TIDMTRB
RNS Number : 9830V
Tribal Group PLC
13 August 2020
Tribal Group plc
13 August 2020
Half year results for the six months ended 30 June 2020
(unaudited)
Change
2019 H1 Change %
Results Constant Constant Constant
6 months to 30 June 2020 H1 2019 H1 Currency(5) Currency(5) Currency(5)
Revenue GBP38.2m GBP40.4m GBP39.7m GBP(1.5)m (3.9)%
========== ========== ============= ============= =============
Annual Recurring Revenue
(ARR)
at period end (1) GBP43.2m GBP41.8m GBP41.8m GBP1.4m 3.3%
========== ========== ============= ============= =============
Adjusted Operating Profit
(EBITDA) (2, 3) GBP8.1m GBP8.3m GBP7.7m GBP0.4m 5.9%
========== ========== ============= ============= =============
Adjusted Operating Cash Flow
(4) GBP4.3m GBP(2.7)m GBP(2.7)m GBP7.0m 257%
========== ========== ============= ============= =============
Net Cash GBP6.7m GBP6.0m GBP6.0m GBP0.7m 12.2%
========== ========== ============= ============= =============
Statutory Profit after Tax GBP3.8m GBP3.6m GBP3.6m GBP0.2m 4.3%
========== ========== ============= ============= =============
Earnings per Share (diluted) 1.9 p 1.7p 1.7p 0.2p 11.8%
========== ========== ============= ============= =============
Operational Highlights
-- Responded well to the challenges of COVID-19 and shown good resilience
-- Services provision for all parts of the business moved to
remote delivery quickly and successfully, only on-site school
inspections work in the Middle East and US remain paused
-- Cost saving measures implemented early to mitigate the impact
of COVID-19 on trading margin and cash; all tax deferrals repaid in
period and furlough will be repaid
-- Two new SITS customers won in Australia, and a new Dynamics CRM customer in Further Education
-- First Edge module released and sold to all Higher Education
customers in Australia; Edge Admissions module to be released
before the end of the year
Financial Highlights
-- Revenue down 3.9% to GBP38.2m on a constant currency basis
(2019 H1: GBP39.7m); SIS revenue increased 1.3%, Education Services
down 17.2% due to the impact of COVID-19
-- Annual Recurring Revenue (ARR) at period end increased 3.3% to GBP43.2m (2019 H1: GBP41.8m)
-- Adjusted Operating Profit (EBITDA) performance 5.9% higher at GBP8.1m (2019 H1: GBP7.7m)
-- Adjusted Operating Margin (EBITDA) improved 190bps to 21.3% (2019 H1:19.4%)
-- Statutory profit after tax up 4.3% at GBP3.8m (2019 H1: GBP3.6m)
-- Net Cash of GBP6.7m (2019 H1: GBP6.0m); Adjusted operating
cash flow GBP4.3m (2019 H1: GBP(2.7)m) excluding the one off
payment of GBP8.1m in final settlement of the dispute with a
platform provider
-- Annual dividend payment will resume for FY2020
-- Full year earnings expected to be slightly ahead of current
market expectations for Revenue and Adjusted EBITDA, and ahead for
Adjusted EBITA
(1) Annual Recurring Revenue (ARR) at period end includes Support & Maintenance fees, Cloud
Services and Subscription Licence and is assessed as contracted ARR at the 30 June 2020 and
30 June 2019.
(2) Adjusted Operating Profit and Adjusted Operating Margin is in respect of continuing operations
which excludes "Other Items"
charges of GBP1.7m (2019 H1: charge of GBP1.9m)
(3) EBITDA is calculated by taking the Adjusted Operating Profit after the allocation of
Central Overheads and excludes Interest, Tax,
Depreciation and Amortisation
(4) Adjusted Operating cash flow excludes the one-off settlement to the platform provider
of GBP8.1m
(5) 2019 H1 results restated to "constant currency" using 2020 rates to exclude foreign currency
impact
-----------------------------------------------------------------------------------------------------
Mark Pickett, CEO of Tribal Group, commented:
"Tribal continued to make good progress against its strategic
objectives in the first six months of the year. We took swift
action to mitigate the adverse impact of Covid-19, whilst focussing
on support to our customers and the safety of our employees. I was
delighted by the professionalism of all our customer-facing teams,
who moved seamlessly to delivering services remotely to our
customers. Overall our first half performance was better than
expected, benefiting from significant cost mitigations which will
not continue at the same level in the second half; I would also
note that the account management and general project work is
slowing as customers assess the impact of Covid-19. Despite this,
the outlook for the full year is expected to be slightly ahead of
current market expectations for Revenue and Adjusted EBITDA, and
ahead for Adjusted EBITA. We remain excited about the longer-term
growth opportunities available to us through the transition to
Tribal Edge."
Further Information
A presentation of these results will be made to analysts at
9.00am today via conference call. Interested parties should email
Investor.Relations@n1singer.com to register their interest . A copy
of the presentation will be made available on the Tribal Group
website: www.tribalgroup.com.
Tribal Group plc Tel: 0117 311 5293
Mark Pickett, Chief Executive
Officer
Paul Simpson, Acting Chief Financial
Officer
Investec Bank plc Tel: 020 7597 5970
Sara Hale
Will Godfrey
Virginia Bull
N+1 Singer Capital Markets Limited Tel: 020 7496 3000
Shaun Dobson
Tom Salvesen
Alex Bond
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.
Business review
Introduction
The primary focus in the first half of the year has been
managing the unexpected and unprecedented challenges arising from
the COVID-19 pandemic. As a global business we experienced this
earlier than some, with initial impacts presenting themselves in
Australia from February before affecting our UK and wider global
business later in March.
The Group has responded well to these challenges and shown good
resilience. We have continued to operate at planned levels on our
existing software contracts and the majority of our non-software
contracts, and we quickly put in place short-term cost saving
measures to protect trading margins and cash.
Adjusted Operating Profit (EBITDA) for the period decreased by
2.4% to GBP8.1m (2019: GBP8.3m reported) but increased on a
constant currency basis (2019: EBITDA of GBP7.7m). Revenue for the
period was GBP38.2m (2019: GBP40.4m reported and GBP39.7m on a
constant currency basis). Adjusted Operating Margin increased to
21.3% (2019: 20.5% reported; 19.4% constant currency). Statutory
Profit After Tax increased 4.3% to GBP3.8m (2019 H1: GBP3.6m).
Annual Recurring Revenue (ARR) at period end increased to GBP43.2m
(2019 H1: GBP41.8m reported; GBP41.8m constant currency) and
represents contracted ARR at 30 June 2020. Net cash at 30 June 2020
was GBP6.7m (2019: GBP6.0m) and Adjusted Operating Cash Flow
increased to GBP4.3m (2019 H1: GBP(2.7)m) excluding the one off
payment of GBP8.1m in final settlement of the dispute with a
platform provider.
Student Information Systems (SIS)
We have continued to deliver successfully existing global
software implementation projects remotely with minimal
interruption, with both Tribal and its customers adapting their
working practices to a remote delivery model quickly.
The business has benefitted from the strong focus on growing
Annual Recurring Revenue in recent years. Annual renewals of
Support & Maintenance and Cloud Services contracts have
continued in the period with no noticeable attrition, and
benefitted from the addition of new customers and the sale of the
Edge module Transforming the Collection of Student Information
(TCSI) in Australia. ARR reported in the period for SIS increased
to GBP20.5m (2019: GBP19.5m constant currency) and now represents
71% of total SIS revenue.
Adjusted Operating Profit in Student Information Systems
increased by 17.7% to GBP10.5m (2019: GBP9.0m constant currency) on
a slightly increased revenue of GBP29.0m (2019: GBP28.6m constant
currency).
We won two new customers for full SITS implementation, Kaplan
Australia (Total Contract Value (TCV) AUD$3.5m) and Chartered
Accountants Australia and New Zealand (TCV AUD$3m). We have also
won a number of new large customers for our ebs software including
Wolverhampton College and University of Gibraltar, and have started
to sell Dynamics CRM solutions (2019 acquisition) to existing
customers including The North East Surrey College Of Technology
(NESCOT).
Our first Edge module was released in Australia with all Higher
Education customers taking the TCSI module and implementing this
with their existing Tribal software.
Education Services (ES)
We have continued to deliver the majority of non-software
contracts. In the UK the National Professional Qualifications
(NPQ), Advanced Maths Support Programme (AMSP) and National Centre
for the Excellence of Teaching Mathematics (NCETM) contracts have
all moved successfully to remote delivery, as have the majority of
the US contracts with only a small part of the New York State
Education Department (NYSED) contract delayed until schools
re-open. In the Middle East the delivery of the school inspections
contract with ADEC paused due to the closure of all schools in the
region, with work resuming when schools re-open. Surveys and
Benchmarking assessments have continued but at lower levels, and
our International Student Barometer in the Southern hemisphere has
been delayed to 2021.
Adjusted Operating Profit in Education Services fell slightly to
GBP2.0m (2019: GBP2.3m constant currency) on a 17.2% reduction in
Revenue to GBP9.2m (2019: GBP11.1m constant currency),
demonstrating the resilience of the business and the pro-active
cost management undertaken.
Three existing customers extended their contracts by a further
year - New Zealand Tertiary Education Council, Advanced Mathematics
Support Programme (AMSP) and the European Schools assessment.
We have won a number of new contracts in the period, including
Quality Mark for Further Education colleges in the UK. There have
also been some new opportunities which have arisen as a response to
COVID-19, including the evaluation of distance learning in Sharjah
in the Middle East.
Strategy Update
Our priorities for 2020 are to protect the business from the
impact of COVID-19, win new customers, increase share of wallet in
existing customers, and deliver on the Tribal Edge strategy.
To facilitate this we have completed the transformation of the
software business into one Tribal team, which is Edge/Cloud ready,
and able to deliver value to our customers through our Edge
solutions. Mark Wilson, Chief Operating Officer, heads the SIS
business globally including sales, support and maintenance, and
professional services (implementation). We have also brought
together one unified Cloud team under Mike Cope, Chief Technology
Officer, developing new service delivery processes.
By the end of 2020 we expect to have five early adopters in the
UK for Edge Admissions module, and all customers in Australia
through the release of the TCSI module. We have redefined the Edge
strategy and roadmap with the TCSI beta going live in January 2020
and Admissions progressing well for completion before the end of
the year. We have developed our cloud proposition and service, and
are focussing on migrating our existing customers to the public
cloud, with Edge readiness to enable a seamless adoption of Edge
modules as they are released.
Outlook
The pipeline of sales opportunities remains positive, with
increasing interest from universities and colleges in moving to the
Public Cloud, adopting Dynamics CRM and our Engage (student
engagement) mobile solution.
The sales cycle has however lengthened, particularly in Higher
Education, as customers consider their future budgets in light of
the current uncertainty around student numbers for the 2020/21
academic year. This has delayed investment in non-critical IT
projects and larger projects resulting in a reduced number of large
student management system tenders. This does however provide
strength in Tribal's existing customer base and we are well
positioned for future increases in customer activity.
Customers are increasingly recognising that the complexity of
their systems, together with their associated cost and
inefficiency, are impacting their agility to deal with their
challenges, such as improving student experience. This is driving
institutions to adopt Public Cloud solutions through Tribal, and
should encourage demand for simplification and standardisation as
part of Edge Readiness services.
The Group expects results in the current year to be slightly
ahead of market expectations for Revenue and Adjusted EBITDA, and
ahead for Adjusted EBITA.
Financial review
Results 20 19 Change
6 months to 30 June Constant Constant
GBPm 2020 2019 Currency Currency
Revenue 38.2 40.4 39.7 (3.9)%
======= ====== ========== ==========
Student Information Systems 29.0 29.1 28.6 1.3%
======= ====== ========== ==========
Education Services 9.2 11.3 11.1 (17.2)%
======= ====== ========== ==========
Adjusted Operating Profit
(before Central Overheads)
(1) 12.6 11.8 11.2 11.8%
======= ====== ========== ==========
Student Information Systems 10.5 9.5 9.0 17.7%
======= ====== ========== ==========
Education Services 2.0 2.3 2.3 (11.5)%
======= ====== ========== ==========
Central Overheads (6.0) (5.6) (5.5) 8.7%
======= ====== ========== ==========
Adjusted Operating Profit
(EBITA) 6.6 6.3 5.7 14.6%
======= ====== ========== ==========
Adjusted Operating Margin
(EBITA) 17.2% 15.5% 14.4% 280bps
======= ====== ========== ==========
Adjusted Operating Profit
(EBITDA) 8.1 8.3 7.7 5.9%
======= ====== ========== ==========
Adjusted Operating Margin
(EBITDA) 21.3% 20.5% 19.4% 190bps
======= ====== ========== ==========
(1) Adjusted Operating Profit and Adjusted Operating Margin is
in respect of continuing operations, excluding intangible asset
amortisation of GBP0.6m (2019 H1: GBP0.6m), restructuring costs of
GBP0.5m (2019 H1: GBP0.3m), and share based payments GBP0.6m (H1
2019: GBP0.5m).
Over 40% of Tribal's income is generated outside the UK, and is
therefore subject to foreign exchange movement. Overall, there was
an adverse impact due to foreign exchange fluctuations of GBP0.7m
in Revenue and GBP0.6m in Adjusted Operating Profit, due
particularly to the Group's exposure to the Australian dollar,
which was on average 5% stronger against GBP sterling in 2020 H1
compared with 2019 H1.
The Revenue and Adjusted Operating Profit by segment in the
table shows the reported results for 2020 H1 and 2019 H1, and the
2019 H1 results restated to "constant currency" using 2020 rates to
exclude foreign currency impact. The growth percentages shown are
on the 2019 constant currency numbers. All comparatives reported
below are on a constant currency basis.
Revenue
In the six months ended 30 June 2020 the Group's Revenue was
down 3.9% to GBP38.2m (2019 H1: GBP39.7m). Student Information
Systems increased by 1.3% to GBP29.0m (2019 H1: GBP28.6m) helped by
an improved performance in APAC. Education Services decreased by
17.2% to GBP9.2m (2019 H1: GBP11.1m) mainly due to the impact of
COVID-19 on contracts in the Middle East with most activities
paused, partially offset by continued strong delivery on the UK
contracts.
Adjusted Operating Profit
Adjusted Operating Profit (before Central Overheads) increased
by 11.8% to GBP12.6m (2019 H1: GBP11.2m). Student Information
Systems increased by 17.7% to GBP10.5m (2019 H1: GBP9.0m) helped by
an improved performance in APAC due to implementation work with the
three new SITS customers and increased delivery on ebs for the One
TAFE project. Education Services decreased by 11.5% to GBP2.0m
(2019 H1: GBP2.3m) mainly due to the impact of COVID-19 on
contracts in the Middle East with most activities paused, partially
offset by continued strong delivery on the UK contracts.
Adjusted Operating Profit (EBITDA) increased 5.9% to GBP8.1m
(2019 H1: GBP7.7m) and Adjusted Operating Margin increased to 21.3%
(2019 H1: 19.4%); including depreciation Adjusted Operating Profit
(EBITA) increased 14.6% to GBP6.6m (2019 H1: GBP5.7m) and Adjusted
Operating Margin increased to 17.2% (2019 H1: 14.4%). The Group
implemented a number of cost saving initiatives in the period in
response to COVID-19 including a four day working week for the
majority of staff across May to July, and a cessation of all
discretionary spend. The Group also benefitted from ongoing
efficiencies and cost savings, with a planned reduction in
headcount saving GBP0.2m in the period (full year benefit GBP1.4m,
annualised GBP2.1m).
Central overheads, representing costs in HR, IT, Finance,
Marketing and Management that aren't directly attributable to lines
of business remained at GBP5.4m before the impact of foreign
exchange, and GBP6.0m (2019 H1: GBP5.5m) including the impact of
foreign exchange in the period. We continue to focus on reducing
these costs and have grown our Manila office in the Philippines to
help support certain finance and HR processes, alongside their
existing work supporting ebs and SchoolEdge and business services.
This has enabled us to improve margin without impacting the Group's
ability deliver on customer contracts and generate growth.
Statutory Profit After Tax was GBP3.8m (2019 H1: GBP3.6m) and
Diluted Earnings Per Share (EPS) were 1.9p (2019 H1: 1.7p).
Net Cash and Adjusted Operating Cash Flow
At the end of the period, the Group had Net Cash of GBP6.7m
(2019 FY: GBP16.5m; 2019 H1: GBP6.0m) and Adjusted Operating Cash
Flow of GBP4.3m (2019 H1: GBP(2.7)m). Collections continued
throughout the period with minimal delays to payment terms. Cost
saving measures undertaken in response to COVID-19 improved the
cash position including the move to a four-day working week which
benefited cash by GBP1.1m - the Group returned to a five day week
at the end of July and the savings will provide some protection
across the second half of the year. In addition, the Group has
benefited from the timing of working capital requirements as the
business has moved to a remote delivery model. The Group paid
GBP8.1m in final settlement of the dispute with a platform provider
and GBP1.7m deferred consideration relating to the acquisition of
Tribal Dynamics.
For those countries that offered the benefit of a temporary tax
deferral, the Group has now repaid these in full. All furlough
benefits (approximately GBP50,000) will be repaid in the near
future. The annual dividend payment in respect of FY2019 was
cancelled saving GBP2.5m; however, we will resume a dividend
payment for FY2020.
The Group has bank facilities of GBP10 million.
Student Information Systems
Overall Adjusted Operating Profit increased to GBP10.5m (2019
H1: GBP9.0m) and Adjusted Operating Margin increased to 36.4% (2019
H1: 31.3%).
License and development revenue was flat at GBP3.3m (2019 H1:
GBP3.4m). License revenue on larger contracts is recognised under
IFRS15 as the implementation progresses. We commenced
implementation of SITS at University of Northampton which was won
at the end of 2019, as well as the two new large contracts won in
the period at Kaplan Australia and Chartered Accountants Australia
and New Zealand. In addition, we have recognised module sales into
existing customers including the TCSI module in Australia. There is
an increasing amount of subscription (recurring) revenue, with
GBP1.4m (2019 H1: GBP0.7m) recognised in the period, including
GBP0.7m (2019 H1: GBP0.1m) for Dynamics CRM sales.
Implementation revenue increased to GBP6.4m (2019 H1: GBP6.1m),
reflecting a much improved performance in APAC benefitting from the
new SITS sales. We continue to implement SITS in EMEA at Glasgow
Caledonian University, The University of Bristol, Canterbury Christ
Church University, The University of Sheffield, University of
Portsmouth, St Mary's University, Carleton University (Canada) and
Ravensbourne University, and deliver the large ebs implementations
at Colleges Northern Ireland and Capital City College Group. There
was also significant revenue in APAC on the One TAFE project.
Support & Maintenance revenue increased to GBP16.2m (2019
H1: GBP15.8m). This reflects the new license and account management
sales achieved, together with the contractual annual inflationary
uplift.
Cloud Services revenue remained at the same level as last year
at GBP2.9m (2019 H1: GBP2.9m). The main cloud hosting services
revenue increased with interest from customers in moving to the
public cloud remaining high; however, some sales have been delayed
as customers have needed to focus on short term issues from
COVID-19. Our Data Managed Services work reduced by GBP200k due to
the loss of one larger (non-education) customer whose contract
ended, whilst another customer paused work in the current year due
to COVID-19.
Education Services
School Inspections and Related Services revenue decreased to
GBP6.7m (2019 H1: GBP9.1m). In the UK the main contracts continued
to operate at the same level with work on 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
moving successfully to a remote delivery model; however, there was
a reduction in additional change requests on the NCETM contract
compared to the prior year. In the US we continued to deliver three
of the four elements of the contract with the New York State
Education Department (NYSED), with the fourth element deferred
until schools re-open. The Performance Review Program for Initial
Licensure (PRPIL) in Massachusetts experienced lower teacher
license sales due to the closure of schools due to COVID-19. In the
Middle East the closure of schools resulted in a reduction in
inspections compared to last year, however this was partially
offset by smaller contracts in Sharjah and Bahrain albeit at lower
levels than previous years.
Surveys and Benchmarking revenue decreased to GBP1.2m (2019 H1:
GBP1.6m). Surveys revenue was lower mainly due to the International
Student Barometer for the southern hemisphere being delayed until
2021 due to COVID-19, along with a number of smaller international
surveys. Benchmarking revenue remained at the same level as last
year.
Asset Management (K2) and Software Solutions revenue increased
to GBP1.3m (2019 H1: GBP1.2m), primarily due to royalties from
increased end consumer demand on a Software Solutions contract.
Overall Adjusted Operating Profit decreased to GBP2.0m (2019 H1:
GBP2.3m) and Adjusted Operating Margin increased to 21.9% (2019 H1:
20.5%). The impact of reduced revenue on the contracts in the
Middle East was offset by the variable cost base with the majority
of the work performed by contractors.
Key Performance Indicators (KPIs)
The Group monitors its performance using the KPIs in the table
below.
KPIs
6
months
to 20 19 Change
30 Constant Constant
June 2020 20 19 Variance Currency Currency
Revenue GBP38.2m GBP40.4m (5.4)% GBP39.7m (3.9)%
========== ========== =========== ========== ==========
Annual
recurring
revenue
(ARR)
at
period
end(1) GBP43.2m GBP41.8m 3.3% GBP41.8m 3.3%
========== ========== =========== ========== ==========
Adjusted
operating
profit
(EBITDA)(2,
3) GBP8.1m GBP8.3m (2.4)% GBP7.7m 5.9%
========== ========== =========== ========== ==========
Adjusted
operating
margin
(EBITDA)(2,
3) 21.3% 20.5% 80bps 19.4% 190bps
========== ========== =========== ========== ==========
Committed GBP131.2m GBP133.6m GBP(2.4)m GBP140.6m GBP(9.5)m
income(4,5)
========== ========== =========== ========== ==========
Adjusted GBP4.3m GBP(2.7)m GBP7.0m GBP(2.7)m GBP7.0m
operating
cash
flow
(6)
========== ========== =========== ========== ==========
Staff
retention 97% 93% 400bps
========== ========== ===========
Revenue / average FTE (5) GBP93.4k GBP92.0k GBP1.4k
(GBP'000s: annualised)
========== ========== ===========
(1) Annual Recurring Revenue (ARR) at period end includes
Support & Maintenance fees, Cloud Services and Subscription
Licence and is assessed as contracted ARR at the 30 June 2020 and
30 June 2019.
(2) Adjusted Operating Profit and Adjusted Operating Margin is
in respect of continuing operations which excludes "Other
Items"
charges of GBP1.7m (2019 H1: charge of GBP1.9m)
(3) EBITDA is calculated by taking the Adjusted Operating Profit
after the allocation of Central Overheads and excludes Interest,
Tax,
Depreciation and Amortisation
(4) Committed income relates to the total value of orders which
have been signed on or before, but not delivered by, 30 June
2020,
based on the Total Contract Value, even though customers may be
permitted, under certain circumstances, to reduce their
commitment at a future date. This is reported on an IFRS15 basis
and represents the best estimate of business expected to be
delivered and recognised in future periods, and includes License
sales, Implementation work and two years of Support &
Maintenance revenue
(5) 2019 committed income and revenue / average FTE comparatives
are as at 31 December 2019
(6) Adjusted Operating cash flow excludes the one-off settlement
to the platform provider of GBP8.1m
Annual Recurring Revenue (ARR) at period end , which represents
annual Support & Maintenance fees paid on all software and
Cloud hosting services, and License sold on a subscription basis
contracted at the 30 June 2020, increased by 0.9% on a constant
currency basis to GBP43.2m (2019 H1: GBP41.8m). The growth includes
the benefit of new license sales in 2019 and contractual
inflationary uplifts applied annually.
Committed Income at 30 June 2020 this decreased by GBP9.5m on a
constant currency basis to GBP131.2m (2019 FY: GBP140.6m). The
movement includes the benefit of new License sales in 2019 and
contractual inflationary uplift applied annually to Support &
Maintenance of GBP1.4m. This is offset by GBP5.0m due to the
reduction in the term life of the contract with Callista to 2.5
years and GBP5.9m due to the change in delivery of work and timing
of revenue recognition as a result of the impact of COVID-19.
Product Development Costs: The Group spent GBP5.9m on product
development, of which GBP3.0m was capitalised in relation to Tribal
Edge and GBP0.1m was capitalised in relation to Tribal Dynamics
(2019 H1: GBP5.8m spent; GBP2.8 capitalised in relation to Tribal
Edge). The Group spent GBP2.2m on current products including SITS,
ebs, SchoolEdge, Dynamics and Maytas, this was consistent with the
previous half year (2019 H1: GBP2.9m).
Items excluded from adjusted profit figures: Certain items not
directly related to the trading business or regarded as exceptional
in nature have been removed from the adjusted profit figure and
disclosed as "Other Items" on the Income Statement to provide
greater understanding of the Group's underlying performance. The
main adjustments are as follows:
-- Share Based Payments charges (including employer related
taxes) stayed comparable at GBP0.6m (2019 H1: GBP0.5m), and are
excluded from the Adjusted Operating profit. The charges in the
current year relate to the Long Term Incentive Plan options (LTIPs)
which were granted to the executive and senior management teams in
2016, 2017, 2018 and 2019.
-- Amortisation of IFRS3 Intangibles charge in relation to IFRS3
intangible assets of GBP0.6m (2019 H1: GBP0.6m) 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,
this was determined in the year the acquisition took place.
-- Restructuring and Associated Costs relate to the
restructuring of the Group's operations, principally in Australia,
completed early in 2020, and includes a charge for redundancy costs
of GBP0.5m (2019 H1: GBP0.3m).
-- Legal Costs relate to the legal fees incurred in relation to
the items mentioned previously in the Legal Matters section.
Net Cash and Cash flow
Net cash at 30 June 2020 was GBP6.7m (2019 H1: GBP6.0m).
Cash flow
6 months to 30 June 2020
GBPm 2019
Net cash from operating activities (3.8) (2.7)
======= ======
Capitalised product development on
Tribal Edge (3.2) (3.0)
======= ======
Capital expenditure (0.2) (0.3)
======= ======
Acquisition of Crimson Consultants - (5.9)
======= ======
Deferred consideration (1.7) -
======= ======
Gross proceeds on issue of shares 0.2 -
======= ======
Loan arrangement fees & interest (0.1) -
======= ======
Loan drawdown 10.0 -
======= ======
Net repayment of lease liabilities (0.5) -
======= ======
Dividend payment - (2.1)
======= ======
Net increase/(decrease) in cash &
cash equivalents 0.7 (14.0)
======= ======
Cash & cash equivalents at beginning
of the year 16.5 20.0
======= ======
Cash & cash equivalents at end of
period 17.2 6.0
======= ======
Less: Effect of foreign exchange rate
changes (0.5) -
======= ======
Cash & cash equivalents at end of
period 16.7 6.0
======= ======
Borrowings (10.0) -
======= ======
Net Cash & cash equivalents at the
end of the period 6.7 6.0
======= ======
Operating Cash Inflow for the period was GBP(3.8)m this includes
GBP8.1m paid in respect of the final settlement of the Platform
provider dispute (2019: GBP(2.7)m). Cash conversion excluding the
settlement was 68% (2019 H1: (45)%) due to strong collections and
improvements in working capital. Most Support & Maintenance and
Cloud Services renewals are invoiced and collected towards the end
of the calendar year, and cash conversion is expected to normalise
in the second half of the year.
Share Options and Share Capital: On 16 January 2020, 3,405,998
shares were exercised by executives under the Share Matching Plan.
On 4 February 2020 1,223,241 options were exercised by Mark
Pickett, Chief Executive Officer under the Long-Term Incentive
Plan. On 1 June 2020 1,339,286 shares were issued in satisfaction
of the deferred consideration for the acquisition of Tribal Campus
Pty Limited (formerly Sky Software Pty Limited). On 12 June 2020,
150,000 options were exercised under the Long-Term Incentive
Plan.
As at 30 June 2020, there were 205,698,309 shares issued (2019
FY: 199,579,784).
Earnings per share: Diluted earnings per share increased by
11.8% to 1.9p (2019 H1: 1.7p). Adjusted diluted earnings per share
from continuing operations before other costs, including intangible
asset amortisation, restructuring costs and share based payment
charges, this reflects the Group's underlying trading performance,
decreased by 8% to 2.3p (2019 H1: 2.5p).
Dividends: The annual dividend for 2019 has been cancelled as a
result of cash and cost saving measures deemed necessary to manage
the risk of Coronavirus (2018: 1.1p per share); the Board confirms
its intention to continue a progressive dividend policy, with a
single dividend payment each year and we will resume a dividend
payment for FY2020.
Condensed consolidated income statement
For the six months to 30 June 2020
Six months Six months
ended ended
Other 30 June Other 30 June
(note 2020 (note 2019
Adjusted 5) Total Adjusted 5) Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----- --------- --------- ----------- --------- --------- -----------
Continuing operations
Revenue 4 38,183 - 38,183 40,374 - 40,374
Cost of sales (17,912) - (17,912) (20,045) - (20,045)
------------------------------- ----- --------- --------- ----------- --------- --------- -----------
Gross profit 20,271 - 20,271 20,329 - 20,329
------------------------------- ----- --------- --------- ----------- --------- --------- -----------
Total administrative expenses (13,704) (1,529) (15,233) (14,064) (1,845) (15,909)
------------------------------- ----- --------- --------- ----------- --------- --------- -----------
Operating profit/(loss) 4 6,567 (1,529) 5,038 6,265 (1,845) 4,420
Investment income 8 - 8 33 - 33
Finance costs 6 (176) (185) (361) (58) (86) (144)
------------------------------- ----- --------- --------- ----------- --------- --------- -----------
Profit/(loss) before tax 6,399 (1,714) 4,685 6,240 (1,931) 4,309
Tax (charge)/credit 7 (1,640) 733 (907) (1,040) 354 (686)
------------------------------- ----- --------- --------- ----------- --------- --------- -----------
Profit/(loss) attributable
to the owners of the parent 4,759 (981) 3,778 5,200 (1,577) 3,623
------------------------------- ----- --------- --------- ----------- --------- --------- -----------
Earnings per share
Basic 8 2.3p (0.4)p 1.9p 2.7p (0.8)p 1.9p
Diluted 8 2.3p (0.4)p 1.9p 2.5p (0.8)p 1.7p
------------------------------- ----- --------- --------- ----------- --------- --------- -----------
All activities are from continuing operations
Condensed consolidated income statement
For the year ended 31 December 2019
Other Year ended
(note 31 December
Adjusted 5) 2019
Note GBP'000 GBP'000 GBP'000
------------------------------- ------- --------- --------- -------------
Revenue 4 78,210 - 78,210
Cost of sales (39,028) - (39,028)
---------------------------------- ------- --------- --------- -------------
Gross profit 39,182 - 39,182
Total administrative expenses (27,530) (14,098) (41,628)
---------------------------------- ------- --------- --------- -------------
Operating profit/(loss) 4 11,652 (14,098) (2,446)
Investment income 59 - 59
Finance costs 6 (162) (344) (506)
---------------------------------- ------- --------- --------- -------------
Profit/(loss) before tax 11,549 (14,442) (2,893)
Tax (charge)/credit 7 (2,518) 2,448 (70)
Profit/(loss) attributable
to the owners of the parent 9,031 (11,994) (2,963)
---------------------------------- ------- --------- --------- -------------
Earnings per share
Basic 8 4.6p (6.1)p (1.5)p
Diluted 8 4.4p (5.9)p (1.5)p
---------------------------------- ------- --------- --------- -------------
Condensed consolidated statement of comprehensive income and
expense
For the six months to 30 June 2020
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
------------------------------------------------------- ----------- ----------- -------------
Profit/(loss) for the period 3,778 3,623 (2,963)
Other comprehensive income/(expense)
Items that will not be reclassified subsequently
to profit or loss:
Re-measurement of defined benefit pension schemes - - 490
Deferred tax on measurement of defined benefit
pension schemes - - (83)
Items that may be reclassified subsequently to
profit or loss:
Exchange differences on translation of foreign
operations 1,113 75 (627)
------------------------------------------------------- ----------- ----------- -------------
Other comprehensive income/(expense) for the period
net of tax 1,113 75 (220)
------------------------------------------------------- ----------- ----------- -------------
Total comprehensive income/(expense) for the period
attributable to equity holders of the parent 4,891 3,698 (3,183)
------------------------------------------------------- ----------- ----------- -------------
Condensed consolidated balance sheet
As at 30 June 2020
30 June 30 June 31 December
Note 2020 2019 2019
GBP'000 GBP'000 GBP'000
-------------------------------------- ------- --------- ---------- --------------
Non-current assets
Goodwill 9 26,505 29,953 25,879
Other intangible assets 10 21,444 14,023 19,469
Property, plant and equipment 1,262 1,571 1,438
Right of use assets 3,664 4,527 4,110
Net investment in lease 197 - 220
Deferred tax assets 4,380 3,465 4,462
Contract assets 22 66 129
----------------------------------------- ------- --------- ---------- --------------
57,474 53,605 55,707
-------------------------------------- ------- --------- ---------- --------------
Current assets
Trade and other receivables 11 10,752 13,337 10,791
Net investment in lease 46 - 46
Contract assets 4,237 6,036 3,864
Current tax assets 26 97 2
Cash and cash equivalents (excluding
bank overdrafts) 16 16,739 6,989 16,463
----------------------------------------- ------- --------- ---------- --------------
31,800 26,459 31,166
-------------------------------------- ------- --------- ---------- --------------
Total assets 89,274 80,064 86,873
----------------------------------------- ------- --------- ---------- --------------
Current liabilities
Trade and other payables 12 (6,340) (7,406) (7,027)
Contract liabilities (19,938) (18,488) (22,940)
Accruals (6,490) (5,419) (14,437)
Current tax liabilities (2,457) (1,127) (1,864)
Lease liabilities (999) (994) (933)
Borrowings 16 - (985) -
Provisions 13 (362) (209) (450)
----------------------------------------- ------- --------- ---------- --------------
(36,586) (34,628) (47,651)
-------------------------------------- ------- --------- ---------- --------------
Net current liabilities (4,786) (8,169) (16,485)
----------------------------------------- ------- --------- ---------- --------------
Non-current liabilities
Contract liabilities (316) (328) (78)
Retirement benefit obligations (540) (1,002) (540)
Lease liabilities (2,882) (3,255) (3,286)
Other payables 12 (30) (1,872) (1,970)
Deferred tax liabilities (1,021) (550) (1,093)
Borrowings (10,000) - -
Provisions 13 (908) (1,000) (936)
----------------------------------------- ------- --------- ---------- --------------
(15,697) (8,007) (7,903)
-------------------------------------- ------- --------- ---------- --------------
Total liabilities (52,283) (42,635) (55,554)
----------------------------------------- ------- --------- ---------- --------------
Net assets 36,991 37,429 31,319
----------------------------------------- ------- --------- ---------- --------------
Equity
Share capital 14 10,285 9,803 9,979
Share premium 15,951 15,539 15,539
Other reserves 26,025 25,440 26,029
Accumulated losses (15,270) (13,353) (20,228)
----------------------------------------- ------- --------- ---------- --------------
Total equity attributable to
equity holders of the parent 36,991 37,429 31,319
----------------------------------------- ------- --------- ---------- --------------
Condensed consolidated cash flow statement
for the six months to 30 June 2020
Six
Six months months Year
ended ended ended
30 June 30 June 31 December
Note 2020 2019 2019
GBP'000 GBP'000 GBP'000
---------------------------------------------- ------- ----------- --------- -------------
Net cash (used in)/from operations 15 (3,804) (2,737) 12,359
------------------------------------------------- ------- ----------- --------- -------------
Investing activities
Interest received 5 33 51
Purchases of property, plant and equipment (146) (279) (577)
Expenditure on intangible assets (3,189) (2,999) (6,300)
Payment of deferred contingent consideration
for acquisitions (1,732) - (485)
Acquisition of investments in subsidiaries
- cash consideration - (5,919) (5,904)
Acquisition of investments in subsidiaries
- cash acquired - - 34
Net cash outflow from investing activities (5,062) (9,164) (13,181)
------------------------------------------------- ------- ----------- --------- -------------
Financing activities
Interest paid (46) - (119)
Loan arrangement fees (65) - -
Draw down on Bank loan 10,000 - -
Equity dividend paid - (2,147) (2,147)
Proceeds on issue of shares 239 - 176
Proceeds from sub-leases 26 - 52
Payment of lease liabilities (546) - (865)
Net from/(cash used) in financing activities 9,608 (2,147) (2,903)
------------------------------------------------- ------- ----------- --------- -------------
Net increase/(decrease) in cash and cash
equivalents 742 (14,048) (3,725)
------------------------------------------------- ------- ----------- --------- -------------
Net cash and cash equivalents at beginning
of period 16,463 19,974 19,974
Effect of foreign exchange rate changes (466) 78 214
Net cash and cash equivalents at end of
period 16 16,739 6,004 16,463
------------------------------------------------- ------- ----------- --------- -------------
Condensed consolidated statement of changes in equity
For the six months to 30 June 2020
Share Share Other Accumulated Total
Capital Premium reserves losses Equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ---- -------- --------- -------- --------- ------------ ------------------
Balance at 31 December 2018 as
previously reported 9,803 15,539 25,020 (14,888) 35,474
Effect of IFRS16 - - - (73) (73)
-------------------------------- -------- -------- --------- ------------ ------------------
Balance at 31 December 2018
restated 9,803 15,539 25,020 (14,961) 35,401
Profit for the period - - - 3,623 3,623
Other comprehensive income for
the period - - - 75 75
-------------------------------- -------- -------- --------- ------------ ------------------
Total comprehensive income for
the period - - - 3,698 3,698
-------------------------------- -------- -------- --------- ------------ ------------------
Equity dividend paid - - - (2,147) (2,147)
Charge to equity for
share-based
payments - - 420 - 420
Tax credit on charge to equity
for share-based payments - - - 57 57
Contributions by and
distributions
to owners - - 420 (2,090) (1,670)
Balance at 30 June 2019 as
previously
reported 9,803 15,539 25,440 (13,353) 37,429
Effect of IFRS16 - - - (12) (12)
Tax effect of IFRS16 - - - (9) (9)
-------------------------------- -------- -------- --------- ------------ --------
Balance at 30 June 2019
restated 9,803 15,539 25,440 (13,374) 37,408
Loss for the period - - - (6,586) (6,586)
Other comprehensive expense for
the period - - - (295) (295)
-------------------------------- -------- -------- --------- ------------ --------
Total comprehensive expense for
the period - - - (6,881) (6,881)
-------------------------------- -------- -------- --------- ------------ --------
Issue of equity share capital 176 - - - 176
Charge to equity for
share-based
payments - - 622 - 622
Tax credit on charge to equity
for share-based payments - - - 27 27
Foreign exchange difference on
share-based payments - - (33) - (33)
-------------------------------- -------- -------- --------- ------------ --------
Contributions by and
distributions
to owners 176 - 589 27 792
-------------------------------- -------- -------- --------- ------------ --------
Balance at 31 December 2019 9,979 15,539 26,029 (20,228) 31,319
Profit for the period - - - 3,778 3,778
Other comprehensive expense for
the period - - - 1,113 1,113
-------------------------------- -------- -------- --------- ------------ --------
Total comprehensive income for
the period - - - 4,891 4,891
-------------------------------- -------- -------- --------- ------------ --------
Issue of equity share capital 239 - - - 239
Charge to equity for
share-based
payments - - 446 - 446
Share options exercised 67 412 (479) - -
Tax credit on charge to equity
for share-based payments - - - 67 67
Foreign exchange difference on
share-based payments - - 29 - 29
-------------------------------- -------- -------- --------- ------------ --------
Contributions by and
distributions
to owners 306 412 (4) 67 781
-------------------------------- -------- -------- --------- ------------ --------
Balance at 30
June 2020 10,285 15,951 26,025 (15,270) 36,991
---------------- ----- ------- -------- -------- --------- ------------ --------
Notes to the condensed consolidated financial information
for the six months to 30 June 2020
1. General information
The condensed consolidated financial information for the six
months ended 30 June 2020 was approved by the Board of Directors on
13 August 2020. This condensed consolidated interim financial
information does not comprise statutory accounts within the meaning
of section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2019 were
approved by the Board of Directors on 18 March 2020. A copy of the
statutory accounts for that year has been delivered to the
Registrar of Companies. The auditor reported on those accounts: its
report was unqualified, and did not contain a statement under
section 498(2) or (3) of the Companies Act 2006.
2. Accounting policies
The condensed consolidated set of financial statements included
in this half-yearly financial report has been prepared in
accordance with the Disclosure and Transparency Rules of the
Financial Services Authority.
The condensed consolidated financial information should be read
in conjunction with the annual financial statements for the year
ended 31 December 2019 which have been prepared in accordance with
IFRSs as adopted by the European Union.
In preparing these condensed interim financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were as stated within the consolidated financial statements for the
year ended 31 December 2019.
The accounting policies applied are consistent with those of the
annual financial statements for the year ended 31 December
2019.
3. Going concern
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.
The Group maintains appropriate cash balances and has a GBP2.0m
and $2.0m committed overdraft facilities in the UK and Australia
respectively. The overdraft is committed for a 12-month period
ending September 2020. On 21 January 2020, the Group entered into a
3 year GBP10m multicurrency revolving facility with HSBC with the
option to extend by a further 2 years. The facility was put in
place to cover general corporate and working capital requirements
of the Group.
The outbreak of Covid-19 is of concern as it has the potential
to impact the way we carry out our business. To date, Tribal has
responded well to the restrictions caused by Covid-19 and we have
transitioned quickly to remote working. Similarly, our customers
have adapted well to the challenges of Covid-19. As a business we
have put in place a number of short-term precautionary measures to
preserve cash and we continue to closely monitor the impact of
Covid-19 on a daily basis.
Tribal's main business is software related through the provision
of Student Information Systems (SIS) to education institutions in
the UK, Australia, and a number of other overseas locations.
Revenue is generated from the sale of software licenses and related
implementation work, and the ongoing provision of support &
maintenance and cloud/hosting services.
To date the support & maintenance and cloud/hosting services
have been unaffected. Customers have continued to pay for the
services, all of which can and are being delivered remotely. This
revenue, which is annual recurring (repeat) income and represents
half of our total annual revenue, 2/3 of our software revenue,
provides a level of protection and certainty to the business. We
expect this position to continue.
Implementation has slowed slightly as we move to implementing
remotely, some customers have experienced short-term delays to
projects as they divert their own resources to deal with their
response to the outbreak such as setting up remote lectures and
managing funding. Customers are however continuing with investment
in this area and we have not had any contract cancellations. As
most implementation projects span at least 12 months and up to 3
years, we do not expect the current restrictions caused by Covid-19
to impact Tribal's ability to complete this existing work.
Sales of software and new implementation work continue although
it is too early to tell if there will be a material impact on
earnings in the short or medium term. The pipeline remains strong
and work continues. We have seen some minor delays in the process
due to the impact of Covid-19 but no cancellations to date.
Tribal's other business area, Education Services (ES), provides
training, inspections, surveys and benchmarking to education
institutions globally. The larger UK and US contracts in ES have
mostly continued unaffected by Covid-19 as we have been able to
adapt our delivery to a remote model very quickly. The temporary
closure of schools, particularly in the Middle East, has caused
delays to the delivery of inspections work until the schools
re-open. We have seen some delays on surveys and benchmarking with
projects delayed to later in the year or next year. Whilst we have
seen revenue decrease our profit margins have a degree of
protection as we operate a variable cost.
The changes customers have seen from our delivery of work across
the business has been well received and demonstrates our ability to
adapt and change as a business but still serve customers. It also
demonstrates the benefits of remote working to the business both in
terms of reduction of travel costs and increase in productivity
which we expect to continue to benefit the business into the future
post-Covid-19. The impact on 2021 will become clearer as the year
progresses and as the medium to longer-term impact of Covid-19 on
education institutions is understood.
We do though remain positive about the medium and longer term
prospects for the Group. The Directors, having considered the
cash-flow forecast, and while noting the Group has net current
liabilities, have performed a risk assessment of likely downside
scenarios, and associated mitigating actions. Based on this
assessment they have a reasonable expectation that adequate
financial resources will continue to be available for at least 12
months from the date of approval of the financial statements.
Adoption of the going concern basis
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, taking into account
reasonably possible changes in trading performance. 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 the foreseeable future. Thus, they continue to adopt
the going concern basis in preparing the financial statements.
4. Segmental analysis
Information reported to the Group's Chief Executive for the
purposes of resource allocation and assessment of segment
performance is focused on the nature of each type of activity. The
Group's reportable segments and principal activities under IFRS 8
are detailed below:
Student Information ("SIS") represents the delivery of software
and subsequent maintenance and support services and the activities
through which we deploy and configure our software for our
customers; and
Education Services representing inspection and review services
which support the assessment of educational delivery, and a
portfolio of performance improvement tools and services, including
analytics, software solutions, facilities and asset management.
In accordance with IFRS 8 'Operating Segments' information on
segment assets is not shown as this is not provided to the Chief
Operating decision-maker. Inter-segment sales are charged at
prevailing market prices.
Total Revenue Adjusted segment operating
profit
---------------------------------- --------------------------------------- ---------------------------------------
Six months Six months Year Six months Six months Year
ended ended ended ended ended ended
30 June 30 June 31 December 30 June 30 June 31 December
2020 2019 2019 2020 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP000
---------------------------------- ----------- ----------- ------------- ----------- ----------- -------------
Student Information Systems 28,973 29,094 58,615 10,546 9,482 17,937
Education Services 9,210 11,280 19,595 2,021 2,347 4,014
Total 38,183 40,374 78,210 12,567 11,829 21,951
---------------------------------- ----------- ----------- ------------- ----------- ----------- -------------
Unallocated corporate
expenses (6,000) (5,564) (10,299)
---------------------------------- ----------- ----------- ------------- ----------- ----------- -------------
Adjusted operating profit 6,567 6,265 11,652
Amortisation of IFRS 3 intangibles
(see note 6) (606) (575) (1,331)
Other items (923) (1,270) (12,767)
---------------------------------- ----------- ----------- ------------- ----------- ----------- -------------
Operating profit/(loss) 5,038 4,420 (2,446)
---------------------------------- ----------- ----------- ------------- ----------- ----------- -------------
Depreciation and amortisation is allocated to segment profits
and is included in adjusted segment operating profit as above. The
amount included in SIS is GBP0.8m (30 June 2019: GBP1.0m; 31
December 2019 GBP1.8m) and within Education Services GBP0.1m (30
June 2019: GBP0.1m; 31 December 2019 GBP0.1m).
The accounting policies of the reportable segments are the same
as the Group's accounting policies. Segment profit represents the
profit earned by each segment, without the allocation of central
administration costs, including Directors' salaries, finance costs
and income tax expense. This is the measure reported to the Group's
Chief Executive for the purpose of resource allocation and
assessment of segment performance.
Within Education Services revenues of approximately 6% (31
December 2019: 4%) have arisen from the Segments largest customer:
within SIS revenues of approximately 6% (31 December 2019: 7%) have
arisen from the Segments largest customer.
Geographical information:
Revenue from external customers, based on location of the
customer, are shown below:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
-------------------- ----------- ----------- -------------
UK 22,235 24,220 47,426
Australia 10,324 9,564 19,523
Other Asia Pacific 1,655 1,954 4,021
North America 1,606 2,084 3,127
Rest of the world 2,363 2,552 4,113
38,183 40,374 78,210
-------------------- ----------- ----------- -------------
5. Other items
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
-------------------------------------------------- ----------- ----------- -------------
Acquisition related credit/(costs) 267 (135) (237)
-------------------------------------------------- ----------- ----------- -------------
Platform dispute - (278) (9,133)
-------------------------------------------------- ----------- ----------- -------------
Employee related share option charges (including
employer related taxes) (575) (544) (1,717)
-------------------------------------------------- ----------- ----------- -------------
-Write off of business systems - - (646)
-Legacy Defined benefit schemes (64) - (90)
-Other legal costs (77) - (150)
-Restructuring and associated costs (474) (313) (794)
-------------------------------------------------- ----------- ----------- -------------
Other exceptional items (615) (313) (1,680)
-------------------------------------------------- ----------- ----------- -------------
Amortisation of software and customer
contracts and relationships (606) (575) (1,331)
-------------------------------------------------- ----------- ----------- -------------
Total administrative expenses (1,529) (1,845) (14,098)
Other financing costs (185) (86) (344)
Total other items before tax (1,714) (1,931) (14,442)
-------------------------------------------------- ----------- ----------- -------------
Tax on other items 733 354 2,448
Total other items after tax (981) (1,577) (11,994)
-------------------------------------------------- ----------- ----------- -------------
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 relating to the acquisition of Tribal Dynamics
Holdings Limited in the period total GBPnil (30 June 2019:
GBP135,000; 31 December 2019: GBP237,000).
Under IFRS3 these amounts have been expensed as they are not
eligible for capitalisation.
During the six months to 30 June 2020, the first element of
deferred consideration was paid to the previous owners of Tribal
Dynamics Holdings Limited. The amount paid was lower than the
maximum amount payable and as such a credit of GBP267,000 has
arisen.
Platform dispute: Amounts relating to the Platform dispute and
the agreement to settle the dispute for past royalties and
associated legal costs in the period total GBPnil (30 June 2019:
GBP278,000; 31 December 2019: GBP9,133,000). An accrual of
GBP8,200,000 was made at the end of 2019 to settle all historic
liabilities and outstanding legal costs. This has been fully
utilised in 2020.
Employee related share option charges. The numbers above
include:
-- share based payments plus foreign exchange (30 June 2020:
GBP(29,000); 30 June 2019: GBPnil; 31 December 2019:
GBP33,000);
-- the movement in associated employers taxes accrual (30 June
2020: GBP8,000; 30 June 2019: GBP19,000; 31 December 2019:
GBP(52,000));
-- the cash paid on dividends on share options that have met
performance conditions (30 June 2020: GBPnil; 30 June 2019:
GBP106,000; 31 December 2019: GBP155,000). 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 (30 June 2020:
GBP121,000; 30 June 2019: GBPnil; 31 December 2019: GBP572,000).
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 the previous year the Group upgraded its accounting
system to Microsoft Dynamics D365 to allow the Group's finance team
to access new functionalities and thus providing operating
efficiencies. After the successful upgrade the remaining life of AX
2012 was reviewed and management concluded that this asset should
be fully impaired in line with IAS 36 paragraph 12(e) due to the
obsolescence of the asset ((30 June 2020: GBPnil; 30 June 2019:
GBPnil; 31 December 2019: GBP646,000);
-- 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 administration
charges (30 June 2020: GBP64,000; 30 June 2019: GBPnil; 31 December
2019: GBP90,000);
-- legal costs associated with the data breach in Tribal Campus,
an Australian subsidiary of the Group, amounted to GBP77,000 (30
June 2019: GBPnil; 31 December 2019: GBP150,000); The amounts
expensed are the excess not covered by the Group's Insurance
policy; and
-- restructuring and associated costs relate to the
restructuring of the Group's operations. During 2020 the Group
announced the restructure of the Sales/Support side of the business
with costs arising in 2020 mainly due to redundancies (30 June
2020: GBP474,000; 30 June 2019: GBP313,000; 31 December 2019:
GBP794,000).
Amortisation of software and customer contracts and
relationships: Amortisation arising on the fair value of intangible
assets acquired is separately disclosed. (30 June 2020: GBP606,000;
30 June 2019: GBP575,000; 31 December 2019: GBP1,331,000).
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 (30 June 2020: GBP185,000; 30 June
2019: GBP86,000; 31 December 2019: GBP344,000).
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.
6. Finance costs
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
-------------------------------------------- ----------- ----------- -------------
Interest on bank overdrafts and loans 46 58 4
Loan arrangement fees 65 - -
Net interest payable on retirement benefit
obligations - - 27
Interest expense on lease liabilities 65 - 131
-------------------------------------------- ----------- ----------- -------------
Adjusted Finance costs 176 58 162
-------------------------------------------- ----------- ----------- -------------
Unwinding of discounts 185 86 344
-------------------------------------------- ----------- ----------- -------------
Other finance costs 185 86 344
Total finance costs 361 144 506
-------------------------------------------- ----------- ----------- -------------
7. Tax
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
---------------------------------- ----------- ----------- -------------
Current tax
Overseas tax 821 253 1,299
Adjustments in respect
of prior periods - - (406)
--------------------------------------- ----------- ----------- -------------
Deferred tax 821 253 893
Current period 86 443 (1,143)
Adjustments in respect
of prior periods - - 320
--------------------------------------- ----------- ----------- -------------
86 443 (823)
---------------------------------- ----------- ----------- -------------
Tax charge on profits/(losses) 907 686 70
--------------------------------------- ----------- ----------- -------------
In addition to the amount charged to the income statement, a
deferred tax credit of GBP67,000 (30 June 2019: GBP57,000; 31
December 2019: GBP84,000) has been recognised directly in equity in
relation to share schemes. A deferred tax credit of GBPnil (30 June
2019: GBPnil; 31 December 2019: charge of GBP83,000) has been
recognised in the Consolidated Statement of Comprehensive Income in
relation to Defined Benefit pension schemes.
The Group continues to hold an appropriate corporation tax
provision in relation to the Group relief claimed from Care UK for
the year ended 31 March 2007, together with other appropriate Group
provisions.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual
earnings.
8. Earnings per share
Earnings per share and diluted earnings per share are calculated
by reference to a weighted average of ordinary shares calculated as
follows:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
Thousands thousands thousands
------------------------------------------------- ----------- ----------- -------------
Basic weighted average number of shares
in issue 203,109 195,224 196,626
Weighted average number of Employee share
options 1,152 10,546 7,241
------------------------------------------------- ----------- ----------- -------------
Weighted average number of shares outstanding
for dilution calculations 204,261 205,770 203,867
------------------------------------------------- ----------- ----------- -------------
Diluted earnings per share only reflects the dilutive effect of
share options for which performance criteria have been met.
As at 30 June 2020 there are 647,676 options that have met
vesting criteria and can be exercised. Together with other
potentially dilutive shares, based on options that have been
granted but have not yet met vesting criteria of 504,777, the total
number of potentially dilutive shares is 1,152,453 (31 December
2019: 8,687,855).
The adjusted basic and diluted earnings per share figures shown
on the condensed consolidated income statement are included as the
directors believe that they provide a better understanding of the
underlying trading performance of the Group.
A reconciliation of how these figures are calculated is set out
below.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
----------------------------- ----------- ----------- -------------
Net profit/(loss) 3,778 3,623 (2,963)
----------------------------- ----------- ----------- -------------
Earnings per share
Basic 1.9p 1.9p (1.5)p
Diluted 1.9p 1.8p (1.5)p
----------------------------- ----------- ----------- -------------
Adjusted Net profit 4,759 5,200 9,031
Adjusted earnings per share
Basic 2.3p 2.7p 4.6p
Diluted 2.3p 2.5p 4.4p
----------------------------- ----------- ----------- -------------
Profit/(loss) for the Earnings per share
period
-------------------------- ---------------------------------------- ----------------------------------------
Six months Six months Six months Six months
ended ended Year ended ended ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
2020 2019 2019 2020 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ----------- ----------- -------------- ----------- ----------- --------------
Profit/(loss) for the
period attributable to
equity share holders 3,778 3,623 (2,963) 1.9p 1.9p (1.5)p
-------------------------- ----------- ----------- -------------- ----------- ----------- --------------
Add back/(deduct):
Amortisation of IFRS
3 intangibles (net of
tax) 460 412 1,003
Share based payments 446 420 1,009
Unwinding of discounts 185 86 344
Platform dispute - - 9,133
Movement on deferred (267) - -
consideration
Other items (net of tax) 157 659 505
Total adjusted items
(net of tax) 981 1,577 11,994 0.4p 0.8p 6.1p
-------------------------- ----------- ----------- -------------- ----------- ----------- --------------
Adjusted earnings 4,759 5,200 9,031 2.3p 2.7p 4.6p
-------------------------- ----------- ----------- -------------- ----------- ----------- --------------
9. Goodwill
GBP'000
------------------------------- ----------
Cost
At 1 January 2020 107,110
Exchange differences 626
------------------------------- ----------
At 30 June 2020 107,736
------------------------------- ----------
Accumulated impairment losses
At 1 January 2020 81,231
At 30 June 2020 81,231
------------------------------- ----------
Net book value
At 30 June 2020 26,505
------------------------------- ----------
At 31 December 2019 25,879
------------------------------- ----------
The Group tests annually for impairment, or more frequently if
there are indicators that goodwill could be impaired. At the half
year, a review has been undertaken to ascertain if any indicators
have arisen of potential impairments. Due to the impact of Covid-19
and the change in interest rates a full impairment assessment has
been performed had half year.
The cash flow projects are discounted at a pre-tax discount rate
of 8.55% (2019: 9.3%). The single discount rate, which is
consistently applied for both CGU's, is determined with reference
to internal measures and available industry information and
reflects specific risks relevant to the Group. The discount rate
has reduced compared to year end as a result of the full drawdown
of the GBP10.0m revolving credit facility.
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 25% and 38% would trigger an
impairment in SIS and ES respectively. A decline in growth rate to
(15%) in SIS and (26%) in ES would result in an impairment.
Management does not consider these changes possible but considers a
slight increase in discount rate to 10% and zero growth may be
possible as a result of the current economic environment. As a
result of the analysis, there is headroom of GBP111.4m and GBP16.9m
in SIS and ES respectively.
As a result, management does not believe a reasonably possible
change in key assumptions may cause an impairment.
10. Other intangible assets
Customer
contracts Acquired
and intellectual Development Business Software
Software relationships property costs systems licences Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- --------------- --------------- ------------ --------- ---------- ---------
Cost
At 1 January 2020 9,831 8,424 1,873 36,513 5,083 1,489 63,213
Additions - - - 3,140 49 - 3,189
Exchange differences 366 155 - 191 6 - 718
---------------------- --------- --------------- --------------- ------------ --------- ---------- ---------
At 30 June 2020 10,197 8,579 1,873 39,844 5,138 1,489 67,120
---------------------- --------- --------------- --------------- ------------ --------- ---------- ---------
Amortisation
At 1 January 2020 7,137 5,677 659 23,893 4,893 1,485 43,744
Charge for the
period 365 240 37 641 12 2 1,297
Exchange differences 373 107 - 150 5 - 635
At 30 June 2020 7,875 6,024 696 24,684 4,910 1,487 45,676
---------------------- --------- --------------- --------------- ------------ --------- ---------- ---------
Carrying amount
At 30 June 2020 2,322 2,555 1,177 15,160 228 2 21,444
---------------------- --------- --------------- --------------- ------------ --------- ---------- ---------
At 31 December
2019 2,694 2,747 1,214 12,620 190 4 19,469
---------------------- --------- --------------- --------------- ------------ --------- ---------- ---------
Software and customer contract and relationships have arisen
from acquisitions, and are amortised over their estimated useful
lives, which are 3-8 years and 3-12 years respectively. The
amortisation period for development costs incurred on the Group's
product development is 5 to 15 years, based on the expected
life-cycle of the product. Amortisation of development costs is
included within cost of sales; the amortisation for software,
customer contracts and relationships and business systems is
included within administrative expenses. Intellectual property was
acquired from WAMBIZ Limited in 2017 and is recorded as Acquired
Intellectual property. During 2019 this asset was incorporated
within the new app/Engage platform of Tribal Edge, and is now
amortised over a period of 15 years.
11. Trade and other receivables
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
--------------------------------------------- --------- --------- ------------
Amounts receivable for the sale of services 7,767 9,495 8,070
Less: loss allowance (121) (174) (441)
--------------------------------------------- --------- --------- ------------
7,646 9,321 7,629
Other receivables 358 437 330
Prepayments 2,748 3,579 2,832
10,752 13,337 10,791
--------------------------------------------- --------- --------- ------------
12. Trade and other payables
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
--------------------------------------- --------- --------- ------------
Current
Trade payables 812 1,388 800
Other taxation and social security 2,081 2,414 3,156
Other payables 1,629 1,506 1,378
Deferred contingent consideration - 485 -
Deferred non-contingent consideration 1,818 1,613 1,693
--------------------------------------- --------- --------- ------------
6,340 7,406 7,027
--------------------------------------- --------- --------- ------------
Non-current
--------------------------------------- --------- --------- ------------
Other payables 30 35 31
Deferred contingent consideration - 1,837 1,939
--------------------------------------- --------- --------- ------------
30 1,872 1,970
--------------------------------------- --------- --------- ------------
Total 6,370 9,278 8,997
--------------------------------------- --------- --------- ------------
Deferred contingent consideration reflects amounts in respect of
the acquisition of Tribal Dynamics Limited, payable over a period
of 2 years. The amounts are contingent upon the performance with
the amounts provided reflecting management's best estimate of the
future annual recurring revenue (ARR) of this entity and the
resultant payments due under the Sale and Purchase Agreement.
The amounts above have been discounted at a rate of 11.69%. The
undiscounted value of the deferred consideration is GBP2,000,000
(2019: GBP4,000,000) versus a discounted value of GBP1,818,000
(2019: GBP3,450,000).
13. Provisions
Property related Legal
GBP'000 claims Other Total
GBP'000 GBP'000 GBP'000
--------------------------------- ----------------- --------- ---------- ----------
At 1 January 2020 1,077 153 156 1,386
Increase/(release) in provision (54) - 1 (53)
Utilisation of provision - (108) - (108)
Exchange rate movement 28 2 15 45
At 30 June 2020 1,051 47 172 1,270
--------------------------------- ----------------- --------- ---------- ----------
The provisions are split as
follows:
--------------------------------- ----------------- --------- ---------- ----------
Property related Legal
GBP'000 claims Other Total
GBP'000 GBP'000 GBP'000
--------------------------------- ----------------- --------- ---------- ----------
Within one year 143 47 172 362
More than one year 908 - - 908
Total 1,051 47 172 1,270
--------------------------------- ----------------- --------- ---------- ----------
Provisions are recognised when the Group has a present
obligation as a result of a past event, and it is probable that the
Group will be required to settle the obligation. Provisions are
measured at the Directors' best estimate of the expenditure
required to settle the obligation at the balance sheet date, and
are discounted to present value where the effect is material.
Property related provision relates to the dilapidation costs
arising from exiting leasehold properties, under IAS 37.
Legal claims provision relates to a specific contract and
represents the anticipated costs to resolve the contractual
dispute.
Other provision relates to the recoverability of input VAT in
the Philippines.
14. Share capital
Six months Six months Six months Six months Year
ended ended ended ended ended Year ended
30 June 30 June 30 June 30 June 31 December 31 December
2020 2020 2019 2019 2019 2019
number GBP'000 number GBP'000 number GBP'000
---------------------- ------------ ----------- ------------ ----------- ------------- --------------
Allotted, called
up and fully paid
At beginning of
the period 199,579,784 9,979 196,051,181 9,803 196,051,181 9,803
Issued during the
period 6,118,525 306 - - 3,528,603 176
At end of the period 205,698,309 10,285 196,051,181 9,803 199,579,784 9,979
---------------------- ------------ ----------- ------------ ----------- ------------- --------------
The Company has one class of ordinary shares of 5p which carry
no right to fixed income.
The shares issued during the period were in order to satisfy
exercises of share-based payment schemes. 3,405,998 shares were
issued on 16 January 2020, 1,223,241 on 4 February 2020, 1,339,286
on 1 June 2020 and 150,000 on 12 June 2020. The exercise costs of
5p per share resulted in cash receipts of GBP0.2m.
15. Notes to the cash flow statement
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
------------------------------------------------ --------------- --------------- -----------------
Operating profit/(loss) from continuing
operations 5,038 4,420 (2,446)
Depreciation of property, plant and
equipment 360 899 879
Depreciation of right-of-use assets 523 - 1,043
Amortisation and impairment of other
intangible assets 1,297 1,690 3,770
Share based payments 446 418 1,042
Movement in deferred consideration (267) - -
Research and development tax credit (100) (180) (176)
Net pension charge - - 3
Other non-cash items 866 134 (428)
Operating cash flows before movements
in working capital 8,163 7,381 3,687
Decrease/(increase) in receivables 687 (2,159) 2,248
(Decrease)/increase in payables (12,507) (8,036) 6,245
------------------------------------------------ --------------- --------------- -----------------
Net cash (used in)/ from operating activities
before tax (3,657) (2,814) 12,180
Tax (paid)/received (147) 77 179
------------------------------------------------ --------------- --------------- -----------------
Net cash (used in)/from operating activities (3,804) (2,737) 12,359
------------------------------------------------ --------------- --------------- -----------------
Net cash (used in)/from operating activities
before tax can be analysed as follows:
Continuing operations (excluding restricted
cash) (3,657) (2,814) 12,180
------------------------------------------------ --------------- --------------- -----------------
16. Analysis of net cash
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
--------------------------- --------- --------- ------------
Cash and cash equivalents 16,739 6,989 16,463
Overdrafts - (985) -
Borrowings (10,000) - -
Net cash 6,739 6,004 16,463
--------------------------- --------- --------- ------------
Analysis of changes in net cash
------------------------------------------------------------------------------
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
------------------------------------------ --------- --------- ------------
Opening net cash 16,463 19,974 19,974
Increase in bank loans (10,000)
Net increase/(decrease) in cash and cash
equivalents 742 (14,048) (3,725)
Effect of foreign exchange rate changes (466) 78 214
Closing net cash 6,739 6,004 16,463
------------------------------------------ --------- --------- ------------
17. Contingent liabilities
The Company and its subsidiaries have provided performance
guarantees issued by their banks on their behalf, in the ordinary
course of business totalling GBP1.7m (30 June 2019: GBP1.1m, 31
December 2019: GBP1.6m). These are not expected to result in any
material financial loss.
18. Related party disclosures
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
The remuneration of the key management personnel of the Group is
set out below in aggregate for each of the categories specified in
IAS 24 'Related Party Disclosures'. The members of the Group Board
and the Group's Executive Board are considered to be the key
management personnel of the Group.
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
------------------------------ --------- --------- ------------
Short-term employee benefits 874 1,069 3,711
Termination benefits - - 318
Share-based payments 521 203 814
------------------------------ --------- --------- ------------
1,395 1,272 4,843
------------------------------ --------- --------- ------------
19. Seasonality
The overall performance for the second half of the year will be
lower than for the first half as a result of phasing of Education
Services school inspections. In addition, i-graduate revenues and
profit are skewed to the fourth quarter of the calendar year, in
line with the start of the academic year.
Responsibility statement
The Directors' confirm that these condensed interim financial
statements have been prepared in accordance with the Disclosure and
Transparency Rules (DTR) of the Financial Services Authority and
that the interim management report includes a fair review of the
information required by DTR 4.2.7 and DTR 4.2.8, namely:
-- An indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- Material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report
The Directors of Tribal Group plc are listed in the Tribal Group
plc Report and accounts for the 12 month period ended 31 December
2019. A list of current Directors is maintained on the Tribal Group
plc website: www.tribalgroup.com .
The Directors are responsible for the maintenance and the
integrity of the Group's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
By order of the Board
Mark Pickett
Chief Executive
13 August 2020
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR KKBBDDBKBAFD
(END) Dow Jones Newswires
August 13, 2020 02:00 ET (06:00 GMT)
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