REG - Tribal Group PLC - Preliminary Results
21/03/2024 07:00
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RNS Number : 6953H Tribal Group PLC 21 March 2024
Tribal Group plc
("Tribal" or "the Group")
Preliminary Results for the year ended 31 December 2023
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 2023.
Financial performance
· A solid trading performance with Adjusted EBITDA, net debt and Group revenue
ahead of market expectations as at January 2024*.
· Annual Recurring Revenue (ARR) increased 8.7% to £54.5m (2022: £50.2m at
constant currency), reflecting a 12.9% growth in the Group's strategic
products.
· Group revenue increased 3.2% to £85.7m (2022: £83.1m constant currency,
£83.6m reported).
o Student Information Systems revenue grew 1.1% to £68.6m, with 23% growth in
Cloud revenue, offset by a reduction in professional services revenues partly
due to the termination of the Nanyang Technological University ("NTU")
contract.
o Education Services revenue grew 12.7% to £17.2m.
· Adjusted EBITDA increased by 99.0% to £14.4m (2022: £7.2m constant currency;
£7.0m reported), representing an Adjusted EBITDA Margin of 16.8% (2022: 8.7%
constant currency; 8.4% reported).
o The net impact of the release of the £4.5m NTU onerous contract provision
created in 2022, with associated contract costs in 2023 gave a £0.6m one off
upside in the year, excluding this Adjusted EBITDA would be £13.8m and
Adjusted EBITDA Margin 16.1%.
· Statutory Profit before tax for the year increased to £6.6m (2022: £1.0m
constant currency).
· Net debt and cash equivalents at 31 December 2023 were (£7.2)m (2022:
£3.4m).
o Operating cash conversion increased to 110.5% (2022: 89.0%) and free cash
outflow improved to £(1.4)m (2022: £(5.3)m).
o Operating cash inflow increased to £9.4m (2022: £8.7m) despite £0.8m cash
outflow from costs relating to the lapsed offer from Ellucian and £0.9m
outflow from restructuring of Education Services.
· Given Tribal's solid financial performance in FY23, the Board intends to pay a
dividend to shareholders. However, given the uncertainty around the likely
outcome of the dispute with NTU, the Board is deferring its decision on the
quantum of the dividend payment this year until the Board has an appropriate
level of certainty. Such dividend is likely to be declared as an interim
dividend.
Operational highlights
· Solid sales performance, adding four major Tribal Cloud contracts from
existing customers and one SITS:vision contract from a new customer, adding a
total of £2.2m to ARR.
· Continued focus on operational efficiency and organisational structure to
support the Group's SaaS ambitions, with a cost reduction programme
implemented in 2024 to ensure Group profit margins remain stable through the
transition to SaaS.
· Successful go live of a standalone Tribal Admissions pilot product marking an
important milestone for Edge product development, with continued investment of
£8.5m in 2023 (2022: £10.3m) as the Group works towards making Tribal
Admissions generally available in 2025.
· Education Services secured new contracts with the UK Department for Education.
The division has been successfully restructured as a standalone business, and
investment made into the team, to support future growth.
Outlook
· Trading in H1 FY24 has begun in line with Board expectations.
· The NTU mediation process is expected to conclude in the first half of 2024.
· Focused on the delivery of our key strategic priorities, which are to drive
growth in high margin recurring SaaS revenue and grow operating profits and
look to the future with confidence.
Mark Pickett, Chief Executive, commented:
"While there were several corporate developments at Tribal in FY23, our focus
has remained resolute on delivering outstanding service to our customers
around the world and providing our teams with a rewarding place to work. Our
financial performance demonstrates the enduring strength of the Group as we
executed against our growth strategy, winning new customers, transitioning
existing customers to the Cloud, and successfully piloting our newly developed
native cloud product, Tribal Admissions.
We have entered 2024 very much on the front foot, with a clear strategic
focus, to evolve Tribal at pace to become an EdTech SaaS business, which will
in turn drive growth in high margin recurring SaaS revenue and protect our
operating profit margins."
*Market expectations: Net Debt(excluding leases): £9.8m, Revenue: £84.2m,
Adjusted EBITDA: £12.5m
Tribal Group plc Tel: +44 (0) 117 311 5293
Mark Pickett, Chief Executive Officer
Diane McIntyre, Chief Financial Officer & Company Secretary
Investec Bank plc (NOMAD & Joint Broker) Tel: +44 (0) 20 7597 5970
Virginia Bull, Nick Prowting, Tom Brookhouse
Singer Capital Markets Limited (Joint Broker) Tel: +44 (0) 20 7496 3000
Shaun Dobson, Tom Salvesen, Alex Bond
Alma Strategic Communications 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.
Chair's Statement
The Board is pleased with the progress achieved across the Group's strategic
priorities, including the transition to Cloud-based offerings. Our core SITS
offering is number one in the UK market and our Cloud offerings are gaining
traction. We have an enviable list of customers, market leading technology and
growing opportunities.
As shareholders will be aware on 5 October 2023 the Board recommended an offer
for the Company at a price of 74 pence per share. The offer did not achieve
the necessary support from our largest shareholder and as a consequence the
offer did not progress. Our largest shareholder has indicated their continuing
support for the Company and its management and is optimistic for its future.
For the year ended 31 December 2023 Tribal reported adjusted EBITDA, net debt
and Group revenue ahead of market expectations. The Group achieved revenue
growth of 3% to £85.7m, Adjusted EBITDA growth of 86% to £13.8m (excluding
the £0.6m net benefit from the release of provisions and payment of costs in
respect of NTU) and closed the year with a net debt position of £7.2m.
Importantly, Tribal exited the year with over £54.5m of Annual Recurring
Revenue. This was achieved against the backdrop of the lapsed offer for the
Company, as announced in October 2023, and the termination of the contract
with NTU (both of which absorbed substantial management time and effort)
demonstrating the strength of the business, with its established customer base
and respected product set. Tribal is, as previously announced, entering a
mediation process with NTU which is expected to conclude in the first half of
2024, the potential outcome remains uncertain. We will continue to provide
updates as appropriate.
Education Services (ES) continued to contribute positively to the Group's
financials, delivering another year of good progress under its new managing
director. The Board conducted a strategic review of the division during the
Year and concluded that the best way to deliver value to shareholders and
drive further growth in revenue and profitability, was to establish ES as a
standalone entity within the Group with its own company structure. ES made
good progress in FY23, resetting its operating model, and strengthening its
business development and marketing functions.
Dividend
Given Tribal's solid financial performance in FY23, the Board intends to pay a
dividend to shareholders. However, given the uncertainty around the likely
outcome of the dispute with NTU, the Board is deferring its decision on the
quantum of the dividend payment this year until the Board has an appropriate
level of certainty. Such the dividend is likely to be declared as an interim
dividend.
People
Supporting our employees as we transition to a SaaS business is a top
priority, and much work has been done throughout the year to ensure
appropriate training and development opportunities exist across the Group. The
Board would like to thank the team for their unwavering commitment to the
success of Tribal and its customers.
Outlook
The Board is confident Tribal has the resources and high levels of recurring
revenues sufficient to continue to execute on its growth strategy and looks
forward to continuing to drive the Group forward, for the benefit of all
stakeholders.
Tribal started 2024 with £54.5m of ARR, providing the business with a
substantial platform from which to grow its core software product and service
offerings in Higher and Further Education. Following our strategic review of
our ES business we are increasingly positive that it will deliver growth in
2024 and beyond. We are also committed to driving improved operational
efficiencies across the Group whilst continuing to improve customer
satisfaction. The Board has no doubt that businesses generally face many
economic headwinds, we are however positive that Tribal can continue the
progress achieved to date.
Richard Last
Chair
Chief Executive's review
While there have been many corporate developments at Tribal over the course of
the last year, our focus has remained resolute on delivering outstanding
service to our customers around the world and providing our teams with a
rewarding place to work. As a result, we have continued to execute against our
growth strategy, winning new customers, transitioning existing customers to
the Cloud, and successfully piloting our newly developed native cloud product,
Tribal Admissions.
Naturally some new business discussions were paused whilst we were in an offer
period, as customers assessed the impact of a potential change of ownership of
Tribal. Nonetheless, the Company's strong underlying basis of recurring
revenue and continued focus on cost control have ensured we have delivered a
year of growth.
We have entered 2024 very much on the front foot, with a clear strategic
focus, to evolve Tribal at pace to become an EdTech business, delivering
products to the further and higher education sectors. This transition will
accelerate in 2024, as we change our operational structure to better fit that
of a focused, SaaS business. We have implemented a cost reduction programme to
ensure our profit margins remain stable as we execute against this strategy.
Strategy
Our strategic focus over the recent years has been the transition of the Group
to a pureplay EdTech, SaaS business. Over the next year we will continue to
focus on this, building on the solid SaaS foundations we have already
established.
With a clear direction of travel, focused on the delivery of our
market-leading products as a cloud-based solution, further driving the
adoption of our newly launched Tribal Admissions product and educating our
customers on the opportunity and need to transition to the cloud, we are
confident in our ability to continue to deliver growth.
Product development
In FY22, the Board made the decision to focus development spend in 2023 and
2024 on our existing Edge products, to ensure we are focused on maximising the
opportunity for each, targeting an overall reduction in Edge development from
2023 as the peak of development investment on the Admissions product has
passed. Our Edge products are part of the broader Student Information System
ecosystem as we modernise our Student Management Systems products to provide a
roadmap to SaaS for all our customers.
We see significant opportunities for our core cloud-native Edge and
SITS:Vision products in the next few years, across our key geographies, as
there is an increasing appetite from the higher education sector to transition
their existing Student Information Systems to the cloud and we anticipate this
to be the main driver for uptake of our current range offerings.
NTU update
As previously announced on 20 and 24 March 2023 the contract with Nanyang
Technological University ("NTU") has been terminated and in April 2023, Tribal
received from NTU an interim demand for the payment of damages which it
rejected. In November 2023, NTU claimed the HSBC Bank Guarantee to the value
of approximately £0.6m, which Tribal disputes. In February 2024, Tribal
received an updated interim demand for the payment of damages. Tribal is now
entering a mediation process with NTU which is expected to conclude in the
first half of 2024, the potential outcome of which remains uncertain. Tribal
vigorously disputes NTU claims and no provision has been currently made for
any outcome from the mediation or potential future litigation. An update will
be provided as and when appropriate.
Student Information Systems (SIS)
Student Information Systems, our core segment which targets the further and
higher education sectors through our range of software solutions, delivered a
steady performance in the year, growing customer numbers and revenue.
During the year, we secured a new SITS: Vision customer, adding a total of
£0.5m to ARR. This is a multi-year contract with the London School of Science
and Technology to provide an improved student experience and deliver
operational efficiencies for the university. This new business win comprises
SITS Cloud, Engage and Tribal Dynamics Marketing & Recruitment.
In the first half of the year, we also sold further native-cloud based Edge
modules, such as Dynamics, Engage and Tribal Data Engine (TDE), to existing
customers. Notably, Tribal Dynamics saw several projects go live in the
period. Early in H2, we also went live with our first Admissions product, a
next generation, native SaaS solution, built using Edge technology. Edith
Cowen university, an Australian university with around 30,000 students, is
running a pilot, starting with the admission of Post Graduate Domestic
students and, over the coming year, rolling the product out to all student
admissions. This is a key milestone for Tribal, successfully implementing a
complex solution which is a critical system for a university and we are
working towards making Tribal Admissions generally available in 2025.
With our Course & Exam Scheduling product, Semestry, we are beginning to
see the UK universities starting to come to market to select their
next-generation scheduling product. Although there is a good pipeline of
opportunities, it is likely to be into mid 2024 before we see those tenders
coming to market. In the meantime, we have taken the opportunity to integrate
Semestry fully into the Tribal organisation.
We signed three further cloud contracts for existing customers, the University
of Wolverhampton, University of the Arts and Royal Veterinary College, as part
of their programme of improvement with Tribal to migrate to the Tribal Cloud.
We secured smaller contracts across our ebs and Maytas portfolios where we
continue to see substantial opportunities for these offerings across both
existing and new customers.
We are pleased with these positive signs of potential across the Group and
although it will take time for full adoption of our solutions by our customers
due to the annual cycle of the academic year, we remain confident in the
significant long-term opportunities.
Education Services (ES)
Tribal Education Services (ES) delivers Quality Assurance and benchmarking
services to ministries of education and other education agencies around the
world, across a broad range of services including overall school quality,
leadership and teaching quality, as well as many specialist areas such as new
teacher competence, Early Years, literacy and numeracy.
Last year, we implemented a strategy for the business, targeting sustainable
growth. The aim of the new strategy was to create a clear identity for the ES
business and better articulate the value it creates for our customers.
The business has made good progress, concluding the first phase of its new
strategy this year, resetting the operating model and bedding in new
structures and processes. A principal focus has been investing to strengthen
both its business development and marketing functions, starting with the
appointment of a new Director of Business Development in January 2023, and
aligning leadership expertise with key markets, including appointments of new
Directors for the UK and Middle East business units. These changes have
already created growth in our pipeline depth and quality, which in turn
underscore our confidence in the division and the services it provides. This
year, the Board also conducted a strategic review of the ES division and
concluded that the best way to drive further growth in revenue and
profitability, and deliver value to shareholders, was to establish ES as a
standalone entity.
In the year, ES signed a new 24-month £1.5m contract with the Department for
Education in England - Multiply - supporting the roll out of promising
interventions supporting Adult Numeracy with colleges and other providers
across the country. We have focused much of our business development attention
on the Middle East, resulting in an improved pipeline of projects due over the
coming months. The first of these to come on stream is with the Emirates
Schools Establishment in the UAE, a new customer. We are delighted to begin a
12-month 10m AED (United Arab Emirates Dirham) project supporting teachers in
public schools to attain their professional license, working in partnership
with Queen Rania Teachers Academy in Jordan. These two major projects were
complemented by the strong performance in our Surveys and Benchmarking
business, now trading above pre-COVID levels.
Operations and people
We continue to carefully invest in our operations and people, whilst
effectively managing our cost base as we evolve our operational model to
ensure service levels are maintained for long-term profitable growth and to
remain robust.
We have seen considerable progress since the Global Business Services (GBS)
organisation was established in January 2023, with the objective of driving
internal efficiencies by simplifying, standardising and centralising back
office processes into a single, global Centre of Excellence. In January 2023
we welcomed a new leader for GBS, based in the Philippines, who has a solid
track record of leading finance and accounting services to large global
corporations and who will lead the next phase of the program to realise the
benefits as we transform our execution of business processes. By year end,
several business-critical processes had migrated to GBS delivering immediate
benefits and a solid foundation for continued improvements, in line with our
Centre of Excellence model. This progress has already enabled us to create
savings and unlock investment in new capabilities, which will be critical to
our SaaS transformation. We will continue to build on this progress across all
business support functions, so they take full advantage of the potential
offered by Global Business Services.
Our evolving operational model, which is built upon our increasing focus on
customer success and alignment to Tribal's 'as-a-service' transition,
continues to prove effective. The new target operating model is also now being
supported by the implementation of new SaaS financial systems and processes,
intended to give our customers a more personalised experience and to maximise
the value of each of the Group's products
In June 2023, Tribal Achievers was launched, a global peer to peer recognition
programme to maintain a vibrant culture and ensure reward and recognition is
part and parcel of life at Tribal. It has been very encouraging to see both
the creativity and frequency with which colleagues are ready to celebrate one
another's achievements.
Our Customer Success model has successfully established itself in Further
Education, providing some impressive outcomes and establishing a clear new
revenue stream and source of value creation. We are taking those learnings
into the Higher Education market, bringing in highly valued sector
professionals to build our advisory services and customer success offerings.
We remain committed to our ESG strategy and long-term goals. This year Tribal
is supporting employees volunteering with ChapterOne, an education-based
charity providing reading and literacy support to primary school aged children
living in deprived areas of the UK. There are currently 14 active Tribal
volunteers on the programme, collectively providing over 6 hours of support
each week. We are proud that our volunteers are making a meaningful
difference; ChapterOne's latest Impact results show children who participate
in the programme increase their reading level by 44%, on average.
Focus for 2024
The resolution of the NTU contract dispute will continue to be a key area of
focus during 2024 and we will update the market as appropriate.
We are focused on the delivery of our clear strategic priorities for the year,
which will in turn drive growth in high margin recurring SaaS revenue and
protect our operating profit margins, and look to the future with confidence.
Mark Pickett
Chief Executive Officer
Financial
review
Results
£m 2023 2022 Reported restated(1) Constant Change constant currency Change constant currency %
currency 2022(3)
Revenue 85.7 83.6 83.1 2.7 3.2%
Student Information Systems 68.6 68.2 67.9 0.7 1.1%
Education Services 17.2 15.4 15.2 1.9 12.7%
Gross Profit 42.1 31.3 31.4 10.7 34.1%
Gross Profit Margin 49.1% 37.5% 37.8% 11.3% 11.3pp
Adjusted EBITDA(2)
(Before Central Overheads) 28.1 17.9 18.1 10.1 55.6%
Student Information Systems 25.7 14.3(5) 14.6 11.1 75.9%
Education Services 2.4 3.6(5) 3.5 (1.0) (29.8%)
Central Overheads(4) (13.6) (10.8) (10.8) (2.9) 26.5%
Net foreign exchange (losses)/gain (0.2) (0.1) (0.1) (0.1) 62.7%
Adjusted EBITDA(2) 14.4 7.0 7.2 7.1 99.0%
Adjusted EBITDA(2) 16.8% 8.4% 8.7% 8.1% (8.1)pp
Statutory Profit before Tax 6.6 0.4 1.0 5.6 562.9%
Statutory Profit/(Loss) after Tax 5.3 (0.5) 0.2 5.1 2,703.7%
Annual Recurring Revenue 54.5 51.2 50.2 4.3 8.7%
1. 2022 Gross profit margin, Adjusted EBITDA and
Adjusted EBITDA margin are all restated due to a change in accounting policy
in 2023 to 'exceptionals'. As a result, certain items of income or expense
previously included as 'exceptionals' have been classified as underlying;
Items reclassified are employee related share option charges, including
employer related taxes (2023: £446,000; 2022: £450,000).
2. Adjusted EBITDA and Adjusted EBITDA Margin are in
respect of continuing operations and are calculated by taking the Adjusted
EBITDA after the allocation of Central Overheads and excludes Interest, Tax,
Depreciation and Amortisation and exceptional items of £2.9m (2022: £2.1m),
refer to Note 4.
3. 2022 results updated for constant currency - the
Group has applied 2023 foreign exchange rates to 2022 results to present a
constant currency basis. On a constant currency basis there is a decrease in
Revenue of £0.5m and an increase to Adjusted EBITDA (before Central
Overheads) of £0.2m.
4. Central Overheads are made up of costs that are not
directly attributable to either Student Information Systems or Education
Services.
5. 2022 Adjusted EBITDA has been restated by £0.3m in
Student Information Systems and (£0.3m) in Education Services due to a
misclassification.
The financial review presents the reported results for 2023 and 2022, and the
2022 results restated to 'constant currency' using 2023 rates to exclude
foreign currency impact. The change percentages and comparatives are shown on
the 2022 constant currency numbers. In addition to EBITDA and Adjusted EBITDA,
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). 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 increased 3.2% to £85.7m (2022: £83.1m constant currency, £83.6m
reported). Notwithstanding the drop in professional services partly due to the
NTU contract ending, the Group's Student Information Systems segment performed
well, with significant growth of 23% in Cloud revenue driven by new customer
wins and Tribal Cloud migrations.
Education Services revenue increased by 12.7% to £17.2m (2022: £15.2m
constant currency; £15.4m reported) as the main UK contracts continued to
track well throughout the year in addition to growth in Surveys and
Benchmarking due to the seasonality of the Southern Hemisphere International
Student Barometer's in which most institutions participate every other year.
32.7% (2022: 38.0%) of Tribal's revenue in the year was generated outside the
UK and is therefore subject to foreign exchange movement.
Gross Profit increased 33.6% to £42.1m (2022: £31.4m constant currency,
£31.3m reported) and the margin percentage has increased to 49.1% (2022:
37.8% constant currency, 37.5% reported). The margin percentage increase is
largely due to the release of the NTU onerous contract provision following
termination of the contract.
Adjusted EBITDA
Adjusted EBITDA increased £7.1m to £14.4m (2022: £7.2m constant currency;
£7.0m reported). Adjusted EBITDA margin increased to 16.8% (2022: 8.7%
constant currency; 8.4% reported). The net impact of the release of the £4.5m
NTU onerous contract provision created in 2022, with associated contract
costs in 2023 gave a £0.6m one-off upside in the year, excluding this the
adjusted EBITDA would be £13.8m and adjusted operating margin 16.1%.
Central Overheads, representing costs in HR, IT, Finance, Marketing and
Management that aren't directly attributable to lines of business increased by
£2.9m to £13.6m (2022: £10.8m constant currency and reported). This
includes £1.1m of one-off costs in relation to NTU, as well as increased
global insurance costs and legal and professional fees in line with market
trends, and investment in global business services as we focus on
standardisation of processes across the Group to drive efficiency.
Statutory (Loss)/Profit after Tax
The Statutory (Loss)/Profit after tax for the year increased by £5.1m against
constant currency to a profit of £5.3m (2022: £0.2m constant currency;
(£0.5m) reported). The increase is largely due to the negative impact of the
NTU contract within 2022, offset by £1.2m higher exceptionals due to £1.4m
of costs associated with the lapsed offer for the company by Ellucian. The tax
charge was £1.3m (2022: £0.9m reported and £0.8m constant currency).
Segmental performance
The Group provides software and non-software related services to the
international educational market. These services are managed across two
divisions, SIS and ES.
Student Information Systems (SIS)
£m 2023 2022 Reported Constant currency 2022 Change constant currency Change constant currency %
Foundation Support and Maintenance 24.9 25.4 25.1 (0.2) (0.7%)
Foundation Software 8.5 7.2 7.3 1.3 17.5%
Cloud Services 10.4 8.5 8.5 2.0 23.2%
Edge 5.2 4.8 4.8 0.4 9.0%
Professional Services 9.8 11.2 11.7 (1.9) (16.1%)
Core Revenue 58.8 57.1 57.2 1.6 2.8%
Other Software & Services 9.7 11.0 10.6 (0.9) (8.4%)
Total Revenue 68.6 68.2 67.9 0.7 1.1%
Adjusted Operating Profit 25.7 14.3(1) 14.6(1) 11.1 75.9%
Adjusted Operating Margin 37.5% 20.9% 21.6% 16.0% (16.0)pp
1. 2022 Adjusted Operating Profit has
been restated by £0.3m in Student Information Systems and (£0.3m) in
Education Services.
Student Information Systems focuses 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, Malaysia, Netherlands and Canada.
SIS revenue increased 1.1% to £68.6m (2022: £67.9m constant currency;
£68.2m reported). Revenue generated from our core product offerings increased
2.8% to £58.8m (2022: £57.2m constant currency and £57.1m reported). Growth
in our Foundation, Edge and Cloud revenue streams has offset the professional
services revenue lost from NTU following contract termination in March 2023.
Foundation Support & Maintenance fees in the period on our Foundation
products (including SITS, Callista, ebs, Maytas, K2 and SID) decreased 0.7% in
the period. As previously announced, Victoria University (Callista) exited in
Q4 2022 resulting in £0.7m decline in revenues. Several ebs and Maytas
customers moved onto Software-as-a-Service (SaaS) contracts in the year,
resulting in £0.3m of associated revenues transferring from Foundation
Support and Maintenance to Foundation. This has been offset by £0.8m
increased revenues from inflationary and student number increases across SITS
and Callista.
Foundation Software includes the sale of new software licenses on our
Foundation products. Revenue in the period increased 17.5% to £8.5m (2022:
£7.3m constant currency, £7.2m reported) driven by growth across SITS, ebs
and Maytas, including a new SITS customer: London School of Science and
Technology.
Cloud Services cover the provision of Tribal Cloud, a fully managed public
cloud service and other hosting services supporting Tribal products, either in
a private cloud, or increasingly in a public cloud. Cloud revenues have
continued to increase and are up 23.2% to £10.4m (2022: £8.5m constant
currency and reported). As previously discussed, revenue growth in this area
is driven by significant sales to existing customers, transitioning their
existing on-premise SITS:Vision software, into the Tribal Cloud. During 2023,
four additional customers signed up to migrate their on-premise solutions into
the cloud including University of the Arts London, University of
Wolverhampton, University of Exeter and Royal Veterinary College.
Edge revenues saw an increase of 9.0% to £5.2m (2022: £4.8m constant
currency and reported), due to sales across our range of products such as
Semestry, Support and Wellbeing and Engage.
Professional Services includes the implementation of all our Foundation and
Edge 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
either a day rate fee or performed under a fixed fee for defined
implementation scope. Professional services have continued to be delivered
remotely where appropriate, and the team has been bolstered by the Global
Delivery Centre (GDC) in Kuala Lumpur, Malaysia. Professional Services revenue
decreased by 16.1% to £9.8m (2022: £11.2m constant currency, £11.7m
reported), partly driven by the termination of the NTU contract.
Other Software & Services revenue decreased 8.4% to £9.7m (2022: £10.6m
constant currency, £11.0m reported) due to continued Australian SchoolEdge
churn and declining revenues on the Department of Education Contract with
schools in New South Wales as previously announced. The Department of
Education is working with schools to allow them to select their own providers
and move away from one overarching contract with Tribal. Ahead of this
expected exit, revenues will decline as usage of the Tribal systems decreases.
The previously announced exit of the Technical and Further Education colleges
New South Wales, 'TAFE NSW' contract has been extended from H2 2023 to H2
2024, at which point no further revenue will be generated. The TAFE and DoE
contracts contributed £4.9m to Other Software and Services revenues in 2023.
Adjusted Operating Profit increased by 75.9% to £25.7m (2022: £14.6m
constant currency; £14.3m reported) and Adjusted Operating Margin increased
to 37.5% (2022: 21.6% constant currency and 20.9% reported). Operating profit
benefited by £1.8m from the net impact of the reversal of the onerous
contract provision recognised against the NTU contract in 2022 and the loss
made on the contract in the early part of 2023. Revenue growth across
Foundation Software and Cloud as discussed above, together with cost
optimisation has further contributed to the margin improvement.
Education Services (ES)
£m 2023 2022 Reported Constant currency 2022 Change constant currency Change constant currency %
Revenue 17.2 15.4 15.2 1.9 12.7%
School Inspections & Related Services 14.2 12.7 12.6 1.6 12.9%
i-graduate - Surveys & Data Analytics 2.9 2.7 2.6 0.3 11.6%
Adjusted Operating Profit 2.4 3.6(1) 3.5(1) (1.0) (29.8%)
Adjusted Operating Margin 14.1% 23.6% 22.7% (8.6%) (8.6)pp
1. 2022 Adjusted Operating Profit has
been restated by £0.3m in Student Information Systems and (£0.3m) in
Education Services.
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 12.7% to £17.2m (2022: £15.2m
constant currency; £15.4m reported).
The revenue from School Inspections & Related Services increased by 12.9%
to £14.2m (2022: £12.6m constant currency; £12.7m reported). This revenue
growth was driven by contracts in the UK with the Department for Education in
England. The National Centre for Excellence in the Teaching of Mathematics
'NCETM' contract scope was increased resulting in additional revenues for
Tribal and the contract for the National Tutoring Programme 'NTP' won in 2022
benefited from a full year's delivery. Tribal was also successful in securing
a new contract with the Department for Education for the Multiply contract
with a total contract value of £1.2m over two years. The Middle East revenues
declined against 2022 with no new contracts won in year
The revenue for Surveys & Data Analytics increased by 11.6% to £2.9m
(2022: £2.6m constant currency; £2.7m reported). The revenues from Surveys
are improved, as expected, due to the seasonality of the Southern Hemisphere
International Student Barometer in which most institutions participate every
other year.
The Adjusted Operating Profit in Education Services decreased by 29.8% to
£2.4m (2022: £3.5m constant currency; £3.6m reported), the Adjusted
Operating Margin also decreased 8.6pp to 14.1% (2022: 22.7% constant currency;
23.6% reported), this decrease is largely due to the mix of contracts running,
with lower revenues in the Middle East which typically attract higher margins
than in the UK, together with investment in the delivery, sales and management
teams to drive and sustain growth in 2024 and beyond. There were £0.6m of
one-off negative operating margin impacts, the majority of which relate to
reorganisation of the operating model.
Product development
£m 2023 2022 Reported Change
Product Development 12.4 14.4 14%
Of which capitalised 8.5 10.3 17%
Tribal Edge 8.5 10.3 17%
Other Products - -
Of which expensed 4.0 4.1 5%
Foundational Products 2.7 2.3(1) (19%)
Edge 0.7 1.3 49%
Other Software Products 0.6 0.6(1) (0%)
Amortisation 1.6 1.4 (13%)
1 2022 restated as the Student
Information Desk product (£0.3m) has been restated from other.
The Group spent £12.4m on Product Development, of which £8.5m was
capitalised in relation to Edge, including Dynamics and Semestry (2022:
£14.4m spent, £10.3m capitalised, £4.1m expensed).
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 an efficient 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.
As previously announced, the Edge development team reached its peak of
development activities to deliver Tribal Admissions during 2022. The team was
reduced part way through 2023 to align to our development strategy, which
resulted in a 17% saving in capitalised product development and will reduce
further in 2024 with further reductions undertaken in early 2024.
Expensed product development decreased 5% to £4.0m (2022: £4.1m) of which
£2.7m (2022: £2.3m) related to our Foundation products, £0.7m (2022:
£1.3m) related to Edge and £0.6m (2021: £0.6m) related to other products.
Key performance indicators (KPIs)
£m 2023 2022 Reported 2022 Constant currency Change constant currency Change constant currency %
Revenue 85.7 83.6 83.1 2.7 3.2%
- Student Information Systems 68.6 68.2 67.9 0.7 1.1%
- Education Services 17.2 15.4 15.2 1.9 12.7%
Adjusted EBITDA(1) 14.4 7.0 7.2 7.1 99.0%
Adjusted EBITDA Margin(1) 16.8% 8.4% 8.7% 8.1% 8.1pp
Annual Recurring Revenue (ARR)(2) 54.5 51.2 50.2 4.3 8.7%
Gross Revenue Retention (GRR)(3) 91% 91% 91% 0% 0.0pp
Net Revenue Retention (NRR)(4) 102% 103% 103% (1%) (1.0)pp
Committed Income (Order Book) 168.8 172.9 170.4 (1.6) (0.9%)
Operating Cash Conversion(6) 110.5% 89.0% 89.6% 20.9% 23.3pp
Free Cash (Out)/In Flow (1.4) (5.3) (5.3) 3.9 73.2%
Staff Retention 86.2% 83.6% 83.6% 2.6% 2.6pp
Revenue per Operational FTE(5) £103.2k £102.0k £101.4k £1.8k 1.8%
1. Adjusted EBITDA and Adjusted EBITDA Margin are in
respect of continuing operations and exclude charges reported in 'Exceptional
items' of £2.9m (2022: £2.1m), refer to Note 4. EBITDA is calculated by
taking the Adjusted Operating Profit after the allocation of Central Overheads
and excludes Interest, Tax, Depreciation and Amortisation.
2. Annual Recurring Revenue is a forward-looking
metric. Includes exit rate annualised recurring revenue, plus future
contracted recurring revenue yet be delivered, and known losses within the
next 12 months where customers have given notice
3. GRR is calculated as a percentage of recurring
revenue retained from existing customers at 1 January including contract
expiry, cancellations or downgrades in the year. NRR is 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. NRR for 2022 has been restated, resulting in a decrease of 1pp from
the reported value.
4. Committed Income (Order Book) refers to the Total
Contract Value of booked sales orders which have not yet been delivered
(including two years Support and Maintenance, where it is contracted on an
annual recurring basis).
5. Revenue per Operational FTE is the average FTE for
the year excluding average FTE associated with capitalised Product
Development. In 2023 107.3 FTE were capitalised (2022: 152.3).
6 Operating cash conversion is calculated as net
cash from operating activities before tax, excluding cash outflow of £0.8m
(2022: £nil) from an aborted takeover and £0.9m (2022:£0.6m) of
restructuring costs as a proportion of Adjusted EBITDA excluding the onerous
contract provision release of £4.3m (2022: provision created £4.5m)
The above Alternative Performance Measures (APM) are not Statutory Accounting
Measures and are not intended as a substitute for statutory measures. A
reconciliation of Statutory Operating Profit and Adjusted EBITDA has been
provided in the financial statements.
Annual recurring revenue (ARR)
2022 Constant currency
£m 2023 Reported 2022 Change Change %
Foundational Support & Maintenance 25.0 24.8 24.3 0.6 2.6%
Foundational Subscription 7.7 5.4 5.4 2.3 42.3%
Cloud 12.6 10.2 10.1 2.5 24.5%
Edge 5.9 5.4 5.4 0.4 8.1%
Core product ARR 51.1 45.8 45.3 5.8 12.9%
Other Software & Services 3.4 5.4 4.9 (1.5) (30.6)%
Total ARR 54.5 51.2 50.2 4.3 8.7%
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 relating to our core product offering increased by 12.9% to £51.1m (2022:
£45.3m constant currency, £45.8m reported) driven by new customer wins and
upsell to existing customers across our core product offerings.
ARR relating to other software and services has decreased 30.6% to £3.4m
(2022: £4.9m constant currency, £5.4m reported), of which £1.5m relates to
the removal of ARR for the Department of Education as we expect the customer
to exit within the next 12 months.
NRR 102% (2022 restated: 103%) has decreased by 1pp. Upsell to existing
customers has been largely consistent year on year, highlighting the growth
opportunities within our existing customer base, in particular migrations of
on-premise customers into the cloud.
GRR 91% (2022: 91%) includes expected churn across our School Edge customers
of 0.7ppt, 2.5ppt for the material decline in DoE contract revenues, and
2.4ppt for the termination of NTU.
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 2023. This represents the best estimate of business expected to be
delivered and recognised in future periods and includes two years of Support
& Maintenance revenue. At 31 December 2023 this decreased to £168.8m
(2022: £170.5m constant currency, £172.9m reported). Growth in Foundation
and Edge ARR revenues have driven committed income upwards, offset by the
reduction due to a further 12 months delivered on key contracts including
Callista, DoE and Education Services contracts.
Operating cash conversion
Operating cash conversion is calculated as net cash from operating activities
before tax (excluding the cash outflow of £0.8m (2022: £nil) from costs
associated with the lapsed offer from Ellucian and £0.9m (2022: £0.6m) of
restructuring costs) as a proportion of Adjusted EBITDA excluding the onerous
contract provision of £4.5m in 2022 and its £4.3m subsequent release due to
the end of the NTU contract in 2023. In 2023, operating cash conversion was
110.5% (2022: 89.0% reported). The increase in operating cash conversion is a
result of improved working capital.
Free cash flow
Free cash flow is included as a key indicator of the cash that is generated
(or absorbed) by the Group and is available for acquisition-related
investment, interest and finance charges, and 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 2023 improved to an outflow of £(1.4)m (2022: outflow of £5.3m
reported) as investment in product development decreased £1.9m to £8.5m
(2022: £10.4m), net cash used in operating activities before tax increased
£0.7m to £9.4m (2022: £8.7m), despite £1.8m of cash outflow from takeover
and restructuring costs in year (2022: £0.6m), and there were lower tax
payments of £1.5m to £1.1m (2022: £2.6m).
Full time equivalent (FTE) and staff retention
2023 2022 Change
UK 601 622 (21)
Asia Pacific 293 317 (24)
Rest of world(1) 14 13 1
Full Time Equivalent (FTE) 908 952 (44)
1. Including USA, Canada and Middle East.
Our overall workforce has decreased by 4.6% to a total FTE of 908 from 952 at
31 December 2022.
On an operational FTE basis (excluding Capitalised Product Development), the
revenue per average operational FTE increased to £103.2k (2022: £102.0k).
The reduction in headcount reflects our drive for operational efficiencies and
reduction in Edge product development, whilst growing our global delivery
capability in Malaysia and the Philippines. Staff retention has increased to
86.2% (2022: 83.6%).
Exceptionals
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 significant one-off events, for which separate disclosure would assist in a
better understanding of the financial performance achieved.
A full explanation of 'Exceptional items' is included in Note 4, however the
main items are as follows:
· Restructuring and associated costs: Relate to planned reductions within our
Edge development teams during the first half of 2024, and the restructuring of
the Group's operations to implement a new target operating model in 2023.These
costs relate to one-off initiatives that support the Group's transition to a
pureplay Edtech, SaaS business (2023: £1.0m; 2022: £0.6m).
· Education Services restructure costs: Board's strategic review of Education
Services and establishing ES as a standalone entity, with costs of £1.0m in
2023
· Lapsed offer by Ellucian: Costs of £1.4m were spent on due diligence and
external advisors in 2023.
· Acquisition-related costs: Amounts relating to the consultancy and legal costs
of potential acquisitions (2023: credit of £0.1m; 2022 charge of £0.2m). The
credit in 2023 has arisen from the recalculation of accounting for changes in
the fair value of the contingent deferred consideration as part of the
earn-out agreement with Eveoh BV, and the corresponding gain has been
recognised in the income statement.
Net cash and cash flow
£m 2023 2022 Change
Net cash flow from operating activities before tax 9.4 8.7 0.7
Tax paid (1.1) (2.6) 1.5
Purchases of PPE (0.4) (0.7) 0.3
Net lease payments (0.9) (0.9) 0.0
Capitalised product development (8.5) (10.4) 1.9
Proceeds from shares 0.0 0.6 (0.6)
Free cash flow (1.4) (5.3) 3.9
Net cash outflow from acquisition activities (0.1) (1.0) 0.9
Net cash inflow/(outflow) from other financing activities 5.6 3.2 2.4
Net decrease in cash & cash equivalents 4.1 (3.1) 7.2
Cash & cash equivalents at beginning of the year 2.9 5.9 (3.0)
Less: Effect of foreign exchange rate changes (0.2) 0.0 (0.2)
Cash & cash equivalents at end of period 6.8 2.9 3.9
Borrowings (14.0) (6.3) (7.8)
Net (debt)/cash & cash equivalents end of period (7.2) (3.4) (3.8)
Net debt and cash equivalents at 31 December 2023 were (£7.2)m (2022:
(£3.4)m).
Operating cash inflow before tax for the period was £9.4m (2022: £8.7m),
£0.7m higher than last year despite £0.8m cash outflow from costs relating
to the lapsed offer from Ellucian and £0.9m outflow from restructuring.
Spend on product development decreased to £8.5m (2022: £10.4m) in line with
the Group's product investment programme. The Group made a payment of £0.1m
for deferred consideration (2022: £1.0m), which was a final earn-out payment
for Eveoh. There have been no acquisitions in 2023.
Cash inflow from other financing activities (per table above) increased to
£5.6m (2022: £3.2m). The Group paid a final dividend of 0.65p per share in
the year with £1.4m returned to shareholders. Bank loan arrangement fees and
all interest in the period totalled £0.9m (2022: £0.3m). During the year the
Group drew down an additional net loan of £7.8m (2022 £6.3m) from the £20m
facility to assist with working capital requirements.
Funding arrangements
On 29 December 2023 the Group entered into a three-year £20m multicurrency
revolving facility with a further £5m accordion with HSBC, with the option to
extend by a further two years. The facility was put in place to cover general
corporate and working capital requirements of the Group; as at 31 December
2023 £14.0m (2022: 6.3m) of the loan was utilised. The Group has a £2m
committed overdraft facility in the UK and an AUD $2m committed overdraft
facility in Australia; both facilities are committed for a 12-month period
ending August 2024 and October 2024 respectively. At 31 December 2023 none of
the overdraft facilities were drawn.
Shareholders returns and dividends
Given Tribal's solid financial performance in FY23, the Board intends to pay a
dividend to shareholders. However, given the uncertainty around the likely
outcome of the dispute with NTU, the Board is deferring its decision on the
quantum of the dividend payment this year until the Board has an appropriate
level of certainty. Such dividend is likely to be declared as an interim
dividend.
Going concern
As at 31 December 2023, the Group had cash and cash equivalents of £6.8m
(2022: £2.9m) and borrowings of £14.0m (2022: £6.3m). The Group has funding
arrangements in place as described earlier, also please see Note 13.
The Group benefits from strong annual recurring revenues and cash generation,
it also has a significant pipeline of committed income as it enters 2024. The
Group's net current liability position has reduced to £19.1m from £25.0m in
2022; the decrease mainly driven by the release of the onerous contract
provision (£4.5m) following termination of the NTU contract. The remaining
net current liabilities primarily consists of net contract liabilities £21.8m
(2022: £19.3m) relating to deferred customer revenue recognised in accordance
with IFRS 15.
Management have considered a range of outcomes in relation to the NTU contract
dispute and its potential impact on the Group's cash flows. If mediation is
not successful, it may result in possible litigation. Should the dispute
result in litigation, timelines for resolution will be uncertain but are
considered highly unlikely to be resolved within the next 12 months.
Management is undertaking a range of actions, including assessing all
discretionary spend, in order to improve cash flows as a matter of prudence.
In assessing the Group's going concern position the Directors have considered
all relevant facts, latest forecasts, an assessment of the risks faced by the
Group, and considered potential changes in trading performance. In addition,
management have stress tested the latest forecasts to the point where either
the Group cannot meet its liabilities or is in breach of banking covenants and
have concluded that this position is highly unlikely. Accordingly, the
Directors have a reasonable expectation that the Group and the Company have
adequate resources to continue in operational existence for at least 12 months
from the date of approval of the financial statements and the foreseeable
future. Thus, they continue to adopt the going concern basis in preparing the
financial statements.
Taxation
The corporation tax on profit before tax was £1.3m (2022: £0.9m). This
increase is driven by the increased profits of the Group.
Share options and share capital
On 16 October 2023, 418,314 nil-cost share options were granted to Mark
Pickett (240,308) and Diane McIntyre (178,006) as part of their ongoing
remuneration.
On 16 October 2023, 185,194 nil-cost share options were granted to eligible
employees on the Executive Board under the terms of its 2018 Long-Term
Incentive plan.
Earnings per share (EPS)
Adjusted basic earnings per share from continuing operations before
exceptional items and intangible asset impairment charges and amortisation,
which reflects the Group's underlying trading performance, increased to 4.1p
due to the improved adjusted profit before tax in the year.
Statutory basic earnings per share increased to 2.5p (2022: statutory loss
0.2p) as a result of the statutory profit in the year £5.3m (2022: statutory
loss £0.5m).
Pension obligations
At 31 December 2023, the Group operated two defined benefit pension schemes
for the benefit of certain deferred employees of its subsidiaries in the UK.
These schemes are administered by separate funds that are legally separated
from the Company. 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 surplus calculated under IAS 19 at the end of
the year was £0.1m (2022: surplus of £0.1m), with gross assets of £8.5m and
gross liabilities of £5.7m (2022: £8.1m and £5.4m respectively). Total
actuarial losses recognised in the consolidated statement of comprehensive
income are (£0.1m) (2022: gains £0.3m). The Company does not have an
unqualified right to apply any surplus on one of the schemes and consequently
a surplus of £2.6m has not been recognised.
Diane McIntyre
Chief Financial Officer
Consolidated Income Statement
For the year ended 31 December 2023
Note Year ended 31 December 2023 Restated*
Total Year ended 31 December 2022
£'000 Total
£'000
Revenue 2 85,750 83,585
Cost of sales (43,628) (52,250)
Gross profit 42,122 31,335
Total administrative expenses (34,861) (30,556)
Operating profit 3 7,261 779
Analysed as: 3 10,581 2,901
Operating profit (before exceptional items)
Exceptional items 4 (3,320) (2,122)
Operating profit (EBIT) 7,261 779
Finance income 308 25
Finance costs 5 (939) (417)
Profit before tax 6,630 387
Tax charge 6 (1,336) (897)
Profit/(loss) attributable to the owners of the parent 5,294 (510)
Earnings per share
Basic 8 2.5p (0.2)p
Diluted 8 2.4p (0.2)p
Consolidated statement of comprehensive income
For the year ended 31 December 2023
Note Year ended Year ended
31 December 2023 £'000 31 December 2022 £'000
Profit/(loss) for the year 5,294 (510)
Other comprehensive (expense)/income: (129) 262
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit pension schemes
Deferred tax on measurement of defined benefit pension schemes - (66)
Items that may be reclassified subsequently to profit or loss: (458) 595
Exchange differences on translation of foreign operations
Other comprehensive (expense)/income for the year net of tax (587) 791
Total comprehensive income for the year attributable to equity holders of 4,707 281
the parent
Consolidated balance sheet
As at 31 December 2023
Note 2023 £'000 2022 £'000
Non-current assets 9 28,524 29,176
Goodwill
Other intangible assets 10 49,894 43,667
Property, plant and equipment 836 1,044
Right-of-use assets 2,117 1,435
Net investment in lease 21 70
Deferred tax assets 4,960 5,064
Retirement benefit scheme assets 81 72
86,433 80,528
Current assets 11 13,690 12,505
Trade and other receivables
Net investment in lease 49 47
Contract assets 2 5,918 6,676
Current tax assets 752 421
Cash and cash equivalents 6,797 2,891
27,206 22,540
Total assets 113,639 103,068
Current liabilities 12 (5,902) (5,788)
Trade and other payables
Accruals (9,194) (8,622)
Contract liabilities 2 (27,732) (26,004)
Current tax liabilities (1,541) (1,145)
Lease liabilities (713) (728)
Borrowings 13 - (35)
Provisions (1,205) (5,194)
(46,287) (47,516)
Net current liabilities (19,081) (24,976)
Non-current liabilities 12 (212) (209)
Other payables
Deferred tax liabilities (2,740) (2,930)
Contract liabilities 2 - (141)
Lease liabilities (1,320) (721)
Borrowings 13 (14,000) (6,250)
Provisions (605) (483)
(18,877) (10,734)
Total liabilities (65,164) (58,250)
Net assets 48,475 44,818
Equity 10,611 10,611
Share capital
Share premium 83 83
Other reserves 28,893 28,598
Accumulated profits 8,888 5,526
Total equity attributable to equity holders of the parent 48,475 44,818
Consolidated statement of changes in equity
For the year ended 31 December 2023
Note Share capital Share premium Other reserves Accumulated Total equity
£'000 £'000 £'000 (losses)/profits £'000 £'000
Balance at 31 December 2022 10,519 18,961 27,978 (11,118) 46,340
Loss for the year - - - (510) (510)
Other comprehensive income for the year - - - 791 791
Total comprehensive income for the year - - - 281 281
Issue of equity share capital 92 481 - - 573
Share premium capital reduction - (19,359) - 19,359 -
Equity dividend paid 7 - - - (2,736) (2,736)
Credit to equity for share-based payments - - 589 - 589
Foreign exchange difference on share-based payments - - 31 - 31
Tax charge on credit to equity for share-based payments 6 - - - (260) (260)
Contributions by and distributions to owners 92 (18,878) 620 16,363 (1,803)
Balance at 31 December 2022 and 1 January 2023 10,611 83 28,598 5,526 44,818
Profit for the year - - - 5,294 5,294
Other comprehensive expense for the year - - - (587) (587)
Total comprehensive income for the year - - - 4,707 4,707
Equity dividend paid 7 - - - (1,377) (1,377)
Credit to equity for share-based payments - - 295 - 295
Tax credit on credit to equity for share-based payments 6 - - - 32 32
Contributions by and distributions to owners - - 295 (1,345) (1,050)
At 31 December 2023 10,611 83 28,893 8,888 48,475
Consolidated cash flow statement
For the year ended 31 December 2023
Note Year ended Year ended
31 December 2023 31 December 2022
£'000 £'000
Net cash from operating activities 14 8,308 6,106
Investing activities (390) (716)
Purchases of property, plant and equipment
Expenditure on intangible assets 10 (8,479) (10,369)
Payment of deferred consideration for acquisitions (71) (994)
Proceeds from sub-leases 50 29
Net gain on forward contracts 175 23
Net cash outflow from investing activities (8,715) (12,027)
Financing activities (717) (229)
Interest paid
Loan arrangement fees (112) (9)
Loan drawdown 8,750 8,500
Loan repayment (1,000) (2,250)
Proceeds on issue of shares - 573
Principal paid on lease liabilities (911) (943)
Interest paid on lease liabilities (77) (60)
Equity dividend paid 7 (1,377) (2,736)
Net cash from financing activities 4,556 2,846
Net increase/(decrease) in cash and cash equivalents 4,149 (3,075)
Cash and cash equivalents at beginning of year 2,856 5,924
Effect of foreign exchange rate changes (208) 7
Cash and cash equivalents at end of year 6,797 2,856
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 2023 or 2022 but is derived
from those accounts. Statutory accounts for 2022 have been delivered to the
Registrar of Companies and those for 2023 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 2023 and 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 between revenue streams and
segment information.
31 December 2023 UK £'000 Australia £'000 Other APAC North America and Rest of the world Total £'000
£'000 £'000
Foundation - Support & Maintenance 15,903 6,269 1,727 996 24,895
Foundation - Software 7,865 185 417 75 8,542
Cloud Services 8,384 1,432 453 150 10,419
Edge 3,913 414 63 801 5,191
Professional Services 7,969 498 1,164 151 9,782
Core Student Information Systems (SIS) 44,034 8,798 3,824 2,173 58,829
Other software & services 3,316 6,424 - 9 9,749
Total Student Information Systems (SIS) 47,350 15,222 3,824 2,182 68,578
Schools inspections & other related services (QAS) 9,121 - 1 5,104 14,226
i-graduate survey & data analytics 1,214 370 1,076 286 2,946
Total Education Services (ES) 10,335 370 1,077 5,390 17,172
Total 57,685 15,592 4,901 7,572 85,750
North America and Rest of
31 December 2022 UK £'000 Australia £'000 Other APAC £'000 the world Total £'000
£'000
Foundation - Support & Maintenance 15,668 7,112 1,617 1,023 25,420
Foundation - Software 6,575 106 515 21 7,217
Cloud Services 6,577 1,351 425 144 8,497
Edge 3,870 400 142 346 4,758
Professional Services 7,618 1,191 2,181 231 11,221
Core Student Information Systems (SIS) 40,308 10,160 4,880 1,765 57,113
Other software & services 3,240 7,808 - - 11,048
Total Student Information Systems (SIS) 43,548 17,968 4,880 1,765 68,161
Schools inspections & other related services (QAS) 7,176 - - 5,570 12,746
i-graduate survey & data analytics 1,126 126 1,080 346 2,678
Total Education Services (ES) 8,302 126 1,080 5,916 15,424
Total 51,850 18,094 5,960 7,681 83,585
Net contract liabilities
Contract asset/ Contract asset/
(liability) (liability)
2023 £'000 2022 £'000
Opening contract balance (19,469) (17,647)
Of which released to income statement 19,328 17,405
New billings and cash in excess of revenue recognised (21,673) (19,227)
Closing contract balance (21,814) (19,469)
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 £0.3m (2022: £0.5m) and will be released in line with the total
contract revenue. No amount has been impaired at 31 December 2023 or 2022.
Remaining performance obligations
The amount of revenue that will be recognised in future periods on revenue
contracts entered into prior to 31 December when the remaining performance
obligations will be satisfied is analysed as follows: At 31 December 2023
2024 £'000 2025 £'000 2026 £'000 Thereafter £'000 Total £'000
Foundation - Support & Maintenance 25,476 24,784 16,230 63 66,553
Foundation - Software 7,489 7,332 3,935 20 18,776
Cloud Services 11,523 11,219 7,204 1,272 31,218
Edge 4,845 4,649 2,337 421 12,252
Professional Services 7,763 1,642 52 - 9,457
Core SIS 57,095 49,625 29,758 1,776 138,253
Other software & services 6,120 2,346 1,066 56 9,588
Total SIS 63,215 51,971 30,824 1,832 147,841
Schools inspections & other related services (QAS) 11,396 6,190 275 22 17,883
i-graduate survey & data analytics 1,764 903 453 - 3,120
Total ES 13,160 7,094 728 22 21,003
TOTAL 76,375 59,064 31,552 1,853 168,844
At 31 December 2022 2023 £'000 2024 £'000 2025 £'000 Thereafter £'000 Total £'000
Foundation - Support & Maintenance 24,635 24,472 15,783 6,389 71,279
Foundation - Software 5,876 5,275 3,187 134 14,472
Cloud 8,947 8,320 5,618 2,334 25,219
Edge 4,648 4,560 2,996 1,263 13,467
Professional Services 7,093 1,303 74 12 8,482
Core SIS 51,199 43,930 27,658 10,132 132,919
Other software & services 7,577 3,541 1,982 9 13,109
Total SIS 58,776 47,471 29,640 10,141 146,028
Schools inspections & other related services (QAS) 12,013 8,120 2,101 141 22,375
i-graduate survey & data analytics 2,121 1,033 878 439 4,471
Total ES 14,134 9,153 2,979 580 26,846
TOTAL 72,910 56,624 32,619 10,721 172,874
An analysis of the Group's revenue is as follows:
2023 2022 £'000
£'000
Continuing operations 85,750 83,585
Sales of services
Total revenue 85,750 83,585
Further details of the nature of the services provided are disclosed in Note
3. Sales of goods are not material and are therefore not shown separately.
Included in sales of services is £1.3m (2022: £1.7m) 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. 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.
Restated *
Revenue
Adjusted segment operating profit
Year ended Year ended Year ended Year ended
31 December 2023 31 December 2022 31 December 2023 31 December 2022
£'000 £'000 £'000 £'000
SIS 68,578 68,161 23,412 12,099
ES 17,172 15,424 2,254 3,496
Total 85,750 83,585 25,666 15,595
Unallocated corporate expenses (14,360) (11,596)
Amortisation of acquired software and customer contracts & relationships (725) (1,098)
Adjusted operating profit 10,581 2,901
Exceptional items (see Note 4) (3,320) (2,122)
Operating profit 7,261 779
Finance income 308 25
Finance costs (939) (417)
Profit before tax 6,630 387
Tax charge (1,336) (897)
Profit/(loss) after tax 5,294 (510)
* See Note 5
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 £2.3m (2022: £2.6m) and within Education Services £0.2m (2022:
£0.1m).The accounting policies of the reportable segments are the same as the
Group's accounting policies. Segment profit represents the profit earned by
each segment, without 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 2% (2022: 5%) have arisen
from the segment's largest customer; within SIS revenues of approximately 4%
(2022: 4%) have arisen from the segment's largest customer. These percentages
are calculated against total revenue.
Geographical information
Revenue from external customers, based on location of the customer, is shown
below:
2023 £'000 2022 £'000
UK 57,685 51,850
Australia 15,592 18,094
Other Asia Pacific 4,901 5,960
North America 3,650 3,616
Rest of the world 3,922 4,065
85,750 83,585
Non-current assets (excluding deferred tax)
2023 £'000 2022
£'000
UK 67,523 60,746
Australia 13,342 14,350
Other Asia Pacific 531 305
North America 27 52
Rest of the world 50 11
81,473 75,464
4. Exceptionals
2023 £'000 Restated*
2022
£'000
Acquisition related costs 103 (186)
Internal systems transformation programme 'VERITAS' - (1,420)
Takeover costs (1,003) (1,000)
Education Services (ES) restructure
Group restructuring and associated costs
(1,321)
-
-
(615)
Total exceptional items (3,320) (2,122)
The exceptional items are not part of the Group's underlying trading
activities and include the following:
Acquisition-related costs: Amounts relating to the consultancy and legal costs
of potential acquisitions (2023; credit of £103,000; 2022: charge of
£186,000). The credit in 2023 has arisen from the remeasurement of accounting
for changes in the fair value of the contingent deferred consideration as part
of the earn-out agreement with Eveoh BV, and the corresponding gain has been
recognised in the income statement.
Internal systems transformation programme 'Veritas': The upgrade of the
accounting system went live in January 2023. In 2022 £1,321,000 of costs were
included as exceptional items as the upgrade was material and nonrecurring in
nature. In 2023 all further costs associated with this project have been
expensed as part of the Group's underlying activities.
Restructuring and associated costs relate to the restructuring of the Group's
operations, including properties and the Education Services Restructure.
(2023: £2,003,000; 31 December 2022: £615,000). These costs relate to
one-off initiatives that support the Group's transition to a Pureplay EdTech,
SaaS business.
Takeover costs: Amounts relating to the lapsed offer for Tribal Group plc by
Ellucian. Costs of £1,420,000 were spent on due diligence and external
advisors.
5. Finance Costs
2023 £'000 2022 £'000
Interest on bank overdrafts and loans 717 229
Loan arrangement fees 112 9
Net interest payable on retirement benefit obligations - 4
Interest expense on lease liabilities 78 81
Unwinding of discounts 32 94
Total finance costs 939 417
6. Tax
2023 £'000 2022 £'000
Current tax (117) (1,381)
UK corporation tax
Overseas tax 1,999 1,967
Adjustments in respect of prior years (493) 483
1,389 1,069
Deferred tax Current year 502 (212)
Adjustments in respect of prior years (555) 40
(53) (172)
Tax charge on profits 1,336 897
The continuing tax charge can be reconciled to the profit from continuing
operations per the income statement as follows:
2023 £'000 2022 £'000
Profit before tax on continuing operations 6,630 387
Tax charge at standard UK rate of 23.5% (2022: 19%) 1,558 74
Effects of: 342 619
Overseas tax rates
Expenses not deductible for tax purposes 495 14
Adjustments in respect of prior years (1,048) 523
Additional deduction for R&D expenditure - (23)
Share scheme costs - 19
Fixed assets ineligible depreciation - (14)
Losses not recognised 92 989
Movement in IFRIC 23 tax provision (117) (1,405)
Effect of changes in tax rates 14 101
Tax expense for the year 1,336 897
In addition to the amount charged to the income statement a current tax credit
of £nil (2022: credit of £24,000) and a deferred tax credit of £32,000
(2022: charge of £284,000) has been recognised directly in equity during the
year in relation to Share Schemes.
A deferred tax charge of £nil (2022: £726,000) has been recognised in the
Consolidated Statement of Comprehensive Income in relation to defined benefit
pension schemes.
The Group continues to hold appropriate uncertain tax provisions.
The income tax expense for the year is based on the UK statutory rate of
corporation tax for the period of 23.5% (2022: 19%).
Tax for other jurisdictions is calculated at the prevailing rates in the
respective jurisdictions.
7. Dividends
2023 £'000 2022 £'000
Amounts recognised as distributions to equity holders in the period: 1,377 2,736
Final dividend for the year ended 31 December 2022 of 0.65 pence
(Final dividend for the year ended 31 December 2021: 1.3 pence) per share
Proposed final dividend: 1,379 1,379
Proposed final dividend for the year ended 31 December 2023 of 0.65 pence
(year ended 31 December 2022: 0.65 pence) per share
The Board regularly reviews the available distributable reserves of Tribal
Group plc to ensure they are protected for future dividend payments.
8. 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:
2023 '000 2022 '000
Weighted average number of shares outstanding: 214,180 211,627
Basic weighted average number of shares in issue
Dilutive weighted average number of employee share options 1,626 3,236
Total weighted average number of shares outstanding for dilution calculations 215,806 214,863
Diluted earnings per share reflects the dilutive effect of LTIP and CSOP share
options for which vesting criteria have been met. In regards the diluted loss
per share in 2022, all potentially dilutive Ordinary Shares, including options
are anti-dilutive as they would decrease the loss per share.
The maximum number of potentially dilutive shares, based on options that have
been granted but have not yet met vesting criteria, is 3,300,128 (2022:
3,328,168). This includes 17,937 options in the 2019 SAYE Scheme (2022:
92,157).
The adjusted basic and diluted earnings per share figures shown 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:
2023 £'000 Restated*
2022
£'000
Net profit/(loss) 5,294 (510)
Earnings/(loss) per share 2.5p (0.2)p
Basic
Diluted 2.4p (0.2)p
Net profit (before exceptional items) * 8,811 59
Adjusted earnings per share 4.1p -
Basic
Diluted 4.1p -
* Net profit (before exceptional items) is calculated as below: 2023 £'000 2022 £'000
Operating profit (before exceptional items) 10,581 2,901
Finance income 308 25
Finance costs (939) (417)
Operating profit (before exceptional items) before tax 9,950 2,509
Tax charge (before exceptional items) (1,139) (2,450)
Net profit (before exceptional items) 8,811 59
9. Goodwill
2023 £'000 2022 £'000
Cost 110,407 109,813
At beginning of year
Exchange differences (652) 594
At end of year 109,755 110,407
Accumulated impairment losses 81,231 81,231
At beginning of year
At end of year 81,231 81,231
Net book value 28,524 29,176
At end of year
At beginning of year 29,176 28,582
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:
2023 £'000 2022 £'000
Student Information Systems (SIS) 24,990 25,642
Education Services (ES) 3,534 3,534
28,524 29,176
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
2023. 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. From the budget a forecast was extrapolated by
product over a five-year period to give greater clarity on future cash flows.
Cash flows beyond the budget and extrapolation period were calculated into
perpetuity using a 2% growth assumption. This growth rate is in line with the
expected long-term growth rate of the market in which the business operates.
The cash flows projections are discounted at a pre-tax discount rate of 16.0%
(2022: 14.5%). 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 of 280bps and 250bps would trigger an impairment in
SIS and ES respectively. A decline in growth rate of EBITDA (330bps) in SIS
and (290bps) in ES would result in an impairment.
Management does not believe a reasonably possible change in the key
assumptions may cause impairment.
10. Other Intangible Assets
Acquired software customer contracts & relationships Acquired Development costs £'000 Business systems Software licenses Total £'000
£'000 £'000 Intellectual property £'000 £'000
£'000
Cost 12,233 9,753 1,873 54,013 818 1,488 80,178
At 1 January 2022
Adjustments - - - 23 (30) - (7)
Additions - - - 10,294 75 - 10,369
Disposals - - - (9,171) (793) (1,445) (11,409)
Exchange differences 349 149 - 155 5 1 659
At 31 December 2022 and 1 January 2023 12,582 9,902 1,873 55,314 75 44 79,790
Additions - - - 8,479 - - 8,479
Exchange differences (383) (163) - (170) - - (716)
At 31 December 2023 12,199 9,739 1,873 63,623 75 44 87,553
Amortisation 8,305 6,606 809 26,399 624 1,488 44,231
At 1 January 2022
Charge for the year 628 470 141 1,160 20 - 2,419
Disposals - - - (9,058) (644) (1,445) (11,147)
Exchange differences 350 113 - 156 - 1 620
At 31 December 2022 and 1 January 2023 9,283 7,189 950 18,657 - 44 36,123
Charge for the year 267 458 97 1,388 7 - 2,217
Exchange differences (383) (129) - (169) - - (681)
At 31 December 2023 9,167 7,518 1,047 19,876 7 44 37,659
Carrying amount
At 31 December 2023 3,032 2,221 826 43,747 68 - 49,894
At 31 December 2022 3,299 2,713 923 36,657 75 - 43,667
Software, customer contracts and relationships and intellectual property that
have arisen from acquisitions are amortised over their estimated useful lives,
which are 3 to 8 years and 3 to 15 years respectively. The amortisation period
for development costs incurred on the Group's product development is 3 to 15
years, based on the expected life cycle of the product. Amortisation and
impairment of development costs, amortisation for software, customer contracts
and relationships, intellectual property, business systems and software
licenses are all included within administrative expenses.
Management have reassessed the useful economic life (UEL) of the previously
acquired software relating to the Tribal Dynamics and Semestry intangible
assets. As a result the UEL of these assets has been aligned with that of the
Tribal Edge product, reflecting the fact that these products are integral to
Edge. This has been treated as a change in accounting estimate from 1 January
2023. Prior periods have not been adjusted. The net impact of this change in
accounting estimate resulted in a reduced charge to the Income Statement of
£361,000 in the period (Charge to 31 December 2023: £267,000; under previous
estimate £628,000).
The Group is required to test annually if there are any indicators of
impairment and perform an impairment test on all assets which are under
development, irrespective of whether there is an indicator 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.
The impairment testing allocates all assets relating to specific CGUs,
including goodwill, other intangibles, property, plant and equipment and net
current assets and liabilities.
11. Trade and other receivables
2023 £'000 2022 £'000
Amounts receivable for the sale of services 8,834 7,387
Less: Loss allowance (665) (194)
8,169 7,193
Other receivables 689 828
Prepayments 4,832 4,484
13,690 12,505
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.
Trade receivables
Trade receivables are measured at amortised cost. The average credit terms on
sales is 30 days (20221: 30 days). The Group sells the majority of its
services to the public sector or related bodies and institutions, and as such
there is a low incidence of default experience.
Of the total trade receivables balance at the end of the year there were three
customers (2022: two) who held balances outstanding of more than 5% (2026:
£1.7m; 2022: £1.6m). The average age of receivables is 29 days (2022: 40
days).
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses using a lifetime expected credit loss allowance for trade receivables
and accrued income. To measure expected credit losses on a collective basis,
trade receivables and accrued income are grouped based on similar credit risk
and ageing.
At 31 December 2023 the lifetime expected loss allowance for trade receivables
is as follows:
Expected loss rate Gross carrying amount Loss provision £'000
£'000
Current 1% 7,004 39
30-60 days 9% 715 62
60-90 days 18% 277 50
90-180 days 34% 399 137
180+ days 86% 439 377
Total 8,834 665
At 31 December 2022 the lifetime expected loss allowance for trade receivables
is as follows:
Expected Gross carrying amount
Loss provision
loss rate £'000 £'000
Current 1% 6,502 66
30-60 days 8% 255 19
60-90 days 39% 104 40
90-180 days 10% 252 25
180+ days 16% 274 44
Total 7,387 194
Movement in the impairment allowance for trade receivables is as follows:
2023 £'000 2022 £'000
Balance at the beginning of the year 194 187
IFRS 9 expected credit loss adjustment 491 75
Amounts written off during the year (12) (12)
Movements on unused amounts (8) (56)
Balance at the end of the year 665 194
Contract assets
Contract assets are measured at amortised cost. Contract assets inherently
have some contractual risks associated with them related to the specific and
ongoing risks in each individual contract with a customer. These are subject
to the expected credit loss impairment under IFRS 9.
Revenue provisions recognised in the income statement in respect of contract
assets amount to £0.5m (2022: £0.5m).
12. Trade and other payables
2023 £'000 2022 £'000
Current 1,283 1,010
Trade payables
Other taxation and social security 3,664 2,498
Other payables 955 2,280
5,902 5,788
Non-current 212 209
Other payables
212 209
Total 6,115 5,997
The average credit period taken for trade purchases is 30 days (2022: 10
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:
2023 £'000 2022 £'000
Goods received not invoiced 68 712
Other creditors 888 1,568
956 2,280
13. 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 rolling period ending August 2024 and October 2024 respectively. At
31 December 2023 none of the overdraft facilities were drawn. As at 31
December 2023, the Group had cash and cash equivalents of £6.8m (2022:
£2.9m).
On 29 December 2023 the Group entered into a three-year £20m multicurrency
revolving facility with HSBC, plus a £5m accordion, with the option to extend
by a further two years. The facility was put in place to cover general
corporate and working capital requirements of the Group, as at 31 December
2023 £14.0m (2022: £6.3m) of the loan was utilised.
The facility interest charge is set at Sonia +1.85% and the loan is subject to
two covenants: Senior interest cover (ratio of EBITDA to Senior interest
charge) and Total debt cover (ratio of total debt to EBITDA). The Directors
have reviewed the forecast covenants and do not expect any breach for the
foreseeable future
14. Notes to the cash flow statement
2023 £'000 2022 £'000
Operating profit from continuing operations 7,261 779
Depreciation of property, plant and equipment 566 623
Depreciation of right-of-use assets 1,004 1,036
Amortisation and impairment of other intangible assets 2,217 2,419
Share-based payments 331 589
Movement in contingent deferred consideration (115) -
Research and development tax credit (141) (177)
Net pension credit (9) (29)
Other non-cash items (470) 23
Operating cash flows before movements in working capital 10,644 5,263
Increase in receivables (423) (808)
(Decrease)/increase in payables (853) 4,252
Net cash from operating activities before tax 9,368 8,707
Net tax paid (1,060) (2,601)
Net cash from operating activities 8,308 6,106
Net cash from operating activities before tax can be analysed as follows:
2023 £'000 2022 £'000
Continuing operations 9,368 8,707
15. Contingent liabilities
The Company and its subsidiaries have provided performance guarantees issued
by its banks on its behalf, in the ordinary course of business, totalling
£0.1m (2022: £0.8m). These are not expected to result in any material
financial loss and the likelihood of using these guarantees is assessed as
remote.
Tribal Holdings Limited, Tribal Dynamics Limited and Semestry Limited have
taken advantage of the exemption available under Section 394A/479A of the
Companies Act 2006 in respect of the requirements for audit. As a condition of
the exemption, the Company has guaranteed the year-end liabilities of these
subsidiaries until they are settled in full. The liabilities of the
subsidiaries at the year-end were £72,799,710 (2022: £64,309,000). These are
inclusive of intercompany liabilities of £69,555,514 (2022: £60,963,020).
The Group delivers complex multi-year projects which from time to time give
rise to significant operational and commercial risks. Such risks may, in
certain circumstances, lead to potential negotiations or disputes with
customers which may give rise to consequential financial or commercial
obligations or liabilities arising. The Group's contract with Nanyang
Technological University (NTU) has been terminated with both parties reserving
rights. NTU have demanded SGD17,511,651 and USD377,724 on account of alleged
damages, losses, costs and/or expenses which the Group vigorously disputes. No
legal proceedings have been instituted (nor are they permitted to be brought)
until the parties have participated in mediation in an attempt to achieve a
resolution. The timing and outcome of that process is presently uncertain. It
is possible that there may be a significant adverse financial impact on the
Group but at this juncture it is not practicable for the Board to fully assess
such potential impact, if any.
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. END FR LBLLLZXLFBBDRecent news on Tribal
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