of this preliminary announcement is set out below.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2021 or 2020 but is derived
from those accounts. Statutory accounts for 2020 have been delivered to the
Registrar of Companies and those for 2021 will be delivered following the
Company's annual general meeting. The auditor BDO LLP has reported on the
statutory financial statements for the year ended 31 December 2021and the
audit report was unqualified.
Whilst the financial information included in this preliminary announcement has
been completed in accordance with International Financial Reporting Standards
(IFRSs), this announcement itself does not contain sufficient information to
comply with IFRSs. The financial information has been prepared on the
historical cost basis, except for financial instruments.
Copies of this announcement can be obtained from the Company's registered
office at King's Orchard, 1 Queen Street, Bristol BS2 0HQ.
The full financial statements which comply with IFRSs will be communicated to
shareholders via their selected preference and are available to members of the
public at the registered office of the Company from that date and are now
available on the Company's website: www.tribalgroup.com
(http://www.tribalgroup.com) .
2. Revenue for contracts with customers
The Group has split revenue into various categories which is intended to
enable users to understand the relationship with revenue segment information.
For 2021 reporting Asset Management, Software Solutions and Information
Managed Services revenue is now included in SIS as it more closely aligns
with the Software side of the business. This totals £2.7m and was previously
included within Education Services. 2020 has been updated for comparison with
£2.6m revenue being reassigned.
31 December 2021 UK Australia Other APAC North America Total
and Rest of
£000
£000 £000 £000
the world
£000
Foundation - Support & Maintenance 15,945 7,375 1,709 925 25,954
Foundation - Software 4,927 81 324 71 5,403
Cloud Services 5,097 1,326 237 145 6,805
Edge 2,903 363 125 3 3,394
Professional Services 8,004 2,153 2,338 173 12,668
Core SIS 36,876 11,298 4,733 1,317 54,224
Other software & services 4,266 8,816 - - 13,082
Total SIS 41,142 20,114 4,733 1,317 67,306
Schools inspections & other related services (QAS) 6,888 - - 4,181 11,069
i-graduate survey & data analytics 945 371 1,091 366 2,773
Total ES 7,833 371 1,091 4,547 13,842
Total 48,975 20,485 5,824 5,864 81,148
31 December 2020 UK Australia Other APAC £000 North America Total
and Rest of
£000 £000
the world £000
£000
Foundation - Support & Maintenance 15,529 7,316 1,455 916 25,216
Foundation - Software 4,119 79 146 103 4,447
Cloud Services 4,211 772 42 134 5,159
Edge 1,522 104 - - 1,626
Professional Services 5,778 2,322 635 465 9,200
Core SIS 31,159 10,593 2,278 1,618 45,648
Other software & services 3,754 10,008 23 13 13,798
Total SIS 34,913 20,601 2,301 1,631 59,446
Schools inspections & other related services (QAS) 6,976 - - 4,377 11,353
i-graduate survey & data analytics 574 249 1,066 266 2,155
Total ES 7,550 249 1,066 4,643 13,508
Total 42,465 20,850 3,366 6,273 72,954
Net contract liabilities
Contract asset/(liability) Contract asset/(liability)
2021 2020
£000 £000
Opening contract balance (19,435) (19,025)
Of which released to income statement 19,128 18,750
New billings and cash in excess of revenue recognised (17,340) (19,160)
Closing contract balance (17,647) (19,435)
Balances arise on contract assets and liabilities when cumulative payments
received from customers at the balance sheet date do not necessarily equal the
amount of revenue recognised on contracts. Customers are on standard payment
terms, which may result in settlement of invoices prior to the recognition of
associated revenue.
Contract assets inherently have some contractual risks associated with them
related to the specific and ongoing risks in each individual contract with a
customer. The impairment of contract assets/(liabilities) reflects provisions
recognised against contract assets in relation to these risks.
The amount of incremental costs to obtain a contract which extends over a
period of more than 12 months has been recognised as an asset in prepayments
totalling £0.5m (2020: £0.3m) and will be released in line with the total
contract revenue. No amount has been impaired at 31 December 2021 or 2020.
Remaining performance obligations
The amount of revenue that will be recognised in future periods on these
contracts when those remaining performance obligations will be satisfied is
analysed as follows:
At 31 December 2021
2022 2023 2024 Thereafter Total
£000 £000 £000 £000 £000
Foundation - Support & Maintenance 24,814 24,063 16,191 12,609 77,677
Foundation - Licence 4,563 3,438 2,764 2,068 12,833
Cloud Services 7,557 6,982 4,816 4,283 23,638
Edge 4,132 4,012 2,890 1,724 12,758
Professional Services 12,694 1,062 107 127 13,990
Core SIS 53,760 39,557 26,768 20,811 140,896
Other software & services 9,873 4,000 2,542 677 17,092
Total SIS 63,633 43,557 29,310 21,488 157,988
Schools inspections & other related services (QAS) 6,756 2,136 660 - 9,552
i-graduate survey & data analytics 1,501 1,157 978 1,279 4,915
Total ES 8,257 3,293 1,638 1,279 14,467
TOTAL 71,890 46,850 30,948 22,767 172,455
At 31 December 2020
2021 2022 2023 Thereafter Total
£000 £000 £000 £000 £000
Foundation - Support & Maintenance 25,374 18,197 10,310 738 54,619
Foundation - Licence 3,498 2,692 2,065 470 8,725
Cloud 6,093 5,644 3,562 2,972 18,271
Edge 2,087 2,118 1,695 285 6,185
Professional Services 11,272 7,061 146 - 18,479
Core SIS 48,324 35,712 17,778 4,465 106,279
Other software & services 9,154 5,488 1,477 13 16,132
Total SIS 57,478 41,200 19,255 4,478 122,411
Schools inspections & other related services (QAS) 12,374 4,098 2,113 1,308 19,893
i-graduate survey & data analytics 1,534 414 128 23 2,099
Total ES 13,908 4,511 2,241 1,331 21,991
TOTAL 71,386 45,712 21,496 5,809 144,403
An analysis of the Group's revenue is as follows:
2021 2020
£'000 £'000
Continuing operations
Sales of services 81,148 72,954
Total revenue 81,148 72,954
Further details of the nature of the services provided are disclosed in the
Annual Report. Sales of goods are not material and are therefore not shown
separately. Included in sales of services is £0.8m (2020: £0.5m) related to
software license revenues recognised as a result of a periodic review of our
license entitlement resulting from changes in our customers' enrolled student
numbers.
There is no revenue in respect of discontinued operations.
3. Business segments
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. For 2021 reporting Asset Management, Software
Solutions and Information Managed Services revenue is now included in SIS as
it more closely aligns with the Software side of the business. This totals
£2.7m and was previously included within ES. 2020 has been updated for
comparison with £2.6m revenue being reassigned. The Group's reportable
segments and principal activities under IFRS 8 are detailed below:
· Student Information Systems (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,
being the Chief Executive. Inter-segment sales are charged at prevailing
market prices.
Revenue Adjusted segment operating profit
Year ended Year ended Year ended Year ended
31 December 2021 £'000
31 December 2020 £'000
31 December 2021 £'000
31 December 2020 £'000
Student Information Systems 67,306 59,446 22,404 20,851
Education Services 13,842 13,508 2,229 2,047
Total 81,148 72,954 24,633 22,898
Unallocated corporate expenses (10,666) (11,097)
Adjusted operating profit 13,967 11,801
Amortisation of software and customer contracts & relationships (see Note (947) (1,021)
6)
Other items (see Note 6) (4,132) (1,672)
Operating profit 8,888 9,108
Investment income 255 53
Finance costs (529) (652)
Profit before tax 8,614 8,509
Tax charge (1,621) (2,151)
Profit after tax 6,993 6,358
Associated depreciation and amortisation is allocated to segment profits and
is included in adjusted segment operating profit as above. The amount included
in SIS is £1.1m (2020: £1.4m) and within Education Services £nil (2020:
£0.1m).
The accounting policies of the reportable segments are the same as the Group's
accounting policies described in Note 1 of the Annual Report. Segment profit
represents the profit earned by each segment, without 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 4% (2020: 6%) have arisen
from the segment's largest customer; within SIS revenues of approximately 4%
(2020: 6%) have arisen from the segment's largest customer.
Geographical information
Revenue from external customers, based on location of the customer, is shown
below:
2021 2020
£'000 £'000
UK 48,975 42,465
Australia 20,485 20,850
Other Asia Pacific 5,824 3,366
North America 3,149 2,572
Rest of the world 2,715 3,701
81,148 72,954
Non-current assets (excluding deferred tax)
2021 2020
£'000 £'000
UK 54,314 39,632
Australia 13,391 15,214
Other Asia Pacific 1,637 695
North America 68 88
Rest of the world - 15
69,410 55,644
4. Other items
2021 2020
£'000
£'000
Acquisition related costs (765) 814
Employee related share option charges (including employer related taxes) (1,628) (1,815)
- Internal systems transformation programme "VERITAS" (1,715) -
- Legacy defined benefit schemes - (123)
- Other legal costs - (36)
- Restructuring and associated costs (24) (512)
Other items (1,739) (671)
Amortisation of software and customer contracts & relationships (947) (1,021)
Total administrative expenses (5,079) (2,693)
Other financing costs (299) (307)
Total other items before tax (5,378) (3,000)
Tax on other items 619 1,005
Total other items after tax (4,759) (1,995)
The Group has adopted a policy of disclosing separately on the face of its
Group income statement the effect of any components of financial performance
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. Both materiality
and the nature and function of the components of income and expense are
considered in deciding upon such presentation. As such, 'other items' are not
part of the Group's underlying trading activities and include the following:
Acquisition related costs: Amounts relating to the legal and due diligence
costs of the acquisition of Semestry Limited, and the acquisition of Eveoh
BV's assets into Semestry Netherlands BV in the period total £832,000 (2020:
£nil). Under IFRS 3 these amounts were expensed as they are not eligible for
capitalisation. These are considered to be one-off costs in the year. In 2021
accounting for changes in the fair value of the contingent deferred
consideration have been remeasured at relevant reporting dates as part of the
earn-out agreement with Tribal Dynamics Limited, and the corresponding gain
has been recognised in the income statement (2021: £(67,000): 2020:
£(814,000))
· Employee related share option charges. The numbers above include:
· share-based payments plus foreign exchange (2021: £27,000: 2020:
£(37,000));
· the movement in associated employers taxes accrual (2021: £494,000:
2020: £153,000);
· the amounts accrued and paid on dividends on share options that have
met performance conditions (2021: £(10,000): 2020: £195,000). When the
Company declares a cash dividend, some option holders are entitled to a
'dividend equivalent'. This is a payment in cash and/or additional shares with
a value determined by reference to the dividends that would have been paid on
the vested shares in respect of dividend record dates occurring during the
period between the grant of the Award and the date on which it becomes
exercisable; and
· a nominal value paid to employees as a bonus (2021: £65,000: 2020:
£128,000). Under Companies Act 2006 rules a nominal value must be paid to
issue new shares, however under the rules of the LTIP and Matching Shares
Schemes the Company will pay the nominal value to the participants as a bonus.
Other items are detailed below:
· during 2020 and 2021 the Group has been running the Veritas Programme.
This includes an upgrade to its accounting system (Microsoft Dynamics D365)
and is part of a wider implementation of a new target operating model and
processes to provide greater operating efficiencies and reporting
functionalities. Following clarified guidance issued in relation to IAS 38,
£181,000 of costs capitalised in 2020 have been expensed to the income
statement alongside £1,534,000 of costs in 2021. The upgrade is material and
non-recurring in nature;
· legacy defined benefit schemes relate to the Prudential Platinum and
Federated Pension Funds to which no current Tribal employee is a member. Costs
arising relate to additional funding and administration charges (2021: £nil:
2020: £123,000);
· legal costs associated with the data breach in Tribal Campus, an
Australian subsidiary of the Group, announced on
12 August 2019, amounted to £36,000 in 2020. The amounts expensed are the
excess not covered by the Group's Insurance policy. All costs were fully
settled in 2020; and
· restructuring and associated costs relate to the restructuring of the
Group's operations (2021: £24,000: 2020: £512,000).
Amortisation of software and customer contracts and relationships:
Amortisation arising on the fair value of intangible assets acquired is
separately disclosed. (2021: £947,000: 2020: £1,021,000).
Other 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
(2021: £299,000: 2020: £307,000).
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.
5. Investment income
2021 2020
£'000
£'000
Other interest receivable - 6
Fair value movement on forward exchange contract 249 41
Interest receivable on leased assets 6 6
Total investment income 255 53
6. Finance costs
2021 2020
£'000
£'000
Interest on bank overdrafts and loans 70 147
Loan arrangement fees 45 65
Net interest payable on retirement benefit obligations 14 10
Interest expense on lease liabilities 101 123
Adjusted finance costs 230 345
Unwinding of discounts 299 307
Other finance costs 299 307
Total finance costs 529 652
7. Tax
2021 2020
£'000
£'000
Current tax
UK corporation tax (319) 67
Overseas tax 2,017 1,800
Adjustments in respect of prior years (103) 33
1,595 1,900
Deferred tax
Current year (2) 188
Adjustments in respect of prior years 28 63
26 251
Tax charge on profits 1,621 2,151
The continuing tax charge can be reconciled to the profit from continuing
operations per the income statement as follows:
2021 2020
£'000
£'000
Profit before tax on continuing operations 8,614 8,509
Tax charge at standard UK rate of 19% (2020: 19%) 1,637 1,617
Effects of:
Overseas tax rates 688 654
Expenses not deductible for tax purposes 190 134
Adjustments in respect of prior years (74) 96
Additional deduction for R&D expenditure (13) (11)
Share scheme costs (174) 30
Fixed assets ineligible depreciation (47) (47)
Utilisation of unrecognised tax losses 84 5
Movement in tax provision (371) -
Effect of changes in tax rates (299) (327)
Tax expense for the year 1,621 2,151
In addition to the amount charged to the income statement a current tax credit
of £53,000 (2020: £66,000) and a deferred tax charge of £395,000 (2020:
credit of £343,000) together with the prior year deferred tax credit of
£586,000 (relating to a reduction in the 2020 deferred tax asset due to the
reduced expected future deductions available in relation to Share Schemes) has
been recognised directly in equity during the year in relation to Share
Schemes.
A deferred tax charge of £131,000 (2020: credit of £89,000) 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. There has been no
progress in the Care UK case in the year to 31 December 2021. Under IFRIC 23
management have reviewed this uncertain tax provision and do not consider it
appropriate to make any adjustments due to the lack of progression in the
year.
The income tax expense for the year is based on the UK statutory rate of
corporation tax for the period of 19% (2020: 19%). Tax for other jurisdictions
is calculated at the prevailing rates in the respective jurisdictions.
In the 3 March 2021 Budget, it was announced that the UK tax rate will
increase to 25% from 1 April 2023. As the rate of 25% has been substantively
enacted at the balance sheet date, the deferred tax balances have been
calculated at 25%. Where the underlying timing differences are expected to
unwind before 1 April 2023, the deferred tax on those balances have continued
to be calculated at 19%.
8. Dividends
2021 2020
£'000
£'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2020 of 1.2 pence 2,505 2,254
(Interim dividend for the year ended 31 December 2020: 1.1 pence) per share
Proposed final dividend:
Proposed final dividend for the year ended 31 December 2021 of 1.3 pence 2,735 2,470
(year ended 31 December 2020: 1.2 pence) per share
The Board regularly reviews the available distributable reserves of Tribal
Group plc to ensure they are protected for future dividend payments.
9. Earnings per share
Basic earnings per share and diluted earnings per share are calculated by
reference to a weighted average number of Ordinary Shares calculated as
follows:
2021 2020
thousands
thousands
Weighted average number of shares outstanding:
Basic weighted average number of shares in issue 207,934 203,986
Weighted average number of employee share options 7,047 4,230
Weighted average number of shares outstanding for dilution calculations 214,981 208,216
Diluted earnings per share only reflects the dilutive effect of share options
for which vesting criteria have been met.
The maximum number of potentially dilutive shares, based on options that have
been granted but have not yet met vesting criteria, is 7,125,172 (2020:
12,796,406). This includes 876,512 options in the 2019 SAYE Scheme (2020:
1,028,396).
The adjusted basic and diluted earnings per share figures shown on the
consolidated income statement on page 68 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:
2021 2020
£'000 £'000
Net profit 6,993 6,358
Earnings per share
Basic 3.4p 3.1p
Diluted 3.2p 3.1p
Adjusted net profit 11,752 8,353
Adjusted earnings per share
Basic 5.7p 4.1p
Diluted 5.5p 4.0p
Profit for the year Earnings per share
2021 2020 2021 2020
£'000
£'000
£'000
£'000
Profit for the year attributable to equity shareholders 6,993 6,358 3.4p 3.1p
Add back:
Amortisation of IFRS intangibles 1,083 800 - -
Share-based payments 1,400 1,376 - -
Internal systems transformation programme "VERITAS" 1,460 - - -
Unwinding of discounts 299 307 - -
Movement in deferred consideration (67) (814) - -
Other acquisition costs 832 - - -
Other items (net of tax) (248) 326 - -
Total adjusting items 4,759 1,995 2.3p 1.0p
Adjusted earnings 11,752 8,353 5.7p 4.1p
10. Goodwill
2021 2020
£'000
£'000
Cost
At beginning of year 107,892 107,110
Additions 2,543 -
Exchange differences (622) 782
At end of year 109,813 107,892
Accumulated impairment losses
At beginning of year 81,231 81,231
At end of year 81,231 81,231
Net book value
At end of year 28,582 26,661
At beginning of year 26,661 25,879
Goodwill acquired in a business is allocated, at acquisition, to the
cash-generating units (CGUs) that are expected to benefit from the business
combination. The carrying amount of goodwill has been allocated as follows:
2021 2020
£'000
£'000
Student Information Systems (SIS) 25,048 23,127
Education Services (ES) 3,534 3,534
28,582 26,661
Goodwill is reviewed at least annually for impairment by comparing the
recoverable amount of each cash generating unit (CGU) with the goodwill,
intangible assets and property, plant and equipment allocated to that CGU.
The recoverable amount of a CGU is determined based on value in use
calculations. These calculations use risk adjusted cash flow projections based
on the financial budget approved by management for the period to 31 December
2022. The budget was prepared based on past experience, strategic plans and
management's expectation for the markets in which they operate including
adjustments for known contract ends, contract related inflationary increases
and planned cost savings. The budget was extrapolated over a five-year period
in line with previous calculations and to give greater clarity on future cash
flows. The growth assumption is 2% per annum for SIS (2020: 2%) and 2% for ES
(2020: 2%). Cash flows beyond the budget and extrapolation period were
calculated into perpetuity using the same growth rates. These growth rates are
in line with the expected average UK economy long-term growth rate.
The cash flows projections are discounted at a pre-tax discount rate of 10.8%
(2020: 11.0%). The single discount rate, which is consistently applied for
both CGUs, is determined with reference to internal measures and available
industry information and reflects specific risks relevant to the Group.
Impairment testing inherently involves a number of judgemental areas,
including the preparation of cash flow forecasts for periods that are beyond
the normal requirements of management reporting; the assessment of the
discount rate appropriate to the Group and the estimation of the future
revenue and expenditure of each CGU. Accordingly, management undertook stress
testing to understand the key sensitivities and concluded as follows:
A rise in discount rate to 31% and 301% would trigger an impairment in SIS and
ES respectively. A decline in growth rate to (22%) in SIS and (110%) in ES
would result in an impairment. Management does not consider these changes
possible but considers a slight increase in discount rate to 12% and zero
growth may be possible as a result of the current economic environment. As a
result of the analysis, there is headroom of £103.9 million and £16.5
million in SIS and ES respectively.
As a result, management does not believe a reasonably possible change in the
key assumptions may cause impairment.
11. Other intangible assets
Acquired Acquired Acquired intellectual property Development costs Business systems Software licenses Total
Software Customer contracts & relationships £'000 £'000 £'000 £'000 £'000
£'000 £'000
Cost
At 1 January 2020 9,831 8,424 1,873 36,513 5,083 1,489 63,213
Additions - - - 6,902 227 - 7,129
Exchange differences 462 196 - 204 9 - 871
At 31 December 2020 10,293 8,620 1,873 43,619 5,319 1,489 71,213
and 1 January 2021
Acquisitions 2,305 1,289 - 1,237 - - 4,831
Additions - - - 10,224 - - 10,224
Disposals - - - (905) (4,496) - (5,401)
Exchange differences (365) (156) - (162) (5) (1) (689)
At 31 December 2021 12,233 9,753 1,873 54,013 818 1,488 80,178
Amortisation
At 1 January 2020 7,137 5,677 659 23,893 4,893 1,485 43,744
Charge for the year 535 486 75 1,170 20 3 2,289
Exchange differences 469 136 - 192 7 - 804
At 31 December 2020 8,141 6,299 734 25,255 4,920 1,488 46,837
and 1 January 2021
Acquisitions - - - 366 - - 366
Charge for the year 529 418 75 933 24 1 1,980
Disposals - - - - (4,315) - (4,315)
Exchange differences (365) (111) - (155) (5) (1) (637)
At 31 December 2021 8,305 6,606 809 26,399 624 1,488 44,231
Carrying amount
At 31 December 2021 3,928 3,147 1,064 27,614 194 - 35,947
At 31 December 2020 2,152 2,321 1,139 18,364 399 1 24,376
Software and customer contracts and relationships have arisen from
acquisitions and are amortised over their estimated useful lives, which are 3
to 8 years and 3 to 12 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, business systems and software licenses are all included
within administrative expenses.
Included within Business systems are finance systems with a carrying value of
£0.2m (2020: £0.4m). Phase I of the D365 implementation was fully
capitalised and is being amortised over a period of ten years. The Veritas
programme commenced in October 2020 and is part of a wider implementation of a
new target operating model and processes to provide greater operating
efficiencies and reporting functionalities across the Group. In line with IAS
38 £181,000 of costs capitalised in 2020 no longer meet the criteria to be
capitalised as a software intangible and have been expensed to the 2021 income
statement. All costs in 2021 have also been expensed in 2021.
In addition a review of all business systems was undertaken in the year and
£4.3m of fully depreciated assets have been written off as no longer in use.
The Group is required to test annually if there are any indicators of
impairment. The recoverable amount is determined based on value in use
calculations of identified CGUs. The use of this method requires the
estimation of future cash flows and the determination of a discount rate in
order to calculate the present value of the cash flows.
A review of the Group's capitalisation to date has been undertaken resulting
in £0.9m of early capitalised costs being expensed, as the Group now has
clarity on the future Edge offering. The "Dynamics" product has now been
incorporated into Edge (included within development costs) and the
amortisation time frame of this is expected to be fifteen years in line with
the rest of Edge. Subsequently management have changed the UEL of this asset
from 5 to 15 years in accordance with IAS 8.36. This has been treated as a
change in accounting estimate from 1 January 2021 and therefore prior periods
have not been adjusted as it is not considered practical to do so. The net
impact of this change in accounting estimate is a reduction in the
amortisation charge of £88,000. The future impact of this change is not
considered material.
The impairment testing allocates all assets relating to specific CGUs,
including goodwill, other intangibles, property, plant and equipment and net
current assets and liabilities. Semestry and Eveoh acquired assets have been
allocated to the SIS CGU.
12. Trade and other receivables
2021 2020
£'000
£'000
Amounts receivable for the sale of services 5,629 7,701
Less: loss allowance (187) (231)
5,442 7,470
Other receivables 693 413
Prepayments 4,467 3,153
10,602 11,036
The Group's principal financial assets are cash and cash equivalents and trade
and other receivables which represent the Group's maximum exposure to credit
risk in relation to financial assets. The Group's credit risk is primarily
related to its trade receivables. The credit risk on liquid funds is limited
because the counterparties are banks with high credit ratings assigned by
international credit rating agencies.
All receivables are due within one year in both current and prior years.
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
13. Trade and other payables
2021 2020
£'000
£'000
Current
Trade payables 1,712 892
Other taxation and social security 2,728 2,522
Other payables 1,641 1,246
6,081 4,660
Non-current
Other payables 131 40
131 40
Total 6,212 4,700
The average credit period taken for trade purchases is 17 days (2020: 12
days). For most suppliers, no interest is charged on the trade payables for
the first 30 days from the date of invoice. Thereafter, in some cases,
interest may be charged on the outstanding balances due to certain suppliers
at various interest rates. The Group has financial risk management policies in
place to ensure that all payables are paid within a reasonable time frame. The
Directors consider that the carrying amount of trade and other payables
approximates their fair value.
Other payables are split as follows:
2021 2020
£'000
£'000
Goods received not invoiced 826 564
Other creditors 815 682
1,641 1,246
14. Borrowings
The Group had a £2m committed overdraft facility in the UK and a AUD$2m
committed overdraft facility in Australia, both facilities are committed for a
12-month period ending August 2022 and October 2022 respectively. As at 31
December 2021, the Group had cash and cash equivalents of £5.9m (2020:
£9.5m).
At the year-end there was £2.0m available but undrawn in respect of the UK
overdraft facility and $AUD 2.0m available but undrawn in respect of the
Australian overdraft facility.
On 21 January 2020 the Group entered into a three-year £10m multi-currency
revolving facility with HSBC with the option to extend to a further two years.
The first option to extend was approved by HSBC on 15 March 2021, the second
extension was approved by HSBC on 5 January 2022, effective 21 January 2022.
The loan was fully drawn down in 2021 and repaid in full before 31 December
2021. The facility was put in place to cover general corporate and working
capital requirements of the Group.
15. Notes to the cash flow statement
2021 2020
£'000
£'000
Operating profit from continuing operations 8,888 9,108
Depreciation of property, plant and equipment 650 734
Depreciation of right-of-use assets 985 1,059
Amortisation and impairment of other intangible assets 1,980 2,289
Share-based payments 1,078 1,339
Movement in contingent deferred consideration (67) (815)
Research and development tax credit (204) (214)
Net pension credit (29) (30)
Other non-cash items 874 552
Operating cash flows before movements in working capital 14,155 14,022
Increase in receivables (3,093) (255)
Increase/(decrease) in payables 4,472 (7,461)
Net cash from operating activities before tax 15,534 6,306
Net tax paid (1,645) (845)
Net cash from operating activities 13,889 5,461
Net cash from operating activities before tax can be analysed as follows:
2021 2020
£'000
£'000
Continuing operations 15,534 6,306
16. Acquisition of subsidiary
On 1 April 2021, the Tribal Group plc acquired 71.25% of the issued share
capital of Semestry Limited (Semestry), a company incorporated in the UK that
is a leading supplier of cloud based scheduling and timetabling software to
the higher education market. On 4 May 2021, the Group acquired the remaining
28.75 %.
The Acquisition expands Tribal's product portfolio, adding Scheduling and
Timetabling capability to the Group's Tribal Edge ecosystem of Higher
Education solutions; this provides additional upsell opportunity to the
Group's existing and new customers as well as cross-sell opportunities for
Tribal's existing applications into Semestry's existing customer base.
This transaction has been accounted for by the acquisition method of
accounting. This comprises an initial cash consideration of £4.5m and a
deferred contingent cash consideration of £1.5m (the discounted figure at
acquisition being £1.1m) which is payable on the annual recurring revenue
(ARR) growth of the acquired business. As per the Sale and Purchase agreement,
deferred contingent consideration can be satisfied over a two year period from
completion. The first payment of £854,000 was made in October 2021 after
review of the ARR growth in the period to September 2021.
The carrying amount of each class of Semestry Limited's assets before
combination is set out below:
Book value Fair value adjustments £'000 Acquisition adjustments £'000 Provisional fair value
£'000
£'000
Intangible assets 871 - 2,874 3,745
Tangible assets 14 (14) - -
Trade and other receivables 357 46 - 403
Cash and cash equivalents 317 - - 317
Trade and other payables (173) (52) (225)
Contract liabilities (466) - - (466)
Deferred tax liabilities - - (546) (546)
Net assets/(liabilities) acquired 920 (20) 2,328 3,228
Goodwill arising on acquisition 2,383
Consideration - Satisfied by
Initial cash consideration 4,466
Deferred contingent consideration 1,145
5,611
The initial consideration paid to Semestry was satisfied through existing cash
balances. The acquisition led to a net cash out-flow taking into account the
cash acquired of £4,149,000.
Intangible assets arising on acquisition are in respect of customer
relationships and contracts £1.0m and software £1.9m, together with £0.9m
of assets that relate to the net book value of the capitalised development
costs of the Semestry product.
The goodwill arising on acquisition is attributable to synergies, the
assembled workforce, and potential relationships.
Semestry Limited contributed revenue of £1.1m and operating profit of £0.7m
to the Group for the period between the date of acquisition and the balance
sheet date. Acquisition related costs amounted to £0.7m and have been
expensed through the income statement.
Had the acquisition occurred on 1 January 2021, the Group's revenue would have
increased by £0.3m and its operating profit increased by £0.1m.
Tribal Group incorporated a Dutch legal entity on 14 September 2021 (Semestry
Netherlands BV) for the purpose of acquiring the assets and business of Eveoh
BV on 1 October 2021. Eveoh BV is a supplier of cloud timetabling software to
the higher education market. The software allows institutions to publish
personalised student and staff timetables, via the web or their mobile device
and is currently in use at more than forty institutions in Europe and the UK.
The software will be integrated with the recently acquired Semestry
timetabling and scheduling solutions and will be applicable across Tribal's
extensive customer base, as universities seek to increase engagement with
their students and offer more personalised experiences.
The transaction has been accounted for by the acquisition method of
accounting. This comprises an initial cash consideration of £0.1m and a
deferred contingent cash consideration of £0.7m (the discounted figure at
acquisition being £0.5m) which is payable on the annual recurring revenue
(ARR) growth of the acquired business. Deferred contingent consideration is
expected to be satisfied in 2021 and 2022.
The carrying amount of each class of Eveoh BV assets before combination is set
out below:
Book value £'000 Fair value adjustments £'000 Acquisition adjustments £'000 Provisional fair value
£'000
Intangible assets - 720 720
Tangible assets 9 (9) - -
Trade and other payables (17) (17)
Contract liabilities (126) - - (126)
Deferred tax liabilities - - (197) (197)
Net assets/(liabilities) acquired (117) (26) 523 380
Goodwill arising on acquisition 160
Consideration - Satisfied by
Initial cash consideration 46
Deferred contingent consideration 494
540
The initial consideration paid was satisfied through existing cash balances.
The acquisition led to a net cash out-flow.
Intangible assets arising on acquisition are in respect of customer
relationships and contracts £298,000 and software £422,000.
The goodwill arising on acquisition is attributable to synergies, the
assembled workforce, and potential relationships.
Semestry Netherlands BV contributed revenue of £74,000 and operating loss of
£25,000 to the Group for the period between the date of acquisition and the
balance sheet date. Acquisition related costs amounted to £145,000 and have
been expensed through the income statement.
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