TIDMTRB
RNS Number : 0861U
Tribal Group PLC
24 March 2023
24 March 2023
Tribal Group plc
("Tribal" or "the Group")
Preliminary Results for the year ended 31 December 2022
Tribal (AIM: TRB), a leading provider of software and services
to the international education market, announces its preliminary
results for the year ended 31 December 2022.
Financial performance
-- As announced in the Group's Trading Update on 23 February
2023, the Group's trading performance for 2022 has been
significantly impacted by implementation delays on the
Nanyang Technological University ("NTU") contract , due
to changing scope and complexity, resulting in substantially
increased ongoing costs and lower recognisable revenue
-- The underlying business remains strong, with Group revenue
increasing 2% to GBP83.6m (2021: GBP82.2m constant currency),
following a strong performance across Cloud and Edge offerings
and School Inspection Services; offsetting lower recognisable
revenue from NTU
-- Annual Recurring Revenue (ARR) remained flat at GBP51.2m
(2021: GBP51.2m at constant currency), reflecting a 10%
growth in the Group's strategic products, offset by declining
revenues as anticipated, from Tribal's non-core historic
and schools' systems contracts
-- Our Education Services business "ES" performed well, with
revenue increasing 9% to GBP15.4m (2021: GBP14.2m constant
currency) and operating margin increasing by 10.1pp to
25% (2021: 15% constant currency)
-- Group adjusted EBITDA of GBP7.4m (2021: GBP16.8m constant
currency) reflects operating losses relating to the NTU
contract and an onerous contract provision of GBP4.5m
for future losses. Without the impact of NTU, margins
would have been consistent with historic levels
-- Statutory Profit before tax for the year decreased to
GBP0.4m (2021: GBP8.6m constant currency)
-- Adjusted operating cash conversion of 89% (2021: 104%)
and negative free cash flow of GBP5.3m (2021: GBP5.4m
positive) , reflecting the impact of the NTU contract,
resulting in net debt of GBP3.4m
-- The Board are proposing an annual dividend of 0.65p per
share (2021:1.3p per share) expected to be paid at the
end of July 2023
Operational performance
-- Tribal received notification on 17 March 2023 that NTU
has purported to terminate the contract and reserved its
rights to claim damages. Tribal rejects NTU's right to
terminate and considers its purported termination a wrongful
repudiation of the contract. Tribal has however accepted
NTU's wrongful repudiation, elected to treat the contract
as at an end and reserved i ts rights.
-- Continued good sales performance, adding five major Cloud
contracts from existing customers, University of Sunderland,
Birmingham City University, University for the Creative
Arts, University of Reading and University of East Anglia,
adding GBP1.7m to ARR
-- Expansion into new geographies with the signing of a five-year
SITS:Vision contract with the British University of Vietnam
-- Appointment of new Head of ES and strong business performance,
renewing several significant UK contracts and signing
two new contracts. The Board is considering its strategic
options and opportunities for the Education Services business
Outlook
-- The NTU contract has now been ended and both parties will
participate in a mediation process, the timing and outcome
of which is presently uncertain
-- Tribal:Cloud continues to represent a considerable near-term
addressable opportunity with a further three deals signed
post year end, University of Wolverhampton, Royal Veterinary
College and University of the Arts London, with combined
ARR of GBP1.1m
-- Following a review of investment strategy, Group capitalised
product development will be significantly reduced in 2023,
while maintaining development on our existing portfolio
where we are seeing promising ARR growth
-- Despite the lower EBITDA levels for FY22 the overall prospects
for Tribal remain positive. With an expanding customer
base, advanced service offering and continued contract
and ARR momentum, we have entered FY23 with good sales
momentum.
Mark Pickett, Chief Executive, commented:
"We have continued to execute against our growth strategy,
transitioning our existing customers to the cloud while securing
new customers in our key geographies. Despite the lower EBITDA
levels for FY22 due to the substantially increased costs relating
to the NTU contract and its subsequent termination, the positive
sales performance and successful go live of multiple customer
implementations in the year demonstrates the strength of our
offerings, effectiveness of our cloud strategy and continued
contract and ARR momentum.
Based on the performance in the year and having reviewed the
group's cash flow forecasts, specifically with regard to the
significant uncertainties around the resolution of the NTU
contract, the Board have concluded that it would be prudent to
reduce the final dividend by 50%. It is the Board's intention to
return to its former policy of dividend progression when
circumstances allow.
We believe the education market globally is becoming more
attuned to the benefits of SaaS and cloud offerings which presents
a supportive market backdrop for Tribal and its strategic
investment into and development of cutting-edge technologies. These
factors enable us to remain focused on delivering our key strategic
priorities during 2023 and despite the setback in FY22, we remain
confident in our ability to meet customer demand going
forward."
Tribal Group plc Tel: +44 (0) 117 311 5293
Mark Pickett, Chief Executive Officer
Diane McIntyre, Chief Financial Officer
Investec Bank plc (NOMAD & Joint Broker) Tel: +44 (0) 20 7597 5970
Virginia Bull, Nick Prowting, Carlo
Springardi
Singer Capital Markets Limited (Joint Tel: +44 (0) 20 7496 3000
Broker)
Shaun Dobson, Tom Salvesen, Alex Bond
Alma PR Tel: +44 (0) 203 405 0205
Caroline Forde, Hannah Campbell, Will
Ellis Hancock
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.
Chairman's Statement
Tribal's performance this year has been dominated by our NTU
contract, which was impacted by implementation delays due to
changing scope and complexity. Lower recognisable revenue and
increased costs led to short-term pressures on the business while
the implementation phase was ongoing. The NTU contract has now been
ended and both parties will participate in a mediation process in
an attempt to achieve a resolution, but the timing and outcome of
that process and any private negotiations to that end, is presently
uncertain.
However, there have also been many signs of ongoing positive
progress and the underlying performance of the business has been
good. Sales performance has been robust, our customer base has
grown, we have seen several large customer implementations
successfully go-live, our product development efforts have
continued to augment our product set and we have focused our sales
and marketing strategy. The success of these efforts can be seen in
the 10% growth in Annual Recurring Revenue (ARR) relating to the
Group's core products.
Tribal is financially solid, core ARR continues to grow and net
retention rates remain high. Education Services has also had a
strong year, recovering strongly from the pandemic and is well set
for a year of growth in 2023.
We see an increasing appetite from the higher education sector
to transition their existing Student Information Systems to the
cloud and anticipate this to be the main driver for uptake of our
current range offerings over the next 3-5 years as well as our
existing core SITS:Vision offering, which continues to sell well.
The Board has therefore decided to continue to invest and focus on
sales and marketing of our existing mature products and the Edge
products recently released or currently in development, but to
pause investment in new, additional modules for the time being.
Further details of this will be in covered in the CEO statement.
Given the challenges seen in 2022, we will temporarily pause
exploring M&A opportunities.
With competition amongst universities continuing to increase we
anticipate the Admissions product, which considerably streamlines
and improves the Admissions process for both the institution and
prospective students, will be a long-term growth driver for Tribal.
The first customer for Tribal Admissions is set to go live in
2023.
Financial performance
Notwithstanding the costs relating to the NTU contract, Tribal
has seen another year of progress against our key performance
indicators.
Closing ARR committed as at 31 December 2022 remained flat at
GBP51.2m (2021: GBP51.2m constant currency) however, core ARR
increased 10% to GBP45.8m (2021: GBP41.7m constant currency)
reflecting the Group's momentum selling its strategic products,
offset by declining revenues as anticipated from Tribal's non-core
historic and schools' systems contracts and the termination of the
NTU contract. Revenue for the year increased by 1.6% to GBP83.6m
(2021: GBP82.2m constant currency) due to a solid performance
across the Group's Cloud and Edge offerings and School Inspection
Services. Growth was significantly impacted by the delivery on the
NTU contract resulting in lower recognisable revenue.
Group adjusted EBITDA of GBP7.4m (2021: GBP16.8m constant
currency) reflects operating losses relating to the NTU contract
and an onerous contract provision of GBP4.5m for future losses.
Without the impact of NTU, margins would have been consistent with
historic levels.
Despite the lower EBITDA levels, the Group saw significant
growth in other areas of the business including Education Services
which increased by 8.7% to GBP15.4m (2021: GBP14.2m constant
currency) as the main UK contracts continued to track well
throughout the year in addition to new contract wins in the Middle
East.
Dividend
Tribal remains committed to a progressive dividend policy,
however based on the performance in the year and having reviewed
the Group's cash flow forecasts, specifically with regard to the
significant uncertainties around the resolution of the NTU contract
outlined above, the Board have concluded that it would be prudent
to reduce the final dividend by 50% to 0.65p per share. It is the
Board's intention to return to its former policy of dividend
progression when circumstances allow.
Environment, Social and Governance (ESG)
Tribal is committed to activities that benefit the environment
and society, underpinned by good governance. As part of our journey
to continually improve our approach and performance in these areas,
the ESG Committee, chaired by Non-Executive Director, Nigel Halkes,
focuses on six priority focus areas for the Group, each with key
initiatives and objectives for the year and appropriate ownership
from across our Executive Management Team. We have made good
progress on many of these programmes and have set new objectives
for 2023, we are committed to their sustained delivery and will
continue to build on our activities in 2023 and beyond. You can
read a full report on these priority areas within the ESG section
of the Annual Report.
People
In the year we have continued to invest in our teams, in
particular we have bolstered our executive team, with three
refocused roles covering Service Delivery, Customer Success and
Sales. Creating unity through the organisation and providing a
supportive environment for all to flourish is a key strategic
objective for Tribal and one in which we excel. I would like to
thank all our teams around the world for their continued energy and
commitment to providing world-class education software.
Ukraine
The Directors have considered the impact of the ongoing
situation in Ukraine and have concluded there is currently minimal
risk to business continuity as we do not have a presence in the
region. The Group continues to support all colleagues who are
directly impacted by the conflict and will monitor the situation
closely.
Outlook
The market appetite for our leading solutions continues to be
positive, and the demand for our extended portfolio of products
from both existing and new customers is good. As previously
flagged, we anticipate growth rates to be lower initially, as new
wins are offset by the tailing off of historic high margin
contracts, but we believe the increased scalability and market
applicability of our newer offerings mean we are well positioned to
increase our growth rates over the medium term. The NTU contract
has now been ended and both parties will participate in a mediation
process, the timing and outcome of which is presently
uncertain.
The Board is cognisant of the challenging wider economic
backdrop and in this type of inflationary environment keen cost
control is imperative. The business is being run efficiently and
effectively, and we have the financial resources to execute on the
growth strategy.
Richard Last
Chairman
Chief Executive's Review
Introduction
Tribal demonstrated solid progress in 2022 in terms of sales
performance and our transition to a SaaS business, whilst
maintaining our market-leading position in our core geographies and
supporting our growing customer base. The underlying business
remains strong, with 10% high quality ARR growth from our strategic
software business, Education Services revenue growing strongly at
9%, offset by expected declines in our non-core SIS business.
However, the Group's results this year have been overshadowed by
our NTU contract.
NTU Contract
Tribal received notification on 17 March 2023 that NTU has
purported to terminate the contract and reserved its rights to
claim damages. Tribal rejects NTU's right to terminate and
considers its purported termination a wrongful repudiation of the
contract. Tribal has however accepted NTU's wrongful repudiation,
elected to treat the contract as at an end and reserved i ts
rights. The contract requires the parties to participate in
mediation in an attempt to achieve a resolution, but the timing and
outcome of that process and any private negotiations to that end is
presently uncertain. It is possible that there may be a significant
adverse financial impact on the Group, but as no financial demands
have yet been enumerated, currently the Board cannot fully assess
any such potential impact. We do not expect a resolution in the
near term and will provide updates as and when appropriate.
Whilst EBITDA is lower than the prior year due to the impact of
the NTU contract, revenue for the year was in line with the Board's
expectations reflecting the continued positive sales performance
across the business.
Expanding customer base
We achieved a consistent level of new wins in the year, adding
new customers across our range of software in key geographies and,
notably, we secured five new contracts to migrate customers to
Tribal:Cloud and three new SITS: Vision customers, adding a
combined total of GBP2.6m to ARR. We are increasingly seeing the
benefits of the investments we have made in the evolution and
expansion of our offering, positioning Tribal at the forefront of
the evolving education industry with the ability to address a
broader market in a way not previously possible.
We have carefully invested in our people and operations
throughout the year as we evolve our operational model to ensure
service levels are maintained for long-term profitable growth and
remain robust. While the global macro-economic environment
continues to be challenging, our high levels of recurring revenues
and consistent win rate provide us with confidence that we can meet
our ambitious growth aspirations.
With student numbers continuing to increase both domestically
and internationally, we anticipate the demand for our products will
continue to grow, supporting our growth ambitions.
Market drivers and addressable opportunity
The education market globally continues to evolve as expected.
It is becoming more attuned to the benefits of SaaS and cloud
offerings which present a supportive market backdrop for our
business.
Universities increasingly recognise the role the cloud can play
in driving their own internal efficiencies and to improve the
overall student experience, so as to attract and retain the best
talent over the long term. In recent years, universities have also
witnessed a growing number of applicants; with the total number of
student enrolments in the UK increasing by 13% since the 2019/20
academic year. This in turn has led to increased demand for our
solutions as our suite of products help our customers to address
and service this growing population at a faster rate than
previously possible.
It is becoming increasingly clear that for many universities,
their first step to the cloud is to transition their existing SIS
into the cloud, so that they can reduce their in-house IT
requirements and benefit from the enhanced user experience provide
by Tribal's managed cloud service. We anticipate that this process
of moving key student management systems to the cloud will be the
main focus for our customers over the next three to five years,
before then expanding into a greater number of next-generation,
cloud-native applications.
We see significant opportunities for our core SITS:Vision and
cloud-native Edge products in the next few years, across our key
geographies and believe our teams are well placed to service the
opportunity provided by this mass transition of universities to
cloud-based computing.
Delivering on our strategy
Our aim is to provide education technology solutions to
customers globally, as-a-service. Transitioning to the delivery of
a broader set of solutions, via the 'as-a-service' model will
increase our addressable market across a greater number of
geographies, drive revenue and margin expansion, while enabling
universities to focus on the delivery of exceptional education to
their students.
To achieve this aim whilst growing ARR, we launched our
five-year objectives in 2021 which are supported by our three
pillared growth strategy:
-- expanding our share of customer wallet through sales of our
existing offerings and transitioning customers to the Cloud;
-- expanding our addressable market through product set expansion
via both R&D and acquisition; and
-- expanding our geographical reach.
Whilst we have made solid progress across many of these areas
during the year, due to the continued impact of the NTU contract,
we will review the timelines around achievement of these
objectives.
Top line ARR remained flat, the addition of new customers in our
core product set increased ARR by 10%, however this was offset by
the reduction of revenue from historic Australian government
contracts and non-core schools' systems contracts in Australia and
the termination of the NTU contract. We are pleased with the
continued positive signs of potential and although it will take
time for full adoption of our solutions by our customers due to the
annual cycle of the academic year, we remain confident in the
significant long-term opportunities.
This year's successes included:
-- the winning of three new SITS:Vision customers;
-- the transition of five flagship customers into the Tribal:Cloud;
-- successful go-live of three Cloud implementations in the
year;
-- the launch of Tribal Data Engine; and
-- continued sales momentum in Semestry.
During 2022 Semestry's ARR has grown by more than 50%,
increasing customer numbers and making good inroads into the UK
market. We continue to develop new customer relationships globally
and look for complementary partnerships and acquisitions, to
accelerate our expansion.
2023 will focus on rebalancing our results from the impacts of
the NTU contract and we will temporarily pause exploring investment
opportunities to scale the business, either in new geographies or
to expand our Edge family.
Our sales and marketing efforts will now be focused on our
comprehensive portfolio of existing cloud-based offerings, being
our foundation products, SITS, ebs and Maytas, in the Tribal:Cloud
and our native-cloud based Edge modules, such as Semestry,
Dynamics, Engage and Tribal Data Engine (TDE). We see substantial
opportunities for these offerings across both existing and new
customers.
Innovation
The higher education market is undergoing significant change.
Some of the trends have been present for several years but the
pandemic accelerated the speed of change in many areas. Innovation
in higher education is not simply about new ways of working, to
thrive, institutions must become better at adapting to change.
Through constant product and process innovation we're helping
institutions adapt to change. Removing systems friction and brittle
processes to free people and resources to innovate and ensure
service resilience in an ever-changing landscape. This includes
addressing:
-- continuous changes in government policy;
-- demand for flexible learning;
-- student fee pressures;
-- challenges of institutions achieving Net Zero;
-- soaring number of applications; and
-- ongoing regulatory obligations.
Reduction in development spend of future modules
The Group is committed to product innovation and supporting our
customers in their journey to the cloud. Given the generally
slow-moving nature of the higher education market, we anticipate
this first step of moving to the cloud will likely be the main area
of focus for our customers for the next three to five years, before
then expanding into a greater number of next-generation,
cloud-native applications.
The Board has taken the decision to focus development spend in
2023 and 2024 on our existing Edge products, such as Admissions and
Tribal Data Engine. Development of Admissions is continuing with
our pilot customers and we plan to launch our marketing campaign to
the wider market in advance of the 2024 academic year.
Overall, m anagement is targeting a significant reduction in
Edge development in 2023 as the peak of development investment on
Admissions has passed.
Increased speed of delivery and implementation
In addition to the development of new capabilities we also
continuously seek ways to ensure our customers can implement and go
live with our cloud products more quickly, through the introduction
of more standardised offerings. We were delighted this year to see
three of our cloud customers go live within the year, of which two
were completed within seven months, demonstrating the successes
being achieved.
Geographic expansion
We have leading market shares in the geographies in which we
operate. In the UK over 65% of all Higher Education institutions
use our student management systems, in Australia we support
one-quarter of universities, and in New Zealand three of the eight
universities. In Southeast Asia, we support the largest public and
largest private universities in Malaysia, and this year we have
expanded further with new customer wins including Middlesex
University in Dubai and Universiteit Leiden in The Netherlands. We
will continue to focus on growth in these geographies and we
anticipate our SaaS product offerings will allow us to expand
further into new geographies, due to its more easily digestible
modular approach. The knowledge gained from the experience of
working on the NTU contract will be considered as we assess new
markets, and in particular Singapore, to ensure an appropriate
balance of risk and reward.
Operations and people
We have an exceptional team at Tribal creating value through
market-leading technology and we are continually investing in our
people agenda to enhance our position as a growing international
business. We are driven by our purpose, to enable student success
through expertise, software and services and we rely on the talent
and expertise of our people for this purpose to succeed. Our team
has a deep understanding of the education market, developed through
working in partnership with our customers and operating in senior
roles for leading education institutions.
The key initiatives enabling our people to develop their true
potential includes our bespoke competency framework, which
underpins a range of Career Pathways. Through this framework, we
aim to help each employee understand how they can develop in their
current role as well as plan for their future growth and
development. We also run remote business development programmes
focusing on the expansion of our Manager Academy. The Academy
broadens the skills and commercial awareness of our leaders and
future leaders and supports our Digital Learning strategy.
Our evolving operational model, which is built upon our
increasing focus on customer success and alignment to Tribal's
'as-a-service' transition, started to prove effective this year.
During the year, we made two executive hires focusing on Service
Delivery and Customer Success. Paul Davies has been appointed as
Global Professional Services director and Tawfiq Sleett as Global
Customer Services Director. Both bring a wealth of experience from
global SaaS providers, are focused on improving customer success
and have been appointed to the Executive Board. The Executive Board
was further supported by the appointment of Cheryl Watson as the
Sales Director in order to focus on continued sales momentum.
Cheryl has worked at Tribal for over ten years and has a wealth of
experience of our customers and product offerings.
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.
Professional Services includes the implementation of all our
software products at customer sites, typically working alongside
customer teams. It continues to be delivered remotely and the team
has been bolstered by the Global Delivery Centre (GDC) in Kuala
Lumpur, Malaysia which has performed strongly during the year. The
GDC is now made up of around 30 employees and continues to grow; it
is now at a level of maturity for the delivery of Tribal's
products.
The Tribal Education Services team comprises experts in
education, quality assurance and programme management and has been
reinvigorated with the appointment of Matt Davis, the new Managing
Director of the division, in March 2022. Matt brings over 20 years'
experience in the education sector, a decade of which was spent as
regional director of a major competitor, responsible for the
strategy and commercial growth of its UK business.
Student Information Systems (SIS)
Student Information Systems, our core segment which targets the
further and higher education sectors through our range of software
offerings, delivered a strong performance in the year, growing
customer numbers and revenue and as a result entered the new
financial year with a solid pipeline of opportunities. We continued
to win new customers and transition existing customers onto our
cloud offerings.
Our wins in previous years and those in 2022, mean we currently
have several significant SIS implementations underway, the vast
majority of which are progressing well.
In the year, we had five key wins with existing customers,
University of Sunderland, Birmingham City University, University
for the Creative Arts, University of Reading and University of East
Anglia, to migrate their current Tribal Student Management Systems
SITS:Vision to the Tribal:Cloud, providing an improved student
experience and delivering operational efficiencies for the
universities. The contracts range from three to five years, with a
combined total contract value of GBP5m, generating incremental
annual recurring revenues of GBP1.7m as well as providing an
adoption pathway to our SaaS products, the Company's cloud-native
offerings.
In addition, we signed several significant contracts with new
customers including a seven-year contract with the University of
Plymouth, a four-year Semestry contract with the University of
Birmingham and a new five-year SITS:Vision contract with the
British University of Vietnam. Together, these contracts have a
total value of GBP8.3m, adding GBP1.1m in incremental Annual
Recurring Revenue. We continue to have positive conversations
across our extensive customer base as they explore the benefits a
move to the cloud can bring their organisation and are confident of
continued uptake.
Notwithstanding the NTU contract, we are pleased overall with
the positive signs of potential across Tribal's key geographies,
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) has been curating and delivering
Quality Assurance services to ministries of education and other
education agencies around the world for many years, across a wide
scope of areas across the education sector. These services include
overall school quality, leadership and teaching quality, as well as
many specialist areas such as new teacher competence, Early Years,
literacy and numeracy.
The appointment of Matt Davis as Managing Director of ES from
March 2022, has seen the revision and implementation of a new
three-year strategy for the business, targeting sustainable growth
between FY23 - FY25. The strategy will initially focus on creating
a clearer identity for Education Services and in particular
articulating the value it creates for our customers: supporting
governments and education institutions to deliver on their
strategic ambitions to improve the quality and impact of
education.
Education Services has continued to perform well throughout the
year, delivering strong results. As educational institutions and
organisations around the world saw a return to the classroom
following the pandemic, demand for the Quality Assurance services
ES provides has steadily increased.
Over the course of the year ES has delivered major Quality
Assurance contracts to bodies in the UK, US and the Middle East,
and has been working with hundreds of individual schools on our
Quality Mark accreditation. At present, Tribal is running highly
successful projects across its key geographies.
As previously reported, in the UK this year, we successfully
tendered for renewals as prime contractor of two major contracts
with the Department for Education (DfE) in England: NCETM (GBP8.7m
over two years) and Quality Assurance of the National Professional
Qualifications programme 'NPQ', total contract value of GBP6.5m
over four years. In July 2022 we successfully renewed a third major
UK contract, the Advanced Maths Support Programme 'AMSP' with a
total contract value of GBP2.6m, and also won a two-year contract
with the National Tutoring Programme 'NTP', with a total contract
value of GBP2.4m, securing our position with our key customer in
the UK services market.
During the second half, we successfully mobilised the National
Tutoring Programme (NTP), meeting all contractual requirements and
establishing important processes required to evaluate the quality
of Tuition Partners in the UK.
We have continued to win new contracts throughout the year with
highlights including a contract to deliver inspections on behalf of
the Sharjah Private Education Authority (SEPA) in the UAE and an
extension to our work with the Gulf Sector Skills body. Trading in
the Surveys and Benchmarking business was positive, with this
sector now seeing a strong recovery since the pandemic, setting us
up for a positive 2023.
There is continuing opportunity in the Middle East, where the
macro-economic environment is more positive and our core
capabilities in understanding school quality, supporting
improvement and helping teachers to improve; supporting the school
to work transition, remain the key strategic interests of almost
all education policy makers at any level. Building on momentum from
the previous year and with a clear strategy now in place, the
outlook for the division remains positive.
Environmental, Social and Governance (ESG)
Tribal is committed to activities that benefit the environment
and society, underpinned by good governance. At the end of 2021,
the ESG Committee identified six priority focus areas for the
Group, each with key initiatives and objectives for 2022 and
appropriate ownership from across our Executive Management Team.
The implementation of these initiatives was successful throughout
2022 and we will continue to build on our activities in 2023.
This year we worked within the Group's risk management framework
and using the Taskforce on Climate-related Financial Disclosure
(TCFD) guidance have begun our impact assessment of risk and
opportunities relating to the transition to a lower-carbon economy.
In 2023 we will work towards implementing mitigating actions and
applicable recommendations of TCFD in each of the four thematic
areas; governance, strategy, risk management and targets and
metrics.
In 2023, our ESG journey will focus on what is most important
for our business and how our ESG efforts can align with the
commercial context, enable the achievement of organisational goals
and provide a source of competitive advantage. In particular, it is
important that we have an inclusive organisation where diverse
talent is developed, engaged and retained to allow us to add value
and grow as an international business.
2023 areas of focus
The resolution of the NTU contract will continue to be a key
area of focus during 2023, given uncertainty on the outcome, timing
and financial impact.
Within our core business, we will focus on the transition of our
existing customers to the Tribal:Cloud, the sale of further SaaS
products and the delivery of our first early adopter Admissions
customers. We will also look to develop new customer relationships
globally as well as partnerships to accelerate our future
growth.
Outlook
The Group has traded in line with Board expectations since the
start of the new financial year, entering 2023 with good sales
momentum, signing a further three Tribal:Cloud contracts post year
end, with a combined ARR of GBP1.1m. We have adjusted our capital
investment plans, recognising the balance required between the
execution of our growth strategy and recovery from the impact of
the NTU contract.
We believe the education market globally is becoming more
attuned to the benefits of SaaS and cloud offerings which presents
a supportive market backdrop for Tribal following its strategic
investment into and development of cutting-edge technologies. We
remain focused on delivering our key strategic priorities during
2023 and despite the setback in the year, we remain confident in
our ambition and ability to meet global demand and deliver on our
growth strategy going forward.
Mark Pickett
Chief Executive Officer
Financial review
Results
Change
Constant Change constant
2021 Currency constant currency
GBPm 2022 Reported 2021(3) currency %
----------------------------------- ------ ---------- --------- --------- ---------
Revenue 83.6 81.1 82.2 1.4 1.6%
Student Information Systems 68.2 67.3 68.0 0.2 0.2%
Education Services 15.4 13.8 14.2 1.2 8.7%
----------------------------------- ------ ---------- --------- --------- ---------
Gross Profit 31.3 41.8 42.0 (10.7) (25.4)%
Gross Profit Margin 37.5% 51.5% 51.1% - (13.6)pp
----------------------------------- ------ ---------- --------- --------- ---------
Adjusted Operating Profit (EBITDA)
(1, 2)
(Before Central Overheads) 17.9 25.8 25.9 (8.0) (30.6)%
Student Information Systems 14.0 23.6 23.8 (9.8) (40.4)%
Education Services 3.9 2.2 2.1 1.7 81.6%
----------------------------------- ------ ---------- --------- --------- ---------
Central Overheads (4) (10.4) (9.3) (9.3) (1.3) (11.4)%
Net foreign exchange (losses)/gain (0.1) 0.1 0.1 (0.2) (189.1)%
----------------------------------- ------ ---------- --------- --------- ---------
Adjusted Operating Profit (EBITDA)
(1, 2) 7.4 16.6 16.8 (9.3) (55.3)%
Adjusted Operating Margin (EBITDA)
(1, 2) 8.9% 20.5% 20.4% - (11.5)pp
----------------------------------- ------ ---------- --------- --------- ---------
Statutory Profit before Tax 0.4 8.6 8.6 (8.2) (95.5)%
Statutory (Loss)/Profit after
Tax (0.5) 7.0 7.0 (7.5) (107.3)%
----------------------------------- ------ ---------- --------- --------- ---------
Annual Recurring Revenue 51.2 50.3 51.2 - -
----------------------------------- ------ ---------- --------- --------- ---------
(1.) Adjusted Operating Profit and Adjusted Operating Margin are in respect of continuing operations
and exclude charges reported in "Other items" of GBP3.8m (2021: GBP5.4m), refer to Note 6
in the Financial Statements.
(2.) (EBITDA is calculated by taking the Adjusted Operating Profit after the allocation of Central
Overheads and excludes Interest, Tax, Depreciation and Amortisation.)
(3.) 2021 results adjusted are updated for constant currency - the Group has applied 2022 foreign
exchange rates to 2021 results to present a constant currency basis, when applied to 2021
results there is an increase in Revenue of GBP1.1m, an increase to Adjusted Operating Profit
(before Central Overheads) and Adjusted Operating Profit of GBP0.1m.
(4.) (Central Overheads are made up of costs that are not directly attributable to either Student
Information Systems or Education Services.)
The financial review presents the reported results for 2022 and
2021, and the 2021 results restated to "constant currency" using
2022 rates to exclude foreign currency impact. The change
percentages and comparatives are shown on the 2021 constant
currency numbers. The presentation disclosed as "constant currency"
is an alternative performance measure and not a statutory reporting
measure prepared in line with International Financial Reporting
Standards (IFRS) and disclosed as "reported". The Group has chosen
to present its results on a constant currency basis to reflect the
year-on-year performance and account for the impact of foreign
exchange movements in the year.
Revenue
Revenue increased 1.6% to GBP83.6m (2021: GBP82.2m constant
currency, GBP81.1m reported). Notwithstanding the NTU contract, the
Group's Student Information Systems segment performed well, with
significant growth of 29% seen across Cloud and Edge revenue
streams driven by new customer wins. This increase was largely
offset by the continued delay seen by Professional Services in
delivering the implementation phase of the NTU contract.
Education Services revenue increased by 8.7% to GBP15.4m (2021:
GBP14.2m constant currency; GBP13.8m reported) as the main UK
contracts continued to track well throughout the year in addition
to new contract wins in the Middle East.
38% of Tribal's revenue in the year was generated outside the UK
and is therefore subject to foreign exchange movement.
Gross Profit has decreased 25.4% to GBP31.3m (2021: GBP42.0m
constant currency, GBP41.8m reported) and the margin percentage has
decreased to 37.5% (2021: 51.1% constant currency, 51.5% reported).
The margin percentage decrease is largely due to the recognition of
the onerous contract provision and a decline in Professional
Services margin caused by the NTU contract implementation.
Adjusted Operating Profit (EBITDA)
The Adjusted Operating Profit (EBITDA) decreased GBP9.3m to
GBP7.4m (2021: GBP16.8m constant currency; GBP16.6m reported). The
Adjusted Operating Margin (EBITDA) decreased to 8.9% (2021: 20.4%
constant currency; 20.5% reported). Due to the challenges
experienced with the delivery of the NTU contract, an onerous
contract provision of GBP4.5m has been recognised for future
losses, which represents the unavoidable costs of meeting the
obligations under the contract in excess of the expected economic
benefits to be received. Excluding this provision, adjusted
operating profit would be GBP11.9m and adjusted operating margin
would be 14.3%.
Central Overheads, representing costs in HR, IT, Finance,
Marketing and Management that aren't directly attributable to lines
of business increased by GBP1.3m to GBP10.4m (2021: GBP9.3m
constant currency and reported). The increase was primarily due to
increased global insurance costs and legal and professional fees in
line with market trends. Margins will continue to be under pressure
next year due to the impact of inflation on salaries and global
insurance is expected to continue to rise in 2023.
We continue to focus on reducing overhead costs and have
continued to grow our Manila office in the Philippines to support
central back-office functions, product development, ebs and
SchoolEdge product support and other business services. The Group
continues to identify cost saving measures and effectively manage
its cost base.
Statutory (Loss)/Profit after Tax
The Statutory (Loss) / Profit after tax for the year decreased
by 107.3% to a loss of GBP(0.5)m (2021: GBP7.0m reported).
Excluding the costs of the Veritas Programme, a one-off project, in
the year of GBP1.3m (2021: GBP1.7m) and the onerous contract
provision of GBP4.5m (2021: GBPnil) the underlying profit decrease
was 23.5%. The tax charge reduced to GBP0.9m (2021: GBP1.6m
reported) due to the unrecognised deferred tax in respect of the
Singapore branch losses, on the basis we do not anticipate future
profits to be generated to utilise these losses.
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)
Change
Constant Change constant
2021 Currency constant currency
GBPm 2022 Reported 2021 currency %
Foundation Support & Maintenance 25.4 26.0 26.2 (0.8) (2.9)%
Foundation Software 7.2 5.4 5.4 1.8 33.3%
Cloud Services 8.5 6.8 6.9 1.6 24.0%
Edge 4.8 3.4 3.4 1.4 39.6%
Professional Services 11.2 12.7 12.8 (1.6) (12.5)%
--------------------------------- ----- ---------- --------- ---------- ---------
Core Revenue 57.1 54.2 54.7 2.4 4.5%
Other Software & Services 11.0 13.1 13.4 (2.3) (17.3)%
--------------------------------- ----- ---------- --------- ---------- ---------
Total Revenue 68.2 67.3 68.0 0.1 0.2%
--------------------------------- ----- ---------- --------- ---------- ---------
Adjusted Operating Profit 14.0 23.6 23.8 (9.8) (40.4)%
--------------------------------- ----- ---------- --------- ---------- ---------
Adjusted Operating Margin 20.6% 35.0% 35.0% - (14.4)pp
--------------------------------- ----- ---------- --------- ---------- ---------
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, Singapore, Malaysia, Netherlands and Canada.
SIS revenue increased marginally by 0.2% to GBP68.2m (2021:
GBP68.0m constant currency; GBP67.3m reported). Revenue generated
from our core product offerings increased 4.5% to GBP57.1m (2021:
GBP54.7m constant currency and reported). The increase was impacted
by the changing scope and complexity of the NTU contract, resulting
in substantially lower recognisable revenue than originally
anticipated. Revenue from other software and services declined
17.3% to GBP11.0m (2021: GBP13.4m constant currency, GBP13.1m
reported) as discussed below.
The Group secured multiple new customer wins throughout the year
across Tribal's range of software, reflecting the evolving product
suite, technology leadership and increasing activity levels within
the education sector globally.
Foundation Support & Maintenance fees in the period on our
Foundation products (primarily SITS, Callista, ebs, Maytas, K2 and
SID) decreased 2.9% in the period. Several ebs and Maytas customers
moved onto Software-as-a-Service (SaaS) contracts in the year,
resulting in GBP0.2m of associated revenues transferring from
support to software.
Foundation Software includes the sale of new perpetual and
subscription software licenses on our Foundation products. Revenue
in the period increased 33.3% to GBP7.2m (2021: GBP5.4m constant
currency, GBP5.4m reported). Under IFRS15 license revenue is
recognised as the software is implemented on a percentage complete
basis, resulting in the revenue from larger implementations taking
more than two years to recognise. Key new customers include
University of Plymouth, University of East Anglia and The Leeds
Conservatoire and British University Vietnam.
Cloud Services cover the provision of Tribal:Cloud, a fully
managed public cloud services and other hosting services supporting
Tribal products, either on-premise in a private cloud, or more
increasingly in a public cloud.
Cloud revenues have continued to increase and are up 24.0% to
GBP8.5m (2021: 6.9m constant currency, GBP6.8m reported). As
previously discussed, the Group closed a number of significant
sales to existing customers, transitioning their existing
on-premise Tribal SITS software, SITS:Vision, into the
Tribal:Cloud. We continue to have positive conversations across our
extensive customer base as they explore the benefits a move to the
cloud can bring to their organisation and are confident of
continued uptake. At the end of 2022 22% of our 126 SITS:Vision
customers had signed up to Tribal:Cloud.
Edge revenues saw an increase of 39.6% to GBP4.8m (2021: GBP3.4m
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
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, in most instances, and the team has been bolstered by
the Global Delivery Centre (GDC) in Kuala Lumpur, Malaysia which
has grown 39% in the year.
Professional Services revenue decreased by 12.5% to GBP11.2m
(2021: GBP12.8m constant currency, GBP12.7m reported) as a result
of the challenges with the NTU contract implementation.
Furthermore, a significant amount of resource is working on the NTU
contract which has reduced the teams capacity to deliver on other
work as a result.
Other Software & Services revenue decreased 17.3% to
GBP11.0m (2021: GBP13.4m constant currency, GBP13.1m reported) due
to continued Australian SchoolEdge churn in addition to the
previously announced planned reduction in development work on the
Technical and Further Education colleges New South Wales, "TAFE
NSW" contract. The TAFEs transition to their new provider is
expected to conclude during the second half of 2023 at which point
no further revenue will be generated, TAFE's contribution to the
Group's annual recurring revenue totals GBP3.1m.
Adjusted Operating Profit decreased by (40.4)% to GBP14.0m
(2021: GBP23.8m constant currency; GBP23.6m reported) and Adjusted
Operating Margin decreased to 20.6% (2021: 35.0% constant currency
and reported) . SIS margin reduced due to low margins from the
implementation of the NTU contract compounded by the fact the team
have had lower capacity to deliver on higher margin contracts. Due
to the challenges experienced with the delivery of the NTU
contract, an onerous contract provision of GBP4.5m had been
recognised, which represents the unavoidable costs of meeting the
obligations under the contract in excess of the expected economic
benefits to be received. Excluding this provision, SIS's adjusted
operating profit would be GBP18.5m and adjusted operating margin
would be 27.2%.
Education Services (ES)
Change
Constant Change constant
2021 Currency constant currency
GBPm 2022 Reported 2021 currency %
-------------------------------------- ----- ---------- --------- --------- ---------
School Inspections & Related Services 12.7 11.1 11.4 1.3 11.7%
I-graduate - Surveys & Data Analytics 2.7 2.7 2.8 (0.1) (3.9)%
-------------------------------------- ----- ---------- --------- --------- ---------
Total Revenue 15.4 13.8 14.2 1.2 8.7%
-------------------------------------- ----- ---------- --------- --------- ---------
Adjusted Operating Profit 3.9 2.2 2.1 1.7 81.6%
-------------------------------------- ----- ---------- --------- --------- ---------
Adjusted Operating Margin 25.0% 16.3% 15.0% - 10.1pp
-------------------------------------- ----- ---------- --------- --------- ---------
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 8.7% to GBP15.4m (2021:
GBP14.2m constant currency; GBP13.8m reported).
The revenue from School Inspections & Related Services
increased by 11.7% to GBP12.7m (2021: GBP11.4m constant currency;
GBP11.1m reported).
Performance continued to improve throughout the year, with
successful tenders for renewals of three major contracts with the
Department for Education in England: The National Centre for
Excellence in the Teaching of Mathematics "NCETM" (GBP8.7m total
contract value over two years), Quality Assurance of the National
Professional Qualifications programme "NPQ", (GBP6.5m total
contract value over four years) and the Advanced Maths Support
Programme "AMSP" (GBP2.6m total contract value over two years). In
addition, winning a two-year contract with the National Tutoring
Programme "NTP" total contract value of GBP2.4m.
In the Middle East a new six-month contract was won in the year
with the Sharjah Private Education Authority "SEPA" (GBP3.0m total
contract value) to deliver School Inspections in addition to
continued delivery on smaller, high margin, contracts in the UAE
and Bahrain.
The revenue for Surveys & Data Analytics decreased by 3.9%
to GBP2.7m (2021: GBP2.8m constant currency; GBP2.7m reported). The
revenues from Surveys are reduced, as expected, due to the
seasonality of the Southern Hemisphere International Student
Barometer which most institutions participate every other year.
The Adjusted Operating Profit in Education Services increased by
81.6% to GBP3.9m (2021: GBP2.2m constant currency; GBP2.1m
reported), the Adjusted Operating Margin also increased 10.1pp to
25.0% (2021: 16.3% constant currency; 15.0% reported), this
increase is largely due to the variable cost model it operates and
the successful delivery of higher margin contracts in 2022 compared
to the lower margin ADEK contract which was completed at the end of
2021.
Product Development
GBPm 2022 2021 Reported Change
--------------------- ----- ------------- --------
Product Development 14.4 15.9 (10.3)%
--------------------- ----- ------------- --------
Of which capitalised 10.3 10.2 2.3%
Edge 10.3 10.1 1.4%
Other Products - 0.1 (100.0)%
Of which expensed 4.1 5.8 (39.1)%
Foundation Products 2.0 2.2 (11.7)%
Edge 1.3 2.2 (76.3)%
Other Products 0.8 1.3 (48.0)%
Amortisation 1.3 1.0 24.1%
--------------------- ----- ------------- --------
The Group spent GBP14.4m on Product Development, of which
GBP10.3m was capitalised in relation to Edge, including Dynamics
and Semestry (2021: GBP15.9m spent, GBP10.2m capitalised, GBP5.8m
expensed). In 2021 GBP0.1m was capitalised in relation to Education
Services' E-Evidence application, this has been written off due to
a change in focus by new management in the year.
We regularly review our Edge strategy, which provides a
compelling vision to new and existing customers to embrace our
next-generation, best-of-breed, cloud-native SIS solutions, to
improve delivery to customers. As a cloud-native SIS, Edge provides
a competitive differentiator in targeting and acquiring new
customers. In addition, it protects Tribal's customer base by
providing the most efficient, lowest cost route to achieve a
comprehensive, integrated, open-standards SIS which maximises the
student experience and reduces the technical complexity and IT cost
for our customers.
Our continued investment in Edge across our existing product
sets and Admissions saw capitalised product development spend
increased to GBP10.3m (2021: GBP10.1m) as the Edge development team
reached its peak of development activities to deliver Admissions.
Management is expecting capitalised product development to reduce
significantly in 2023 as the peak of development investment has
passed .
Expensed product development decreased 39.1% to GBP4.1m (2021:
GBP5.8m) of which GBP2.0m (2021: GBP2.2m) related to our Foundation
products, GBP1.3m (2021: GBP2.2m) related to Edge and GBP0.8m
(2021: GBP1.3m) related to other products. Product development
costs of GBP0.7m in 2021, relating to our Australian Government
Contracts, has been reallocated from Foundation to Other products.
2021 included a one-off charge of GBP0.8m relating to pre-2021
capitalised costs being expensed to align with our future Edge
offerings.
Key Performance Indicators (KPIs)
Change
2021 Change constant
2021 Constant constant currency
GBPm 2022 Reported Currency currency %
------------------------------------- --------- --------- --------- ---------- ----------
Revenue 83.6 81.1 82.2 1.4 1.6%
------------------------------------- --------- --------- --------- ---------- ----------
- Student Information Systems 68.2 67.3 68.0 0.1 0.2%
* Education Services 15.4 13.8 14.2 1.2 8.7%
------------------------------------- --------- --------- --------- ---------- ----------
Adjusted Operating Profit
(EBITDA)(1) 7.4 16.6 16.8 (9.3) (55.3)%
Adjusted Operating Margin(1) 8.9% 20.5% 20.4% - (11.5)pp
Annual Recurring Revenue
(ARR)(2) 51.2 50.3 51.2 - -
Gross Revenue Retention (GRR)(3) 91% 93% - - (2)pp
Net Revenue Retention (NRR)(4) 104% 106% - - (2)pp
Committed Income (Order Book) 172.9 172.5 176.6 (3.7) (2.1)%
Operating Cash Conversion(6) 89% 104% 104% - (15.0)pp
Free Cash (Out)/In Flow (5.3) 5.4 5.4 (10.7) (198)%
Staff Retention 83.6% 86.9% - - (3.3)pp
Revenue per operational FTE(5) GBP102.0k GBP100.1k GBP101.4k GBP0.6k 0.6%
------------------------------------- --------- --------- --------- ---------- ----------
(1.) Adjusted Operating Profit and Adjusted Operating Margin
are in respect of continuing operations and exclude charges
reported in "Other items" of GBP3.8m (2021: GBP5.4m),
refer to Note 6 in the Financial Statements. EBITDA is
calculated by taking the Adjusted Operating Profit after
the allocation of Central Overheads and excludes Interest,
Tax, Depreciation and Amortisation.
(2.) (ARR is a forward-looking metric representing committed
revenues as at 31 December 2022 and includes Support &
Maintenance fees paid on all software, License sold on
a subscription basis, Cloud services and Edge sales.)
(3.) (Calculated as a percentage of recurring revenue retained
from existing customers at 1 January including contract
expiry, cancellations or downgrades in the year)
(4.) (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)
(5.) Revenue per operational FTE is the average FTE for the
year excluding average FTE associated with capitalised
Product Development. In 2022 152.3 FTE were capitalised
(2021: 126.1)
(6.) Operating cash conversion is calculated as net cash from
operating activities before tax, excluding the cash outflow
of GBP1.2m (2021: GBP1.7m) on the Veritas programme and
GBP0.6m (2021: GBPnil) of redundancy payments as a proportion
of adjusted operating profit (EBITDA) excluding the onerous
contract provision of GBP4.5m (2021: GBPnil).
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 Operating Profit (EBITDA) has been provided in
the financial statements.
Annual Recurring Revenue (ARR)
Constant
2021 Currency Change
GBPm 2022 Reported 2021 Change %
--------------------------------- ---- --------- --------- -------- --------
Foundation Support & Maintenance 24.8 24.7 25.0 (0.2) (1.0)%
Foundation Subscription 5.4 3.8 3.8 1.6 42.6%
Cloud Services 10.2 8.2 8.3 1.9 23.4%
Edge 5.4 4.5 4.6 0.8 18.0%
--------------------------------- ---- --------- --------- -------- --------
Core product ARR 45.8 41.2 41.7 4.1 9.9%
--------------------------------- ---- --------- --------- -------- --------
Other Software & Services 5.4 9.1 9.5 (4.1) (43.5)%
--------------------------------- ---- --------- --------- -------- --------
Total ARR 51.2 50.3 51.2 - -
--------------------------------- ---- --------- --------- -------- --------
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 9.9% to
GBP45.8m (2021: GBP41.7m constant currency, GBP41.2m reported)
driven by wins across our core product offerings, offset by the
decrease of GBP1.3m relating to the NTU contract and other
churn.
As previously reported, ARR relating to other software and
services has decreased 43.5% to GBP5.4m (2021: GBP9.5m constant
currency, GBP9.1m reported). GBP0.6m relates to the decrease in
Department of Education ARR following a contract extension to June
2024, we expect the remaining ARR of GBP1.5m to drop in 2023
subject to historic Government and Schools' contracts migrating
onto an alternative solution.
NRR 104% (2021: 106%) has decreased by 2pp. Upsell to existing
customers has been consistent year on year, highlighting the strong
growth opportunities within our existing customer base, in
particular migrations of on-premise customers into the cloud. This
has been offset by expected churn in Callista as two customers have
exited, as well as expected churn in School Edge as customers
continue to migrate to alternative suppliers decreasing GRR by 2pp
91% (2021: 93%).
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 2022. 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 2022 this decreased to GBP172.9m (2021:
GBP176.6m constant currency, GBP172.5m reported). Committed Income
decreased due to the removal of the NTU contract GBP5.6m, with the
remainder due to the anticipated reduction in historic Australian
Government contracts and SchoolEdge churn offset by new contract
wins in ES, Cloud and Edge.
Operating cash conversion
Operating cash conversion is calculated as net cash from
operating activities before tax, excluding the cash outflow of
GBP1.2m (2021: GBP1.7m) on the Veritas programme and GBP0.6m (2021:
GBPnil) of redundancy payments as a proportion of adjusted
operating profit (EBITDA) excluding the onerous contract provision
of GBP4.5m (2021: GBPnil). In 2022, operating cash conversion was
89% (2021: 104% reported). The decrease in operating cash
conversion is a result of an increase in non-cash items and the
temporary decline in 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,
or distribution to shareholders. It is calculated as net cash
generated, before dividends, interest and finance charges, deferred
consideration, and investments in subsidiaries. Free cash flow in
2022 decreased to and outflow of GBP(5.3)m (2021: inflow of GBP5.4m
reported), investment in product development increased GBP0.4m to
GBP10.6m (2021: GBP10.2m) and proceeds on shares sold to satisfy
exercises of share-based payment schemes reduced to GBP0.6m (2021:
GBP3.2m) . Net cash used in operating activities before tax
decreased GBP6.6m to GBP8.9m (2021: GBP15.5m).
Full Time Equivalent (FTE) and staff retention
2022 2021 Change
--------------------- ---- ---- ------
UK 622 651 (29)
Asia Pacific 317 317 1
Rest of world(1) 13 14 (2)
--------------------- ---- ---- ------
Full Time Equivalent
(FTE) 952 982 (31)
--------------------- ---- ---- ------
(1. Including USA, Canada and Middle East.)
Our overall workforce has decreased by 3.1% to a total FTE of
952 from 982 at 31 December 2021 primarily in the UK.
On an operational FTE basis (excluding Capitalised Product
Development), the revenue per average operational FTE increased to
GBP102.0k (2021: GBP101.4k constant currency, GBP100.1k
reported).
The reduction in headcount reflects our ongoing strategy to
drive efficiencies whilst growing our global delivery capability in
Malaysia and the Philippines. We note our staff retention has
decreased to 83.6% (2021: 87.0%) in line with the market trends,
with the last quarter of 2022 returning to pre-pandemic levels of
attrition.
Items excluded from adjusted profit figures
The Group has adopted a policy of disclosing separately on the
face of its Group income statement the effect of any components of
financial performance considered by the Directors to be not
directly related to the trading business or regarded as
exceptional, and for which separate disclosure would assist in a
better understanding of the financial performance achieved. A full
explanation of "Other Items" is included in note 6 of the Financial
Statements however the main items are as follows:
-- Employee-related share option charges:
In 2022, share-based payment charges (including employer related
taxes) totalled GBP0.5m (2021: GBP1.6m), and are excluded from
the Adjusted operating profit. On 11 April 2022, 552,941 nil-cost
share options were granted to Mark Pickett (317,647) and Diane
McIntyre (235,294) under the terms of the 2010 Long-Term Incentive
Plan.
-- Amortisation of IFRS 3 intangibles:
The amortisation charge in relation to IFRS 3 intangible assets
of GBP1.1m (2021: GBP0.9m) arose from separately identifiable
assets recognised as part of previous acquisitions. The assets
principally relate to software and customer relationships and
are amortised over their expected life which was determined in
the year the acquisition took place.
-- Internal Systems Transformation Programme "Veritas":
Between the end of 2020 and the end of 2022, the Group has been
running the Veritas Programme which went live in January 2023.
This includes an upgrade to its accounting system (Microsoft Dynamics
D365) and is part of a wider implementation of a new target operating
model and processes to provide greater operating efficiencies
and reporting functionalities. Following clarified guidance issued
in relation to IAS 38, GBP1.3m (2021: GBP1.7m) of costs have been
expensed to the income statement.
-- Restructuring and associated costs:
These costs relate to the restructuring of the Group's operations
to implement the new target operating model as part of the Veritas
programme. The charge for the year is GBP0.6m (2021:GBPnil) due
to planned restructures at the start of the year. There are no
restructuring provisions recognised as at 31 December 2022.
Net cash and cash flow
GBPm 2022 2021 Change
Net cash flow from operating activities
before tax 8.7 15.5 (6.8)
Tax paid (2.6) (1.6) (1.0)
Purchases of property, plant and equipment (0.7) (0.6) (0.1)
Net lease payments (0.9) (0.9) -
Capitalised product development (10.4) (10.2) (0.2)
Proceeds from shares 0.6 3.2 (2.6)
Free cash flow (5.3) 5.4 (10.7)
Net cash outflow from other investing
activities (1.0) (6.1) 5.2
Net cash inflow/ (outflow) from other
financing activities 3.2 (2.7) 5.9
-------------------------------------------- ------ ------ ------
Net decrease in cash & cash equivalents (3.1) (3.4) 0.3
-------------------------------------------- ------ ------ ------
Cash & cash equivalents at beginning
of the year 5.9 9.5 (3.6)
Less: Effect of foreign exchange rate
changes - (0.2) 0.2
Cash & cash equivalents at end of period 2.9 5.9 (3.0)
-------------------------------------------- ------ ------ ------
Borrowings (6.3) - (6.3)
-------------------------------------------- ------ ------ ------
Net (debt)/cash & cash equivalents at
end of period (3.4) 5.9 (9.3)
-------------------------------------------- ------ ------ ------
Net (debt) / cash and cash equivalents at 31 December 2022 were
GBP(3.4)m (2021: GBP5.9m).
Operating cash inflow for the period was GBP6.1m (2021:
GBP13.9m) significantly lower than last year due to the impact of
the NTU contract.
Cash outflow from investing activities was GBP12.1m (2021:
GBP16.9m). Spend on purchases of property, plant and equipment
totalled GBP0.7m (2021: GBP0.6m). Spend on product development
increased to GBP10.4m (2021: GBP10.2m) in line with the Group's
product investment programme. The Group made a payment of GBP1.0m
for deferred consideration (2021: GBP2.2m), of which GBP0.6m was
the final earn-out from the Semestry acquisition, the remaining
GBP0.4m was earn-out payments for Eveoh, paid on a quarterly basis
over the two year earn-out period ending September 2023. In 2021
the Group made an upfront net payment of GBP4.2m in respect of the
acquisition of Semestry Limited, there have been no acquisitions in
2022.
Cash inflow/(outflow) from financing activities increased to
GBP2.9m (2021: (0.4)m). The Group paid a final dividend of 1.3p per
share in the year with GBP2.7m returned to shareholders. Bank loan
arrangement fees and interest in the period totalled GBP0.3m (2021:
GBP0.2m). This is offset with the proceeds from the issue of shares
totalling GBP0.6m (2021: GBP3.2m) to satisfy exercises of
share-based payment schemes. During the year the group drew down a
net of GBP6.3m from the GBP10m loan facility to assist with working
capital requirements, this remains outstanding at year end.
Funding arrangements
On 21 January 2020 the Group entered into a three year GBP10m
multicurrency revolving facility with HSBC with the option to
extend by a further two years, both of which have been exercised
with the facility expiring in December 2024. The facility was put
in place to cover general corporate and working capital
requirements of the Group, as at 31 December 2022 GBP6.3m (2021:
GBPnil) of the loan was utilised. The Group had a GBP2m committed
overdraft facility in the UK and a AUD$2m committed overdraft
facility in Australia, both facilities are committed for a 12-month
period ending August 2023 and October 2023 respectively. At 31
December 2022 GBP0.1m of the UK overdraft was drawn. To offset the
impact of movements in foreign exchange the Group entered into
three forward contracts to hedge the movement between AUD:GBP.
These contracts expired in the year and generated a net change in
fair value of GBPnil (2021: GBP0.2m). The Group will continue to
manage foreign exchange exposure during 2023.
In February 2023, to manage short-term working capital
requirements, Tribal converted GBP7m of the GBP10m uncommitted
accordion into its existing loan facility, increasing the total
facility to GBP17m.
Shareholders returns and dividends
Tribal remains committed to a progressive dividend policy,
however based on the performance in the year and having reviewed
the group's cash flow forecasts, specifically with regard to the
significant uncertainties around the resolution of the NTU contract
outlined above, the Board have concluded that it would be prudent
to reduce the final dividend by 50%. It is the Board's intention to
return to its former policy of dividend progression when
circumstances allow.
The Board is proposing a final dividend in respect of the year
ended 31 December 2022 of 0.65p, pending approval at the AGM on 30
May 2023. The anticipated payment date is 27 July 2023, with an
associated record date of 23 June 2023 and ex-dividend date of 24
June 2023. In July 2022 Tribal paid a final dividend of 1.3p per
share in recognition of the year ended 31 December 2021. The Board
intends to continue a progressive dividend policy, with a single
dividend payment each year following annual results.
Going concern
As at 31 December 2022, the Group had cash and cash equivalents
of GBP2.9m (2021: GBP5.9m) and borrowings of GBP6.3m (2021:
GBPnil). The Group had a GBP2m committed overdraft facility in the
UK and a AUD$2m committed overdraft facility in Australia, both
facilities are committed on a 12-month rolling period ending August
2023 and October 2023 respectively. At the year-end there was
GBP1.97m available but undrawn in respect of the UK overdraft
facility (GBP35,000 had been drawn down) and $AUD2m available but
undrawn in respect of the Australian overdraft facility.
Tribal Group plc has undertaken to make adequate financial
resources available to the Group to meet its current and future
obligations as and when they fall due by entering a GBP17m loan
facility to cover temporary working capital requirements of the
Group and corporate merger and acquisition activity, if required,
which expires in December 2024 .
The Group benefits from strong annual recurring revenues and
cash generation, it also has a significant pipeline of committed
income as it enters 2023 which provides a good level of protection
and certainty to the business. While the Group's net current
liability position has increased to GBP25.0m from GBP20.9m in 2021,
the increase is driven by the increase in borrowings of GBP6.3m and
the recognition of an onerous contract provision of GBP4.5m. The
remaining net current liabilities is primarily made up of net
contract liabilities of GBP19.5m (2021: GBP17.6m) relating to
deferred customer revenue recognised in accordance with IFRS
15.
The Group had a positive end to the year for sales, closing
several significant sales to new and existing customers, and
expanding its global footprint. The financial impact of the
pandemic and the changing expectations of students, means that
never has the need for cloud-based solutions for the Education
market been more pressing. The investments the Group continue to
make position Tribal at the forefront of this evolution in the
industry, in addition, the Board has engaged advisors and is
considering its strategic options and opportunities for the
Education Services business.
Management have assessed a range of outcomes in relation to the
NTU contract and its potential impact on the Group's cash flows. If
mediation is not successful, it may result in litigation. Should
the contract result in litigation, timelines will be uncertain but
are considered 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 with particular focus on the challenges
faced with the implementation of the NTU contact. In addition,
management have sufficiently stress tested the latest forecasts to
the point where either the Group cannot meet its liabilities or is
in breach of banking covenants and have concluded that this
position is highly unlikely, and therefore does not have a
significant impact on the Group's ability to continue as a going
concern. Accordingly, the Directors have a reasonable expectation
that the Group and the Company has adequate resources to continue
in operational existence for at least 12 months from the date of
approval of the financial statements and the foreseeable future.
Thus, they continue to adopt the going concern basis in preparing
the financial statements.
Taxation
The corporation tax on adjusted profit before tax was GBP2.9m
(2021: GBP2.2m). The increase was due to the unrecognised deferred
tax in respect of the Singapore branch losses, on the basis we do
not anticipate future profits to be generated to utilise these
losses, and an increase in tax generated in international
jurisdictions with a higher rate of corporation tax. It is
anticipated that the tax charges on profits in the near- to
medium-term future are likely to be higher than the standard rate
of UK corporation tax.
Share options and share capital
On 11 April 2022, 552,941 nil-cost share options were granted to
Mark Pickett (317,647) and Diane McIntyre (235,294) as part of
their ongoing remuneration.
1,847,373 shares were issued during the year in order to satisfy
exercises of share-based payment schemes. The exercise costs of 5p,
58.2p, 71p, 79.6p and 80p per share for the LTIPs resulted in cash
receipts of GBP0.6m.
Earnings per share (EPS)
Adjusted basic earnings per share from continuing operations
before other costs and intangible asset impairment charges and
amortisation, which reflects the Group's underlying trading
performance, decreased by 89% to 0.6p (2021: 5.6p) due to the
decrease in adjusted profit before tax and the reduced tax charge
in the year.
Statutory basic earnings per share decreased by 106% to (0.2)p
(2021: 3.3p) as a result of the statutory loss increase in the year
to GBP(0.5)m (2021: statutory profit GBP7.0m).
In 2021 1,490,169 vested LTIP and CSOP shares that had not yet
been exercised, were in error only included in the diluted EPS
calculation. In the current year these options have been included
in the basic calculation and the prior year has been restated to
3.3p from 3.4p per share.
Pension obligations
At 31 December 2022, the Group operated two defined benefit
pension schemes for the benefit of certain deferred employees of
its subsidiaries in the UK which are closed to new members. These
schemes are administered by separate funds that are legally
separated from the Parent Company and relate to a historic contract
within Education Services. The trustees of the pension funds are
required by law to act in the interest of the funds and of all
relevant stakeholders in the schemes. The trustees of the pension
funds are responsible for the investment policy with regard to the
assets of the funds.
Across the pension schemes, the combined surplus calculated
under IAS 19 at the end of the year was GBP0.1m (2021: deficit of
GBP0.2m), with gross assets of GBP8.1m and gross liabilities of
GBP5.4m (2021: GBP8.8m and GBP9.0m respectively). Total actuarial
gains recognised in the consolidated statement of comprehensive
income are GBP0.3m (2021: GBP0.7m). The Company does not have an
unqualified right to apply any surplus on one of the schemes and
consequently a surplus of GBP2.6m has not been recognised.
Diane McIntyre
Chief Financial Officer
Consolidated income statement
For the year ended 31 December 2022
Year ended Year ended
Other 31 December Other 31 December
items 2022 items 2021
Adjusted (see Note Total Adjusted (see Note Total
Note GBP'000 6) GBP'000 GBP'000 GBP'000 6) GBP'000 GBP'000
--------------------------- ---- -------- ----------- ------------ -------- ----------- ------------
Continuing operations
Revenue 2 83,585 - 83,585 81,148 - 81,148
Cost of sales (52,250) - (52,250) (39,335) - (39,335)
--------------------------- ---- -------- ----------- ------------ -------- ----------- ------------
Gross profit 31,335 - 31,335 41,813 - 41,813
Total administrative
expenses (26,886) (3,670) (30,556) (27,846) (5,079) (32,925)
--------------------------- ---- -------- ----------- ------------ -------- ----------- ------------
Operating profit/(loss) 4,449 (3,670) 779 13,967 (5,079) 8,888
Investment income 5 25 - 25 255 - 255
Finance costs 6 (323) (94) (417) (230) (299) (529)
--------------------------- ---- -------- ----------- ------------ -------- ----------- ------------
Profit/(loss) before
tax 4,151 (3,764) 387 13,992 (5,378) 8,614
Tax (charge)/credit 7 (2,907) 2,010 (897) (2,240) 619 (1,621)
--------------------------- ---- -------- ----------- ------------ -------- ----------- ------------
Profit/(loss) attributable
to
the owners of the parent 1,244 (1,754) (510) 11,752 (4,759) 6,993
--------------------------- ---- -------- ----------- ------------ -------- ----------- ------------
Earnings per share
--------------------------- ---- -------- ----------- ------------ -------- ----------- ------------
Basic 9 (0.2)p 3.3p*
--------------------------- ---- -------- ----------- ------------ -------- ----------- ------------
Diluted 9 (0.2)p 3.2p*
--------------------------- ---- -------- ----------- ------------ -------- ----------- ------------
All activities are from continuing operations.
*Restated see Note 9
Consolidated statement of comprehensive income
For the year ended 31 December 2022
Year ended Year ended
31 December 31 December
2022 2021
Note GBP'000 GBP'000
----------------------------------------------------- ----- ------------ ------------
(Loss)/profit for the year (510) 6,993
Other comprehensive income/(expense):
Items that will not be reclassified subsequently
to profit or loss:
Remeasurement of defined benefit pension
schemes 262 728
Deferred tax on measurement of defined benefit
pension schemes (66) (131)
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation of foreign
operations 595 (917)
------------------------------------------------------------ ------------ ------------
Other comprehensive income/(expense) for
the year net of tax 791 (320)
------------------------------------------------------------ ------------ ------------
Total comprehensive income for the year attributable
to equity holders of the parent 281 6,673
------------------------------------------------------------ ------------ ------------
Consolidated balance sheet
As at 31 December 2022
Note 2022 2021
GBP'000 GBP'000
------------------------------------ ---- -------- --------
Non-current assets
Goodwill 10 29,176 28,582
Other intangible assets 11 43,667 35,947
Property, plant and equipment 1,044 962
Right-of-use assets 1,435 2,309
Net investment in lease 70 -
Deferred tax assets 5,064 5,233
Retirement benefit scheme assets 72 -
Contract assets - 1,610
------------------------------------ ---- -------- --------
80,528 74,643
------------------------------------ ---- -------- --------
Current assets
Trade and other receivables 12 12,505 10,602
Net investment in lease 47 -
Contract assets 6,676 6,178
Current tax assets 421 -
Cash and cash equivalents 15 2,891 5,924
------------------------------------ ---- -------- --------
22,540 22,704
------------------------------------ ---- -------- --------
Total assets 103,068 97,347
------------------------------------ ---- -------- --------
Current liabilities
Trade and other payables 13 (5,788) (6,081)
Accruals (8,622) (9,253)
Contract liabilities (26,004) (23,571)
Current tax liabilities (1,145) (2,456)
Lease liabilities (728) (878)
Borrowings (35) -
Provisions (5,194) (1,349)
------------------------------------ ---- -------- --------
(47,516) (43,588)
------------------------------------ ---- -------- --------
Net current liabilities (24,976) (20,884)
------------------------------------ ---- -------- --------
Non-current liabilities
Other payables 13 (209) (131)
Deferred tax liabilities (2,930) (2,953)
Contract liabilities (141) (1,864)
Retirement benefit obligations - (215)
Lease liabilities (721) (1,449)
Borrowings (6,250) -
Provisions (483) (807)
------------------------------------ ---- -------- --------
(10,734) (7,419)
------------------------------------ ---- -------- --------
Total liabilities (58,250) (51,007)
------------------------------------ ---- -------- --------
Net assets 44,818 46,340
------------------------------------ ---- -------- --------
Equity
Share capital 10,611 10,519
Share premium 83 18,961
Other reserves 28,598 27,978
Accumulated losses 5,526 (11,118)
------------------------------------ ---- -------- --------
Total equity attributable to equity
holders of the parent 44,818 46,340
------------------------------------ ---- -------- --------
Consolidated statement of changes in equity
For the year ended 31 December 2022
Note Share Share Other Accumulated Total
capital premium reserves losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ----- -------- -------- --------- ----------- --------
Balance as at 31 December 2020 10,285 15,951 26,926 (15,530) 37,632
Profit for the year - - - 6,993 6,993
Other comprehensive income for
the year - - - (320) (320)
------------------------------------------ -------- -------- --------- ----------- --------
Total comprehensive income for
the year - - - 6,673 6,673
------------------------------------------ -------- -------- --------- ----------- --------
Issue of equity share capital 234 3,010 - - 3,244
Equity dividend paid - - - (2,505) (2,505)
Credit to equity for share-based
payments - - 1,078 - 1,078
Foreign exchange difference on
share-based payments - - (26) - (26)
Tax credit on credit to equity
for share-based payments - - - 244 244
------------------------------------------ -------- -------- --------- ----------- --------
Contributions by and distributions
to owners 234 3,010 1,052 (2,261) 2,035
------------------------------------------ -------- -------- --------- ----------- --------
Balance at 31 December 2021 10,519 18,961 27,978 (11,118) 46,340
Loss for the year - - - (510) (510)
Other comprehensive expense 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 - - - (2,736) (2,736)
Credit to equity for share-based
payments - - 589 - 589
Foreign exchange difference on
share-based payments - - 31 - 31
Tax credit on credit to equity
for share-based payments - - - (260) (260)
------------------------------------------ -------- -------- --------- ----------- --------
Contributions by and distributions
to owners 92 (18,878) 620 16,363 (1,803)
------------------------------------------ -------- -------- --------- ----------- --------
At 31 December 2022 10,611 83 28,598 5,526 44,818
------------------------------------------ -------- -------- --------- ----------- --------
Consolidated cash flow statement
For the year ended 31 December 2022
Note Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
-------------------------------------- ---- ------------ ------------
Net cash from operating activities 15 6,106 13,889
--------------------------------------- ---- ------------ ------------
Investing activities
Interest received - -
Purchases of property, plant
and equipment (716) (563)
Expenditure on intangible assets (10,369) (10,224)
Payment of deferred consideration
for acquisitions (994) (2,180)
Acquisition of investments in
subsidiaries - cash consideration - (4,512)
Acquisition of investments in
subsidiaries - cash acquired - 317
Proceeds from sub-lease 29 52
Net gain on forward contracts 23 249
--------------------------------------- ---- ------------ ------------
Net cash outflow from investing
activities (12,027) (16,861)
--------------------------------------- ---- ------------ ------------
Financing activities
Interest paid (229) (65)
Loan arrangement fees (9) (45)
Loan drawdown 8,500 15,000
Loan repayment (2,250) (15,000)
Proceeds on issue of shares 573 3,244
Payment of lease liabilities (943) (1002)
Interest paid on lease liabilities (60) (85)
Equity dividend paid (2,736) (2,505)
--------------------------------------- ---- ------------ ------------
Net cash used in financing activities 2,846 (458)
--------------------------------------- ---- ------------ ------------
Net decrease in cash and cash
equivalents (3,075) (3,430)
Cash and cash equivalents at
beginning of year 5,924 9,520
Effect of foreign exchange rate
changes 7 (166)
--------------------------------------- ---- ------------ ------------
Cash and cash equivalents at
end of year 2,856 5,924
--------------------------------------- ---- ------------ ------------
Notes to the financial statements
1. General information
The basis of preparation of this preliminary announcement is set
out below.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2022
or 2021 but is derived from those accounts. Statutory accounts for
2021 have been delivered to the Registrar of Companies and those
for 2022 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 2022 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 .
2. Revenue for contracts with customers
The Group has split revenue into various categories which is
intended to enable users to understand the relationship with
revenue segment information. For 2021 reporting Asset Management,
Software Solutions and Information Managed Services revenue is now
included in SIS as it more closely aligns with the Software side of
the business. This totals GBP2.7m and was previously included
within Education Services. 2020 has been updated for comparison
with GBP2.6m revenue being reassigned.
North America
and Rest
of
UK Australia Other APAC the world Total
31 December 2022 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- ------- --------- ---------- ------------- -------
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 SIS 40,308 10,160 4,880 1,765 57,113
----------------------------------- ------- --------- ---------- ------------- -------
Other software & services 3,240 7,808 - - 11,048
----------------------------------- ------- --------- ---------- ------------- -------
Total 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 ES 8,302 126 1,080 5,916 15,424
----------------------------------- ------- --------- ---------- ------------- -------
Total 51,850 18,094 5,960 7,681 83,585
----------------------------------- ------- --------- ---------- ------------- -------
North America
and Rest
of
UK Australia Other APAC the world Total
31 December 2021 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- ------- --------- ---------- ------------- -------
Foundation - Support & Maintenance 15,945 7,375 1,709 925 25,954
Foundation - Software 4,927 81 324 71 5,403
Cloud Services 5,097 1,326 237 145 6,805
Edge 2,903 363 125 3 3,394
Professional Services 8,004 2,153 2,338 173 12,668
----------------------------------- ------- --------- ---------- ------------- -------
Core SIS 36,876 11,298 4,733 1,317 54,224
----------------------------------- ------- --------- ---------- ------------- -------
Other software & services 4,266 8,816 - - 13,082
----------------------------------- ------- --------- ---------- ------------- -------
Total SIS 41,142 20,114 4,733 1,317 67,306
----------------------------------- ------- --------- ---------- ------------- -------
Schools inspections & other
related services (QAS) 6,888 - - 4,181 11,069
i-graduate survey & data analytics 945 371 1,091 366 2,773
----------------------------------- ------- --------- ---------- ------------- -------
Total ES 7,833 371 1,091 4,547 13,842
----------------------------------- ------- --------- ---------- ------------- -------
Total 48,975 20,485 5,824 5,864 81,148
----------------------------------- ------- --------- ---------- ------------- -------
Net contract liabilities
Contract asset/(liability) Contract asset/(liability)
2022 2021
GBP000 GBP000
-------------------------------------- -------------------------- --------------------------
Opening contract balance (17,647) (19,435)
Of which released to income statement 17,405 19,128
New billings and cash in excess of
revenue recognised (19,227) (17,340)
-------------------------------------- -------------------------- --------------------------
Closing contract balance (19,469) (17,647)
-------------------------------------- -------------------------- --------------------------
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 GBP0.5m (2021: GBP0.5m) and will
be released in line with the total contract revenue. No amount has
been impaired at 31 December 2022 or 2021.
Remaining performance obligations
The amount of revenue that will be recognised in future periods
on these contracts when those remaining performance obligations
will be satisfied is analysed as follows:
At 31 December 2022
2023 2024 2025 Thereafter Total
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- ------- ------- ------- ---------- -------
Foundation - Support & Maintenance 24,635 24,472 15,783 6,389 71,279
Foundation - Licence 5,876 5,275 3,187 134 14,472
Cloud Services 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
----------------------------------- ------- ------- ------- ---------- -------
At 31 December 2021
2022 2023 2024 Thereafter Total
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- ------- ------- ------- ---------- -------
Foundation - Support & Maintenance 24,814 24,063 16,191 12,609 77,677
Foundation - Licence 4,563 3,438 2,764 2,068 12,833
Cloud Services 7,557 6,982 4,816 4,283 23,638
Edge 4,132 4,012 2,890 1,724 12,758
Professional Services 12,694 1,062 107 127 13,990
----------------------------------- ------- ------- ------- ---------- -------
Core SIS 53,760 39,557 26,768 20,811 140,896
----------------------------------- ------- ------- ------- ---------- -------
Other software & services 9,873 4,000 2,542 677 17,092
----------------------------------- ------- ------- ------- ---------- -------
Total SIS 63,633 43,557 29,310 21,488 157,988
----------------------------------- ------- ------- ------- ---------- -------
Schools inspections & other
related services (QAS) 6,756 2,136 660 - 9,552
i-graduate survey & data analytics 1,501 1,157 978 1,279 4,915
----------------------------------- ------- ------- ------- ---------- -------
Total ES 8,257 3,293 1,638 1,279 14,467
----------------------------------- ------- ------- ------- ---------- -------
TOTAL 71,890 46,850 30,948 22,767 172,455
----------------------------------- ------- ------- ------- ---------- -------
An analysis of the Group's revenue is as follows:
2022 2021
GBP'000 GBP'000
---------------------- -------- --------
Continuing operations
Sales of services 83,585 81,148
---------------------- -------- --------
Total revenue 83,585 81,148
---------------------- -------- --------
Further details of the nature of the services provided are
disclosed in Note 4. Sales of goods are not material and are
therefore not shown separately. Included in sales of services is
GBP1.7m (2021: GBP0.8m) 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.
Revenue Adjusted segment operating
profit
------------------------------- ---------------------------- ----------------------------------
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2022 GBP'000 2021 GBP'000 2022 GBP'000 2021 GBP'000
------------------------------- ------------- ------------- ----------------- ---------------
Student Information Systems 68,161 67,306 11,876 22,404
Education Services 15,424 13,842 3,719 2,229
------------------------------- ------------- ------------- ----------------- -------------
Total 83,585 81,148 15,595 24,633
------------------------------- ------------- ------------- ----------------- -------------
Unallocated corporate expenses (11,146) (10,666)
------------------------------- ------------- ------------- ----------------- -------------
Adjusted operating profit 4,449 13,967
Amortisation of software
and customer contracts
& relationships (see Note
6) (1,098) (947)
Other items (see Note 6) (2,572) (4,132)
------------------------------- ------------- ------------- ----------------- -------------
Operating profit 779 8,888
Investment income 25 255
Finance costs (417) (529)
------------------------------- ------------- ------------- ----------------- -------------
Profit before tax 387 8,614
Tax charge (897) (1,621)
------------------------------- ------------- ------------- ----------------- -------------
(Loss)/Profit after tax (510) 6,993
------------------------------- ------------- ------------- ----------------- -------------
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 GBP2.6m (2021: GBP1.1m) and
within Education Services GBP0.1m (2021: GBPnil).
The accounting policies of the reportable segments are the same
as the Group's accounting policies described in Note 1. 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 5% (2021:
4%) have arisen from the segment's largest customer; within SIS
revenues of approximately 4% (2021: 4%) have arisen from the
segment's largest customer.
Geographical information
Revenue from external customers, based on location of the
customer, is shown below:
2022 2021
GBP'000 GBP'000
------------------- -------- --------
UK 51,850 48,975
Australia 18,094 20,485
Other Asia Pacific 5,960 5,824
North America 3,616 3,149
Rest of the world 4,065 2,715
------------------- -------- --------
83,585 81,148
Non-current assets (excluding deferred tax)
2022 2021
GBP'000 GBP'000
------------------- -------- --------
UK 60,746 54,314
Australia 14,350 13,391
Other Asia Pacific 305 1,637
North America 52 68
Rest of the world 11 -
------------------- -------- --------
75,464 69,410
4. Other items
2022 2021
GBP'000 GBP'000
---------------------------------------------------------------- -------- --------
Acquisition related costs (186) (765)
Employee related share option charges (including employer
related taxes) (450) (1,628)
- Internal systems transformation programme "VERITAS" (1,321) (1,715)
- Restructuring and associated costs (615) (24)
Amortisation of software and customer contracts & relationships (1,098) (947)
---------------------------------------------------------------- -------- --------
Total administrative expenses (3,670) (5,079)
---------------------------------------------------------------- -------- --------
Other financing costs (94) (299)
Total other items before tax (3,764) (5,378)
---------------------------------------------------------------- -------- --------
Tax on other items 2,010 619
---------------------------------------------------------------- -------- --------
Total other items after tax (1,754) (4,759)
---------------------------------------------------------------- -------- --------
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 consultancy
and legal costs of potential acquisitions in the period total
GBP186,000. In 2021 the costs related to the acquisition of
Semestry Limited, and the acquisition of Eveoh BV's assets into
Semestry Netherlands BV (2021: GBP832,000). Under IFRS 3 these
amounts were expensed as they are not eligible for capitalisation.
Also in 2021 accounting for changes in the fair value of the
contingent deferred consideration were remeasured as part of the
earn-out agreement with Tribal Dynamics Limited, and the
corresponding gain was recognised in the income statement (2021:
GBP(67,000)). These are all considered to be one-off costs in the
year.
Employee related share option charges. The numbers above
include:
-- share-based payments (see note 22) plus foreign exchange (2022: GBP(31,000): 2021: GBP27,000);
-- the movement in associated employers taxes accrual (2022: GBP(215,000): 2021: GBP494,000);
-- the amounts accrued and paid on dividends on share options
that have met performance conditions (2022: GBP(15,000): 2021:
GBP(10,000)). 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 (2022:
GBP91,000: 2021: GBP65,000). 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 2022 and 2021 the Group has been running the Veritas
Programme. This includes an upgrade to its accounting system
(Microsoft Dynamics D365) and is part of a wider implementation of
a new target operating model and processes to provide greater
operating efficiencies and reporting functionalities. Following
clarified guidance issued in relation to IAS 38, GBP1,321,000 of
costs have been expensed to the income statement (2021:
GBP1,715,000). The upgrade is material and non-recurring in nature.
The system went live in January 2023 and all further costs will be
expensed as part of the Group's underlying activities;
-- restructuring and associated costs relate to the
restructuring of the Group's operations (2022: GBP615,000: 2021:
GBP24,000).
Amortisation of software and customer contracts and
relationships: Amortisation arising on the fair value of intangible
assets acquired is separately disclosed. (2022: GBP1,098,000: 2021:
GBP947,000).
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 (2022: GBP94,000: 2021:
GBP299,000).
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. 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. This includes a
release of GBP1.3m tax provision previously recognised in relation
to the Group relief claim from Care UK for the year ended 31 March
2007.
5. Investment income
2022 2021
GBP'000 GBP'000
------------------------------------------------- -------- --------
Fair value movement on forward exchange contract 23 249
Interest receivable on leased assets 2 6
------------------------------------------------- -------- --------
Total investment income 25 255
------------------------------------------------- -------- --------
6. Finance costs
2022 2021
GBP'000 GBP'000
------------------------------------------------------- -------- --------
Interest on bank overdrafts and loans 229 70
Loan arrangement fees 9 45
Net interest payable on retirement benefit obligations 4 14
Interest expense on lease liabilities 81 101
------------------------------------------------------- -------- --------
Adjusted finance costs 323 230
------------------------------------------------------- -------- --------
Unwinding of discounts 94 299
------------------------------------------------------- -------- --------
Other finance costs 94 299
------------------------------------------------------- -------- --------
Total finance costs 417 529
------------------------------------------------------- -------- --------
7. Tax
2022 2021
GBP'000 GBP'000
-------------------------------------- -------- --------
Current tax
UK corporation tax (1,381) (319)
Overseas tax 1,967 2,017
Adjustments in respect of prior years 483 (103)
-------------------------------------- -------- --------
1,069 1,595
-------------------------------------- -------- --------
Deferred tax
Current year (212) (2)
Adjustments in respect of prior years 40 28
-------------------------------------- -------- --------
(172) 26
-------------------------------------- -------- --------
Tax charge on profits 897 1,621
-------------------------------------- -------- --------
The continuing tax charge can be reconciled to the profit from
continuing operations per the income statement as follows:
2022 2021
GBP'000 GBP'000
--------------------------------------------- -------- --------
Profit before tax on continuing operations 387 8,614
--------------------------------------------- -------- --------
Tax charge at standard UK rate of 19% (2020:
19%) 74 1,637
Effects of:
Overseas tax rates 619 688
Expenses not deductible for tax purposes 14 190
Adjustments in respect of prior years 523 (74)
Additional deduction for R&D expenditure (23) (13)
Share scheme costs 19 (174)
Fixed assets ineligible depreciation (14) (47)
Utilisation of unrecognised tax losses 989 84
Movement in tax provision (1,405) (371)
Effect of changes in tax rates 101 (299)
--------------------------------------------- -------- --------
Tax expense for the year 897 1,621
--------------------------------------------- -------- --------
In addition to the amount charged to the income statement a
current tax credit of GBP24,000 (2021: GBP53,000) and a deferred
tax charge of GBP284,000 (2021: GBP395,000) has been recognised
directly in equity during the year in relation to Share Schemes. A
deferred tax charge of GBP726,000 (2021: GBP131,000) has been
recognised in the Consolidated Statement of Comprehensive Income in
relation to defined benefit pension schemes.
The Group continues to hold an appropriate corporation tax
provision in relation to the Group relief claimed from Care UK for
the year ended 31 March 2007, together with other appropriate Group
provisions. There has been some progress in the Care UK case in the
year to 31 December 2022. Under IFRIC 23 management have reviewed
this uncertain tax provision and now consider it appropriate to
make an adjustment due to the progression in the year. See note
30.
The income tax expense for the year is based on the UK statutory
rate of corporation tax for the period of 19% (2021: 19%). Tax for
other jurisdictions is calculated at the prevailing rates in the
respective jurisdictions.
In the 3 March 2021 Budget, it was announced that the UK tax
rate will increase to 25% from 1 April 2023. As the rate of 25% has
been substantively enacted at the balance sheet date, the deferred
tax balances have been calculated at 25%.
8. Dividends
2022 2021
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Amounts recognised as distributions to equity
holders in the period:
Final dividend for the year ended 31 December
2020 of 1.2 pence
(Interim dividend for the year ended 31 December
2020: 1.1 pence) per share 2,736 2,505
-------------------------------------------------- -------- --------
Proposed final dividend:
Proposed final dividend for the year ended 31
December 2021 of 1.3 pence
(year ended 31 December 2020: 1.2 pence) per
share 1,379 2,735
-------------------------------------------------- -------- --------
The Board regularly reviews the available distributable reserves
of Tribal Group plc to ensure they are protected for future
dividend payments.
9. Earnings per share
Basic earnings per share and diluted earnings per share are
calculated by reference to a weighted average number of Ordinary
Shares calculated as follows:
Restated*
2022 2021
thousands thousands
-------------------------------------------------- ----------- ----------
Weighted average number of shares outstanding:
Basic weighted average number of shares in issue 211,627 209,073
Weighted average number of employee share options 3,236 5,557
-------------------------------------------------- ----------- ----------
Weighted average number of shares outstanding
for dilution calculations 214,863 214,630
-------------------------------------------------- ----------- ----------
(*The 2021 basic calculation has been re-stated to include
1,490,169 LTIP and CSOP shares that have met the vesting criteria
but have yet to be exercised. The previously reported share numbers
used are as follows: Basic weighted average shares 207,986,000;
Dilutive weighted average shares 7,047,000; Total weighted average
shares 214,981,000. The previously reported EPS was as follows:
Basic 3.4p; Adjusted Basic 5.7p. The diluted EPS did not
change.)
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 3,328,168 (2021: 7,125,172). This includes 92,157
options in the 2019 SAYE Scheme (2021: 876,512).
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:
Restated*
2022 2021
GBP'000 GBP'000
---------------------------- --------- ---------
Net profit (510) 6,993
---------------------------- --------- ---------
Earnings per share
Basic (0.2)p 3.3p
Diluted (0.2)p 3.2p
Adjusted net profit 1,244 11,752
---------------------------- --------- ---------
Adjusted earnings per share
Basic 0.6p 5.6p
Diluted 0.6p 5.5p
---------------------------- --------- ---------
Profit for the
year Earnings per share
-------------------- --------------------
Restated
2022 2021 2022 *
GBP'000 GBP'000 GBP'000 2021
GBP'000
------------------------------------------ --------- --------- ---------- --------
Profit for the year attributable to
equity shareholders (510) 6,993 (0.2)p 3.3p
Add back:
Amortisation of IFRS intangibles 889 1,083 - -
Share-based payments 324 1,400 - -
Internal systems transformation programme
"VERITAS" 1,139 1,460 - -
Unwinding of discounts 94 299 - -
Movement in deferred consideration - (67) - -
Other acquisition costs 186 832 - -
Restructuring and associated costs 456 - - -
Reduction of tax provision (1,352) - - -
Other items (net of tax) 18 (248) - -
------------------------------------------ --------- --------- ---------- --------
Total adjusting items 1,754 4,759 0.8p 2.3p
------------------------------------------ --------- --------- ---------- --------
Adjusted earnings 1,244 11,752 0.6p 5.6p
------------------------------------------ --------- --------- ---------- --------
10. Goodwill
2022 2021
GBP'000 GBP'000
------------------------------ -------- --------
Cost
At beginning of year 109,813 107,892
Additions - 2,543
Exchange differences 594 (622)
------------------------------ -------- --------
At end of year 110,407 109,813
------------------------------ -------- --------
Accumulated impairment losses
At beginning of year 81,231 81,231
------------------------------ -------- --------
At end of year 81,231 81,231
------------------------------ -------- --------
Net book value
At end of year 29,176 28,582
------------------------------ -------- --------
At beginning of year 28,582 26,661
------------------------------ -------- --------
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:
2022 2021
GBP'000 GBP'000
---------------------------------- -------- --------
Student Information Systems (SIS) 25,642 25,048
Education Services (ES) 3,534 3,534
---------------------------------- -------- --------
29,176 28,582
---------------------------------- -------- --------
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. The budget was extrapolated over a five-year
period in line with previous calculations and to give greater
clarity on future cash flows. The growth assumption is 2% per annum
for SIS (2021: 2%) and 2% for ES (2021: 2%). Cash flows beyond the
budget and extrapolation period were calculated into perpetuity
using the same growth rates. These growth rates are in line with
the expected average UK economy long-term growth rate.
The cash flows projections are discounted at a pre-tax discount
rate of 10.9% (2021: 10.8%). The single discount rate, which is
consistently applied for both CGUs, is determined with reference to
internal measures and available industry information and reflects
specific risks relevant to the Group.
Impairment testing inherently involves a number of judgemental
areas, including the preparation of cash flow forecasts for periods
that are beyond the normal requirements of management reporting;
the assessment of the discount rate appropriate to the Group and
the estimation of the future revenue and expenditure of each CGU.
Accordingly, management undertook stress testing to understand the
key sensitivities and concluded as follows:
A rise in discount rate to 32% and 210% would trigger an
impairment in SIS and ES respectively. A decline in growth rate of
EBITDA (22%) in SIS and (43.8%) in ES would result in an
impairment. Management does not consider these changes possible but
considers a slight increase in discount rate to 12% and zero growth
may be possible as a result of the current economic environment. As
a result of the analysis, there is headroom of GBP106.3 million and
GBP9.7 million in SIS and ES respectively.
As a result, management does not believe a reasonably possible
change in the key assumptions may cause impairment.
11. Other intangible assets
Acquired
Customer Acquired
Acquired contracts intellectual Development Business Software
Software & relationships property costs systems licenses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---------- ---------------- ------------- ----------- -------- --------- --------
Cost
At 1 January 2021 10,293 8,620 1,873 43,619 5,319 1,489 71,213
Acquisitions 2,305 1,289 - 1,237 - - 4,831
Additions - - - 10,224 - - 10,224
Disposals - - - (905) (4,496) - (5,401)
Exchange differences (365) (156) - (162) (5) (1) (689)
--------------------- ---------- ---------------- ------------- ----------- -------- --------- --------
At 31 December
2021
and 1 January
2022 12,233 9,753 1,873 54,013 818 1,488 80,178
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 12,582 9,902 1,873 55,314 75 44 79,790
--------------------- ---------- ---------------- ------------- ----------- -------- --------- --------
Amortisation
At 1 January 2021 8,141 6,299 734 25,255 4,920 1,488 46,837
Acquisitions - - - 366 - - 366
Charge for the
year 529 418 75 933 24 1 1,980
Disposals - - - - (4,315) - (4,315)
Exchange differences (365) (111) - (155) (5) (1) (637)
--------------------- ---------- ---------------- ------------- ----------- -------- --------- --------
At 31 December
2021
and 1 January
2022 8,305 6,606 809 26,399 624 1,488 44,231
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 9,283 7,189 950 18,657 - 44 36,123
--------------------- ---------- ---------------- ------------- ----------- -------- --------- --------
Carrying amount
At 31 December
2022 3,299 2,713 923 36,657 75 - 43,667
--------------------- ---------- ---------------- ------------- ----------- -------- --------- --------
At 31 December
2021 3,928 3,147 1,064 27,614 194 - 35,947
--------------------- ---------- ---------------- ------------- ----------- -------- --------- --------
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, 3 to 12
years, and 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.
Included within Business systems are finance systems with a
carrying value of GBP0.1m (2021: GBP0.2m). Phase I of the D365
implementation was fully written off in the year. The Veritas
programme, which is part of a wider implementation of a new target
operating model and processes to provide greater operating
efficiencies and reporting functionalities across the Group, went
live on 1 January 2023. GBP75,000 of costs have been capitalised
and in line with IAS 38 GBP1,321,000 of costs have been expensed to
the income statement (2021: GBP1,715,000). Business systems are
amortised over 10 years.
In addition, a review of all business systems, development cost
and software licences was undertaken in the year and GBP11.1m of
fully depreciated assets have been written off as no longer in
use.
The Group is required to test annually if there are any
indicators of impairment. The recoverable amount is determined
based on value in use calculations of identified CGUs. The use of
this method requires the estimation of future cash flows and the
determination of a discount rate in order to calculate the present
value of the cash flows.
A review of the Group's capitalisation was undertaken resulting
in GBP0.1m of AI development costs previously capitalised being
written off.
The impairment testing allocates all assets relating to specific
CGUs, including goodwill, other intangibles, property, plant and
equipment and net current assets and liabilities.
12. Trade and other receivables
2022 2021
GBP'000 GBP'000
-------------------------------------------- -------- --------
Amounts receivable for the sale of services 7,387 5,629
Less: loss allowance (194) (187)
-------------------------------------------- -------- --------
7,193 5,442
Other receivables 828 693
Prepayments 4,484 4,467
-------------------------------------------- -------- --------
12,505 10,602
-------------------------------------------- -------- --------
The Group's principal financial assets are cash and cash
equivalents and trade and other receivables which represent the
Group's maximum exposure to credit risk in relation to financial
assets. The Group's credit risk is primarily related to its trade
receivables. The credit risk on liquid funds is limited because the
counterparties are banks with high credit ratings assigned by
international credit rating agencies.
All receivables are due within one year in both current and
prior years.
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
13. Trade and other payables
2022 2021
GBP'000 GBP'000
----------------------------------- -------- --------
Current
Trade payables 1,010 1,712
Other taxation and social security 2,498 2,728
Other payables 2,280 1,641
----------------------------------- -------- --------
5,788 6,081
----------------------------------- -------- --------
Non-current
Other payables 209 131
----------------------------------- -------- --------
209 131
----------------------------------- -------- --------
Total 5,997 6,212
----------------------------------- -------- --------
The average credit period taken for trade purchases is 10 days
(2021: 17 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:
2022 2021
GBP'000 GBP'000
---------------------------- -------- --------
Goods received not invoiced 712 826
Other creditors 1,568 815
---------------------------- -------- --------
2,280 1,641
---------------------------- -------- --------
14. Borrowings
The Group had a GBP2m 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 2023 and
October 2023 respectively. As at 31 December 2022, the Group had
cash and cash equivalents of GBP2.9m (2021: GBP5.9m). At 31
December 2022 GBP0.1m of the UK overdraft was drawn.
At the year-end there was GBP1.97m available but undrawn in
respect of the UK overdraft facility (GBP35,000 had been drawn
down) and $AUD2m available but undrawn in respect of the Australian
overdraft facility.
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, both of which have been exercised with
the facility expiring in December 2024. On 20 February 2023, to
manage the short-term working capital requirements, Tribal
converted GBP7m of the GBP10m uncommitted accordion into its
existing loan facility, increasing the total facility to GBP17m.
The facility was put in place to cover general corporate and
working capital requirements of the Group. During the year the full
GBP8.5m was drawn down and GBP2.25m repaid, so as at 31 December
2022 GBP6.25m (2021: GBPnil) of the loan was utilised.
15. Notes to the cash flow statement
2022 2021
GBP'000 GBP'000
------------------------------------------------- -------- --------
Operating profit from continuing operations 779 8,888
Depreciation of property, plant and equipment 623 650
Depreciation of right-of-use assets 1,036 985
Amortisation and impairment of other intangible
assets 2,419 1,980
Share-based payments 589 1,078
Movement in contingent deferred consideration - (67)
Research and development tax credit (177) (204)
Net pension credit (29) (29)
Other non-cash items 23 874
------------------------------------------------- -------- --------
Operating cash flows before movements in working
capital 5,263 14,155
Increase in receivables (808) (3,093)
Increase/(decrease) in payables 4,252 4,472
------------------------------------------------- -------- --------
Net cash from operating activities before tax 8,707 15,534
Net tax paid (2,601) (1,645)
------------------------------------------------- -------- --------
Net cash from operating activities 6,106 13,889
------------------------------------------------- -------- --------
Net cash from operating activities before tax can be analysed as
follows:
2022 2021
GBP'000 GBP'000
---------------------- -------- --------
Continuing operations 8,904 15,534
---------------------- -------- --------
16. 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 GBP0.8m (2021: GBP1.2m). These are
not expected to result in any material financial loss and the
likelihood of using these guarantees is assessed as remote.
As disclosed in Note 34, Tribal Holdings Limited, Tribal
Dynamics Limited, Tribal Dynamics Holdings Limited, Semestry
Limited and International Graduate Insight Group 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
GBP64,309,000 (2021: GBP60,736,000). These are inclusive of
intercompany liabilities of GBP60,963,120 (2021:
GBP58,340,634).
As disclosed in note 10, there has been some progress in the
Group relief claim from Care UK for the year ended 31 March 2007,
which resulted in management reducing the uncertain tax provision
previously recognised by GBP1.3m. A provision of GBP0.1m still
remains, this being calculated as the maximum adjustment that
Tribal may have to pay. Correspondence to date from HMRC does not
suggest that there will be any adjustment to the original claim
Tribal submitted, however until the case is closed HMRC's position
could change. Following legal advice, Tribal signed a further
standstill agreement until 31 December 2023 and the case is yet to
be formally closed by HMRC.
The Group delivers complex multi-year projects which from time
to time give rise to significant operational risks. Such risks may,
in certain circumstances, lead to potential negotiations or
disputes with customers which may give rise to consequential
financial or commercial obligations or liabilities arising. The
Group has a material contract which has been terminated with both
parties reserving rights. The parties are required to participate
in mediation in an attempt to achieve a resolution but the timing
and outcome of that process and any private negotiations to that
end is presently uncertain. It is possible that there may be a
significant adverse financial impact on the Group, but as no
financial demands have yet been enumerated, currently the Board
cannot fully assess such potential impact. The range of any
settlement is not disclosed as it could be prejudicial to the
outcome.
17. Post balance sheet events
In February 2023, to manage the short-term working capital
requirements, Tribal converted GBP7m of the GBP10m uncommitted
accordion into its existing loan facility, increasing the total
facility to GBP17m.
Tribal received notification on 17 March 2023 that NTU has
purported to terminate the contract and reserved its rights to
claim damages. Tribal rejects NTU's right to terminate and
considers its purported termination a wrongful repudiation of the
contract. Tribal has accepted NTU's wrongful repudiation, elected
to treat the contract as at an end and reserved its rights. The
contract requires the parties to participate in mediation in an
attempt to achieve a resolution.
Following the cessation of the NTU contract, no adjustment has
been made to the 31 December 2022 financial statements as it is a
non-adjusting event after the year end.
At 31 December 2022 the balance sheet included contract assets
of GBP0.8m, refund liability of GBP0.9m and onerous contract
provision of GBP4.5m recognised for future losses, representing the
unavoidable costs of meeting the obligations under the contract in
excess of the expected economic benefits to be received in relation
to the NTU contract. The outcome of the outcome of the mediation
process will determine the subsequent treatment of the balances
referred to above.
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR LXLLLXXLZBBF
(END) Dow Jones Newswires
March 24, 2023 03:00 ET (07:00 GMT)
Tribal (AQSE:TRB.GB)
Historical Stock Chart
From Apr 2024 to May 2024
Tribal (AQSE:TRB.GB)
Historical Stock Chart
From May 2023 to May 2024