TIDMTRB
RNS Number : 5272I
Tribal Group PLC
22 March 2018
Tribal Group plc ("Tribal")
Preliminary Results year ended 31 December 2017
Tribal, a leading provider of software and services to the
international education management market, announces preliminary
results for the year ended 31 December 2017.
Financial highlights
-- Adjusted operating profit for the year up 82% to GBP8.5m*
(2016: GBP4.7m*) on revenue of GBP84.9m (2016: GBP90.3m)
-- Annual recurring revenue increased by 5% to GBP37.5m (2016:
GBP35.5m)
-- Return to statutory profit of GBP2.6m (2016: GBP1.2m loss);
earnings per share 1.3p (2016: 0.7p loss)
-- Annualised operational efficiencies achieved of GBP12.0m,
including GBP3.0m in year savings; further efficiencies anticipated
in 2018
-- Strong operational cash inflow during the year of GBP11.1m
(2016: GBP8.3m) and year end net cash of GBP14.1m (2016: 8.8m);
operating cash conversion of 130% (2016: 115%)
-- Return to dividend payment with the Board recommending 1p per
share dividends to be paid annually going forwards
* Adjusted operating profit is in respect of continuing
operations and is stated excluding "Other Items" charges of GBP4.9m
(2016: GBP5.0m). Other Items include Share-based Payments, Deferred
Contingent Consideration, Amortisation of IFRS3 Intangibles, Profit
on sale of Synergy, and Restructuring and associated costs
Operational highlights
-- Positive sales momentum with new contract wins at three major
universities
-- Significant commitment from Australian customer base with
four-year extension agreed
-- Strong performance in Quality Assurance Solutions business,
with new customer wins in Abu Dhabi and Dubai
-- Investment in next generation cloud-based Student Information
System "Tribal Edge" well received by customers
Ian Bowles, Chief Executive, commented:
"I am very pleased with the 2017 results as they clearly
demonstrate that the changes driven by management are having the
positive impact anticipated. Representing twenty-two months of a
three year turn around, it is my view that we are very much on
track. Our Customers, partners and the broader team at Tribal are
seeing the benefit of a clear long-term strategy and commitment to
the Education Sector"
Ends
For further information please contact:
Tribal Group plc Today: 020 7067 0700
Ian Bowles, Chief Executive Thereafter: 0117 311 5293
Mark Pickett, Chief Financial Officer
Weber Shandwick Financial 020 7067 0700
Nick Oborne
Tom Jenkins
Investec Bank plc 020 7597 5970
Sara Hale
Andrew Pinder
Will Godfrey
N+1 Singer Advisory LLP 0207 496 3000
Shaun Dobson
Alex Price
Chairman's statement
With the Group placed on a sound financial footing in 2016, and
with many of its operational challenges addressed, I am pleased to
report that the Group has now returned to full year statutory
profit for the first time since 2013.
Annually Recurring Revenues, which now include Cloud services,
grew over 5% to GBP37.5m, overall profitability doubled to an
adjusted operating margin of 10%, compared with 5% in 2016, and the
Group ended the year with net cash up 59% at GBP14.1m (2016:
GBP8.8m). Shareholder value is now being created in a sustainable
manner as the Group continues to drive efficiencies in the
business. A further GBP3m of annualised savings were realised in
2017, bringing the total annualised savings realised to GBP12.0m
since the initiation of the cost savings programme; this has driven
improved financial performance without impacting the Group's
ability to serve its customers or drive its business forward.
For the year to 31 December 2017, Tribal Group achieved an
adjusted Operating Profit of GBP8.5m, up 82%, on a revenue of
GBP84.9m (2016: operating profit of GBP4.7m on a revenue of
GBP90.3m) and increased Adjusted Earnings per Share (diluted) to
3.2p (2016: 1.9p). The fall in revenue reflected a combination of
the expiry of the Ofsted Early Years contract in March 2017 and the
disposal of Synergy in March 2016 - excluding these factors, the
revenue increased by 6.5%, particularly due to the strong
performance in the remaining Quality Assurance Solutions (QAS)
business.
2017 confirmed that Tribal remains a leading international
provider of student information systems to universities, colleges
and schools in the UK, Australia and New Zealand markets as well as
elsewhere in the world. We serve a large installed customer base,
including many of the world's leading universities and
colleges.
During the year, the Group secured significant new contract wins
in the Higher Education sector, including Sheffield University and
Glasgow Caledonian University in the UK, and our third win in
Malaysia, at the University of Malaya. We also finalised a
AUD$27.5m (approx. GBP16.8m), four-year extension to the Callista
contract, which provides student information systems to 11
Australian universities for the on-going development of the
Callista product and seamless migration into the cloud ready Tribal
Edge platform.
I am also pleased to note the strong performance in Further
Education and Work-based Learning where, in the UK, the growth is
being driven by significantly improved software sales to new
business customers, and in APAC, the Campus solution at the British
Council has been successfully rolled out to 34 countries. In our
i-graduate business there was a change of leadership in the first
half of the year, and we successfully secured a number of new
contracts. However, the overall participation by universities in
the key International Student Barometer survey towards the end of
2017 was disappointing, as more universities than expected chose to
skip a year. We look forward to welcoming them back into the survey
in 2018.
The Quality Assurance Solutions business also performed well in
2017 and secured significant contract wins at the Abu Dhabi
Education Council, the Ministry of Education of Dubai &Northern
Emirates. In addition to broadening the offerings beyond School
Inspections to include Performance Benchmarking and Professional
Development & Training, QAS continues to have opportunities to
grow and develop its business both in the UK and, more widely, to
build on our existing contracts in the Middle East and the USA.
Looking to the future
In 2018, I expect Tribal to continue to secure new clients for
our Student Information Systems, with a strong pipeline of new
opportunities in Higher Education, and the prospect of continued
improvement in sales performance. Additionally, with a further
contract already secured in Dubai and a strong pipeline of new
work, QAS enters 2018 with confidence and optimism.
Revenues are expected to be broadly flat in 2018, which
represents a small growth excluding the impact of the final year of
Ofsted revenue in 2017.
We expect the operating margins to increase further, as the cost
savings achieved in 2016 and 2017 continue to benefit 2018. We will
look for further efficiencies in 2018.
We will also continue to reshape our product development and
customer-facing support businesses to provide a more agile and
responsive customer-facing environment. As part of this change, we
are transitioning our current hosted customers to a new data
centre, in partnership with Rackspace. The investment in this
migration will provide us with increased sales opportunities for
hosting solutions to new and existing customers, as well as
providing a resilient platform for our next generation, cloud-based
Student Information System.
Although there remains much to do, I see the momentum continuing
into 2018 and beyond, as the Group continues to drive cost
efficiencies in the business and increasingly takes advantage of
the international market for student information systems.
Employees
I would like to thank all our employees for their hard work and
commitment. The Group has undergone significant continued change
through 2017, and that inevitably brings uncertainty. The support
of the employees has been invaluable in bringing the Group through
this challenging period. Although there is much still to do in
2018, the overall business structural changes have largely been
made, which should provide a more settled and certain environment
for 2018. I should also like to thank my fellow directors for their
hard work, determination and persistence in seeking to improve the
efficiency of the Tribal business.
Dividends
The Board believes that the payment of dividends is important
and has previously confirmed its intention to pursue a progressive
dividend policy once the Group's financial performance supported
the payment of a dividend.
Given the good overall performance of the business in 2017 and
the strong closing cash position, the Group is now in a sustainable
financial position. The Board has therefore decided to propose a
dividend of 1p per share. This will be paid in May 2018, pending
ratification at the Company's Annual General Meeting.
Outlook and current trading
We expect overall market conditions and demand for student
management systems to remain stable in 2018. While the timing of
deal closures and achievement of implementation milestones remains
difficult to predict, we are well positioned to continue to benefit
from the demand for student systems and upgrades. We have already
secured several software and service contract wins in the early
part of 2018.
With the introduction of IFRS15 in 2018, there will be some
impact on revenues and operating profit as the Group will be
required to spread the recognition of software revenues over the
duration of the implementation period, rather than immediate
recognition on installation. This is likely to cause a modest
transitional dip in revenues and operating profit in 2018, as large
contract wins in year are spread over the future implementation
period.
Given the factors described above, and the strong platform
around which to build sustainable shareholder value, I expect
continued improvement in our profitability during the current
year.
Richard Last
Chairman
Chief Executive's report
The Group has delivered a significant improvement in
profitability, as a result of continued restructuring and
efficiency drive, and it has maintained its market leadership, with
strong sales momentum, and new customers gained. Ongoing investment
in the development of a next generation, cloud-based platform for
Student Information Systems(1) provides a roadmap for new and
existing customers into the future.
In 2017, the Group has continued to build on the strong
foundations laid in 2016 and has driven a significant and
sustainable improvement in profitability.
Revenues fell in 2017 to GBP84.9m (2016: GBP90.3m); however,
2016 revenue included GBP11.6m relating to the Ofsted contract
which successfully concluded in March 2017 (2017 Ofsted revenue:
GBP3.0m), and GBP1.7m from Synergy (disposed of in March 2016) and
SLS (closed 2015). Excluding these items, revenue relating to
continuing operations increased by 6.5%, to GBP81.9m (2016:
GBP76.9m).
Annually Recurring Revenues, which from 2017 include Cloud
services, increased by 5.5% to GBP37.5m (2016: GBP35.5m).
We identified areas where we can more effectively align the
Group's resources to deliver material cost efficiencies and improve
margin without impacting the Group's ability to serve our customers
or drive our business forward. Cumulative annualised cost savings
achieved since the start of the cost efficiencies programme total
GBP12.0m, of which GBP3.0 annualised savings were realised in 2017
(2016: GBP9.0m annualised, of which GBP5.8m in year).
The impact of these actions has grown through the year, and we
can report a significantly improved trading performance for 2017,
with the first full year statutory profit since 2013, and adjusted
operating profit up 82% to GBP8.5m (2016: GBP4.7m). This, coupled
with good cash generation, with net cash up 59% to GBP14.1m (2016:
GBP8.8m), has left the Group in a stronger position at the end of
the financial year.
1 Student Information System (SIS) is the general industry term
for education management solutions that encompasses Management
Information Systems (MIS), Customer (or Student) Relationship
Management (CRM), business insight and data analytics products.
Student Management System (SMS) is more specifically the
administration aspect of Student Information Systems. We refer to
our heritage products as SMS, our new offerings (aligned with their
wider applicability) as SIS, and the general industry as student
information.
2017 in summary
In our chosen regional markets and sectors, overall activity
levels for the replacement or enhancement of student management
systems have remained stable. We have seen significantly improved
win rates in our UK Further Education and Work-based Learning
businesses and we continue to win new customers in the Higher
Education sector, reaffirming the strength of Tribal's software and
services portfolio, and confirming that our international customer
base and continued market leading position provide a strong
platform around which to build long term shareholder value.
The Group won significant new contracts in the Higher Education
sector, including at the University of Sheffield, a major UK
Russell Group University, as well as contracts with Glasgow
Caledonian University, University of South Wales and Heriot-Watt
University. We also secured our third Higher Education customer in
Malaysia at the University of Malaya.
Our Callista business, which provides student information
systems to 25% of Australian universities, performed well, and we
finalised a AUD$27.5m (approx. GBP16.8m), four-year extension to
our contract with the 11 Universities for the on-going development
of the Callista product with seamless migration into the
cloud-ready Tribal Edge product platform.
Quality Assurance Solutions (QAS) confirmed its position as a
market-leading international school inspections business. QAS
completed the first term as sole provider of school inspections for
the Department of Education and Knowledge in Abu Dhabi. In Dubai, a
contract with the Ministry of Education (MoE) for the review of
public schools was won and delivered. In 2018, the MoE in Dubai
also awarded us the contract for the review of private
schools. In the US, evaluations of schools and districts in New
York State continued under a new contract extension and similar
review work was won with a new state, Alabama. The contract to
provide the National Centre for Excellence in the Teaching of
Mathematics for the UK Department for Education was expanded to
include additional maths development in the North of England.
The Group's large customer base ensures it is well positioned to
take advantage of the increasing market trend to improve student
engagement, through our experience in data analytics and student
barometers from the i-graduate line of business.
Shareholder returns & dividends
Given recent performance of the business, a strengthened balance
sheet, and confidence in the sustained profitability of the
business, the Board has declared a full year dividend of 1p (2016:
nil) which will be paid in May 2018, pending approval at the AGM in
April 2018. The Board of Directors believes that the payment of
dividends is important, and will continue to pursue a progressive
dividend policy to be paid once a year.
Product & Services strategy
Tribal is a worldwide, software and services company focused on
the education market. At the core of our business, we have a
portfolio of functionally rich student information systems and
these are being expanded with the development of a next generation,
cloud-based solution - Tribal Edge. Our new product investment will
focus on Tribal Edge and delivering a solution that enables
institutions to significantly enhance the student experience they
are able to offer.
The Group also continues to invest significantly in our existing
products. In 2017, the Group spent GBP10.2m (2016: GBP10.3m) on
product development, of which GBP2.1m (2016: GBP1.1m) was
capitalised, and related to development of SchoolEdge and the new
Tribal Edge solution. The remaining GBP8.1m (2016: GBP9.2m) was
expensed in year and related to product development costs and
related overheads for the existing SITS, ebs, and Maytas
products.
Tribal Edge was successfully launched at our UK Higher Education
conference in July. The launch was followed by a series of
roadshows to all our UK customers. This has drawn high interest and
secured commitments for beta sites and early adopters for the first
Tribal Edge modules. The launch to our Asia Pacific customers has
been equally well received, with those using Callista having agreed
a four-year contract extension that includes the integration of
Tribal Edge for their use in the near-term.
Our strategy for Tribal Edge has been to first develop a number
of new modules that deliver additional functionality for our Higher
and Further Education customers and that integrate to all our core
student information systems. The initial modules are:
-- Student View - a mobile app giving students anytime, anywhere
availability to see their day at a glance and enabling them to
access all information they need at their fingertips, all
personalised to their timetable and their lifestyle. Student View
incorporates Student Engage;
-- Student Engage - a social collaboration app designed to
operate like a social network but with added safeguarding features
that keep staff's professional and personal lives separate. It
enables staff and students to connect, communicate and collaborate
with each other safely and securely;
-- Student Support - ensures students are supported through the
complete education lifecycle. Institution support staff have a
single view of all student performance issues and identify
opportunities to deliver critical support to reduce drop-outs and
maximise student successes, while students have easy access to
support wherever they are; and
-- Student Insight - a learning analytics solution that monitors
and tracks student engagement, analysing student data from multiple
sources, and flagging students at potential risk, thus enabling the
targeting of students that need support. This timely intervention
improves outcomes and reduces dropouts.
The Student Engage module was kick-started with the acquisition
of intellectual property and exclusive distribution rights for an
existing private social network solution in the education markets
across the UK, Australia and New Zealand. This gave both an
existing customer base and a solution that was actively used and
could be developed upon, and is now available as Student Engage,
fully integrated into a single mobile app, Student View.
A closed-beta (limited access) was completed at the end of 2017
and a full beta programme is now underway with both Higher
Education and Further Education customers in the UK and in
Australia. Several early adopters have also been identified and
they will receive the roll-out of new modules in early 2018. The
Student Insight module was also used as the enabling platform in
the ongoing trial of student analytics and analysis with JISC.
Our progress with Tribal Edge has been further enhanced with a
strategic partnership with Microsoft. Microsoft's Azure application
development team will work with Tribal to accelerate the creation
of new functionality, enabling the rapid development of an enhanced
cloud-based platform and the conversion of the current
functionally-rich applications of SITS:Vision and ebs to the Tribal
Edge framework.
Outside of Higher and Further Education, we have continued the
successful development of SchoolEdge, a new, web-based product for
schools. Schools in Australia have adopted many of the new modules
on offer and the development continues to offer a completely
refreshed schools student information system.
We have also continued to invest in our market-leading employers
and training providers' solution, Maytas. This has seen particular
growth in the UK where the Government's introduction of the
Apprenticeship Levy has encouraged companies to explore and adopt
apprentices. Maytas fully supports the management of apprenticeship
programmes including the critical area of funding.
Business structure
Tribal's organisational structure has been simplified to drive
improved customer focus, more agile management, responsiveness to
local needs, and clear accountability across our business and is
managed through three segments. Within the Student Management
Systems business, we have adopted a primarily regional structure,
split between Europe, Middle East & Africa (EMEA), and
Australia, New Zealand & Asia- Pacific (APAC). QAS and
i-graduate operate as independent businesses and are managed
globally.
Student Management Systems (SMS) focuses on the following market
sectors: Higher Education, Further Education, Colleges &
Employers (referred to in Australia as VET), and Schools, and
across three main markets, UK, Australia and New Zealand. Product/
Offerings are split between License & Development Services,
Support
& Maintenance, Implementation, and Cloud Operations. From
2017, SMS no longer includes K2 Asset Management (K2) or Software
Solutions, as they are non-core businesses and are now included
within the i-graduate line of business.
Quality Assurance Solutions covers inspection and review
services which support the assessment of educational delivery
including the Ofsted Early Years inspection contract. From 2017, it
also includes Performance Benchmarking.
i-graduate covers i-graduate student surveys and data analytics
as well as various non-core businesses, not forming part of Student
Management Systems or QAS. These include K2 Asset Management,
Software Solutions and Information Matters. It no longer includes
Performance Benchmarking, which has moved to QAS in 2017.
Revenue and profit for each segment are restated for 2016 to
reflect the above changes.
Product & Services revenues
The table below groups products and offerings, irrespective of
the segment in which they fall. Most license and related services
(Support & Maintenance, Implementation Services and Cloud
Services) relate to the Group's Student Management Systems;
however, there are businesses which are non-core, managed under the
i-graduate line of business, which include license and related
services. This includes K2 and Software Solutions where we continue
to support & maintain the existing product; the Group also has
a software product, developed and sold by QAS, to support Ofsted as
they manage school inspections following the conclusion of our
Ofsted contract at the end of March 2017.
Revenue GBP'000
============================= =============================== ============
2016
Revenues by LoB 2017 (restated) Change
============================= ================ ============= ============
License &
Development fees 9,989 10,973 (9.0%)
Support &
Maintenance fees 33,474 32,211 3.9%
Implementation Services 14,840 12,411 19.6%
Cloud Services 4,004 3,322 20.5%
============================= ================ ============= ============
Software & Related Services 62,307 58,918 5.8%
============================= ================ ============= ============
School Inspections &
related services (excl
Ofsted) 14,119 10,925 29.2%
Survey & data analytics
(i-graduate) 3,031 3,147 (3.7%)
Other Services 2,441 3,918 (37.7%)
============================= ================ ============= ============
Non-Software related
services 19,591 17,989 8.9%
============================= ================ ============= ============
Continuing Operations 81,898 76,907 6.5%
============================= ================ ============= ============
Ofsted contract revenues
(contract completed) 3,020 11,620
Synergy/SLS
(disposed of/ closed) - 1,728
============================= ================ ===========================
Total Revenue 84,918 90,255 (5.9%)
============================= ================ ============= ============
Annually Recurring Revenue 37,478 35,533 5.5%
============================= ================ ============= ============
All revenue (which includes license, support & maintenance,
and other services) relating to Synergy (disposed of) and SLS
(closed) is shown separately.
Overall, the revenue from License & Development fees has
fallen 9.0% to GBP10.0m (2016: GBP11.0m). This is due in part to
contracts successfully moving from a software development phase
further into the implementation phase. We have also seen some
Higher Education institutions moving towards a bundled pricing
model, where the contractual terms result in license revenue being
phased over time rather than being recognised upfront, as
previously. In 2017, the contract awarded by Glasgow Caledonian
University was based on a bundled pricing model with contractual
terms that resulted in the software license recognition being
phased over the implementation period.
For 2018, this transition ends with the move to IFRS15
accounting, by which the Group's revised revenue recognition policy
requires all significant license revenue to be spread over the
implementation period (as detailed in the Financial Review
section).
Support & Maintenance retention rates remain high, and as a
result, our Annual Recurring Revenue base has continued to grow.
Support & Maintenance fees in the period were GBP33.5m (2016:
GBP32.2m), an increase of 3.9%.
Implementation services deliver the technical implementation of
our software products at customer sites, typically working
alongside customer teams. Implementation projects vary in length,
and range from a small number of days, to more than two years for
more complex projects. Revenues are typically based on day rate
fees, although we sometimes operate under fixed fee contracts for
defined implementation scopes. Overall growth of 19.6% was driven
by the extensive implementation work at British Council, University
of Waikato and Massey University.
Cloud services cover the provision of managed IT services and
hosting services to customers to manage their Tribal products
either on premise, in a private cloud, or in a public cloud. These
services have grown by 20.5% in 2017, to GBP4.0m (2016: GBP3.3m) as
customers increasingly migrate their IT systems into the cloud.
These hosting services are recurring, and from 2017 the Group will
include Cloud services revenue in the calculation of Annually
Recurring Revenue.
School inspections & related services covers all products
and services offered by the QAS line of business which do not
relate to the sale of software licenses and related services.
Surveys & data analytics covers all products and services
offered by the i-graduate line of business which do not relate to
the sale of software licenses and related services.
Geographic revenues
Revenues generated in Tribal's key geographic markets were as
follows:
Revenue GBP'000
======================= ========================
2017 2016
======================= =========== ===========
UK 39,252 46,469
Asia Pacific 33,713 31,819
North America and rest
of the world 11,953 11,967
======================= =========== ===========
84,918 90,255
======================= =========== ===========
Revenues in Asia Pacific have increased by 6%, mostly due to the
QAS contracts secured in Abu Dhabi and Dubai.
Headcount
Headcount
As at 31 December
======================= ===========================
2017 2016
======================= ============ =============
UK 542 741
Asia Pacific 287 323
North America and rest
of the world 21 25
======================= ============ =============
850 1,089
======================= ============ =============
Full Time Equivalent
(FTE) headcount 820 1,041
======================= ============ =============
Our overall workforce has reduced by 22% to a total headcount of
850, down from 1,089 at 31 December 2016. Full time equivalent
headcount (FTE) has reduced by 221 FTEs in the year.
This follows an 18% headcount reduction in the previous year, a
total reduction of 473 heads (36%) since 31 December 2015.
Of these reductions in 2017, approximately 100 FTE reductions
were the result of specific actions taken as part of our cost
reduction program to drive increased profitability. The other
reductions were due to the winding down of the Ofsted contract, and
were transferred back to Ofsted under TUPE regulations.
Segmental performance
Results for each business segment are shown in the table below.
The Central & Group costs represent the aggregate of all costs
which support the Lines of Business, and which are not directly and
specifically attributable to each Line of Business. This provides
greater transparency into the profitability of each business.
Revenue Adjusted Operating
GBP'000 Profit GBP'000
======================== ============================ ===========================
2016 2016
2017 (restated) 2017 (restated)
======================== ============= ============= ============ =============
Student Management
Systems 60,026 59,005 17,613 12,021
i-graduate 7,101 8,705 1,064 1,007
Quality Assurance
Solutions 17,791 22,545 4,408 6,537
Total Lines of Business 84,918 90,255 23,085 19,565
Central / Group costs
1 (14,543) (14,877)
======================== ============= ============= ============ =============
8,542 4,688
======================== ============= ============= ============ =============
The capitalised development cost was GBP2.1m in 2017 (2016:
GBP1.1m). This relates to continued development of our SchoolEdge
product, and investment in our Tribal Edge next generation,
cloud-based student management system.
1 Central/Group: these are costs described as Unallocated
Corporate expenses and represent all costs which are not directly
attributable or controllable by the Line of Business. Costs include
Finance, HR, Legal, IT, General (non-Line of Business specific)
Marketing costs, Corporate Services and Board of Director costs
including all attributable office costs. It was determined the
previous methodology allocated costs in a way that did not
represent the level of resource utilised by that business, and
accordingly did not provide sufficient insight into the underlying
profitability of the Lines of Business.
Student Management Systems
Year ended
31 December GBP'000
============================ =============================
2017 2016
============================ ============== =============
Total Revenue 60,025 59,005
============================ ============== =============
Adjusted Operating
Profit 17,613 12,021
Adjusted Operating
Profit Margin 29% 20%
============================ ============== =============
Capitalised Product
Development
Expenditure 2,135 1,098
Amortisation of Development
costs (1,445) (1,411)
============================ ============== =============
Overall activity levels in our markets and sectors for the
replacement or enhancement of student information systems remain
stable and we continue to see a steady stream of new opportunities
in all sectors.
In 2016, the Student Management System included combined revenue
of GBP1.7m and profits of GBP1.0, from Synergy (disposed of in
March 2016) and SLS (closed in 2015).
Student Management Systems revenues increased by 1.7% to
GBP60.0m (2016: GBP59.0m). Excluding Synergy/SLS, SMS revenue grew
by 4.8%.
Adjusted operating profit was GBP17.6m (2016: GBP12.0m) and the
adjusted operating margin was 29% (2016: 20%). Excluding
Synergy/SLS, SMS profit grew by 60%.
The Group won significant new contracts in the Higher Education
sector, including a GBP4.3m contract for the implementation of the
full student information system at the University of Sheffield, a
major UK Russell Group University, as well as contracts with
Glasgow Caledonian University, the University of South Wales and
Heriot-Watt University. We secured our third Higher Education
customer in Malaysia, at the University of Malaya, reaffirming
Tribal as an international market leader in student information
systems.
Within the Higher Education sector, our Callista business, which
was acquired in March 2015, and which provides student information
systems to 25% of Australian universities, performed well, and we
finalised a AUD27.5m (approx. GBP16.8m), four-year extension to our
contract with the 11 Universities for the on-going development of
the Callista product and seamless migration into the cloud ready
Tribal Edge platform.
We have successfully completed key implementation stages at
Massey University and the University of Waikato in New Zealand, as
well as commencing the implementation of recent wins at the
University of the Arts London, the University of Malaya, and
Sheffield University; other key implementation contracts continue
to proceed well, if slightly delayed, including Universiti
Teknologi Petronas (UTP) and Institut Teknologi Petroleum Petronas
(INSTEP) in Malaysia, and University of Bristol.
In the EMEA Further Education and Work-based Learning (WBL)
business, we continued to make strong progress in 2017, with key
wins at Nottingham College, Bridgend College and the Met Film
School, and, following the introduction of the apprenticeship levy,
secured new WBL Maytas customers, including Travis Perkins, Boots
Opticians and EY (Ernst & Young).
In the APAC Further Education (referred to as VET in Australia/
New Zealand) and Schools sectors, the New South Wales Student
Administration and Learning Management (SALM) programme has
continued to deploy our ebs Student Management System successfully;
in 2017, we successfully concluded the roll-out to 2,200 schools in
New South Wales (NSW). This is in addition to the 138 TAFE
(Technical & Further Education) campuses, which continue to
operate successful - although, as previously noted, the NSW
Government made a public announcement in June 2016 that they will
be reviewing their TAFE student enrolment system and will look to
implement a new, cloud-based solution. Tribal continues to discuss
the future solution with TAFE NSW but, regardless, we expect TAFE
NSW to be a customer into 2019, and the schools' element of SALM
will continue as planned.
Within our Campus business, the implementation at the British
Council continues to proceed well, and we have now gone live in 119
locations in 34 countries worldwide.
Our other Student Information product for schools, SchoolEdge,
has enjoyed good customer retention rates during the year. However,
we have been informed that the dioceses representing around 800 of
the 1800 schools have decided to move from Tribal to a student
information system that they are building in collaboration with two
providers; we have commenced discussions regarding transitional
arrangement; however, we expect to continue to provide software and
services to these schools into at least 2019.
i-graduate
Year ended
31 December
GBP'000
=========================== ==========================
2017 2016
=========================== ============ ============
Student surveys & data
analytics 3,031 3,147
Other 4,070 5,558
Total Revenue 7,101 8,705
=========================== ============ ============
Adjusted segment operating
profit 1,064 1,007
Adjusted operating
margin 15% 12%
=========================== ============ ============
The i-graduate division provides a range of services for
managers of universities, colleges and schools, so they are able to
assess and enhance the quality of the education they provide, and
improve their operational performance. Also included in this line
of business are non-core services. Products/Offerings provided by
this division include:
-- i-graduate student surveys & data analytics
-- K2 Asset Management
-- Software Solutions
-- Transformation and change advisory services
-- Information Management Services
This division's activities have increasingly focused on those
skills and tools that closely relate to our student information
systems. Increasingly, we integrate these activities with our
software offerings.
i-graduate line of business revenue in the period was GBP7.1m
(2016: GBP8.7m), a reduction of 18%.
Revenue from the core i-graduate student survey and data
analytics offerings fell 3.7% from GBP3.1m to GBP3.0m. In our
i-graduate business there was a change of leadership in the first
half of the year, and we successfully secured contracts in
Australia, including for the Australian Universities International
Student Barometer. We also extended the strategic partnership with
Universities UK International delivering underpinning research for
the widely distributed UK's Competitive Advantage report. However,
the overall participation by universities in the key International
Student Barometer survey towards the end of 2017 was disappointing,
as more universities than expected chose to skip a year. There were
also costs of further investment in the business and management
transition. These factors adversely impacted the segmental
operating profit, which fell to GBP0.4m (2016: GBP1.1m).
The revenue from the non-core businesses fell by GBP1.5m,
including GBP0.8m in K2 Asset Management, and GBP0.4m in
Information Matters as the businesses are transitioned to a
maintenance mode. However, the focus on optimising margins improved
the operating profit to GBP0.7m (2016: GBP(0.1)m).
Quality Assurance Solutions
Year ended
31 December GBP'000
=========================== =============================
2017 2016
=========================== =============== ============
Education services 14,772 10,925
Ofsted contract revenues 3,019 11,620
Total Revenue 17,791 22,545
=========================== =============== ============
Adjusted segment operating
profit 4,408 6,538
Adjusted operating
margin 25% 29%
=========================== =============== ============
QAS provides inspection services used by the Office of Standards
in Education, Children's Services and Skills (Ofsted), the UK
government agency responsible for monitoring quality in settings
such as colleges, schools and nurseries. These services have also
been purchased by government agencies in the US and Middle East.
Typically, we provide these services under multi-year contracts,
with fixed and variable pricing elements. We also provide
complementary services including training for prospective quality
assurance inspectors, training and software tools for school
leaders to prepare for inspections, online professional development
tools for teachers to enhance their professional development, and
other similar offerings.
QAS revenue declined in the period by 21% to GBP17.8m. However,
in March 2017, the final Ofsted contract ("Early Years") came to a
successful conclusion, as previously announced, to be taken back
in-house by Ofsted. Revenues relating to Ofsted contracts were
GBP3.0m, down from GBP11.6m in 2016.
The remaining Quality Assurance Solutions business, which
excludes the Ofsted contract, had a strong performance and grew by
35% in 2017, to GBP14.8m. QAS has secured significant contract wins
at the Abu Dhabi Education Council, worth GBP8.4m over 2 years,
where we are the sole supplier of school reviews in Abu Dhabi, and
the Ministry of Education of Dubai & Northern Emirates. The
first tranche of these contracts was successfully delivered in
2017. In the US, we signed an extension to our contract with the
New York State Education Department, as well as gaining a new
customer, the Alabama State Education Department. We also
successfully retendered for the NCETM contract (National Centre for
Excellence in the Teaching of Maths).
QAS adjusted operating profit was GBP4.4m (2016: GBP6.5m), and
adjusted operating margins were 25% (2016: 29%).
Ian Bowles
Chief Executive Officer
CFO's report
Overview
For the year ended 31 December 2017, the Group's revenue from
continuing operations was GBP84.9m (2016: GBP90.3m). Adjusted
operating profit increased by 82% to GBP8.5m (2016: GBP4.7m) and
adjusted operating profit margin improved to 10.1% (2016:
5.2%).
All other development costs are expensed as incurred, and
totaled GBP8.1m in 2017 (2016: GBP9.2m). This relates to
development of the existing product portfolio, including SITS, ebs,
K2 Asset Management and Maytas, and associated overhead and
management cost.
Adjusted profit before tax was GBP8.4m (2016: GBP4.2m) and
adjusted diluted earnings per share were 3.2p (2016: 1.9p). The
Group made a statutory profit after tax of GBP2.6m (2016: loss of
GBP1.2m), and a statutory operating margin of 3.1% (2016:
(1.3)%).
At the end of the year the Group had net cash of GBP14.1m (2016:
net cash of GBP8.8m).
Results of operations
Revenue
Revenue was lower by 6% at GBP84.9m in the year (2016:
GBP90.3m). However, total revenue in 2016 included GBP11.6m (2017:
GBP3.0m) from the expiry of contracted work for the Ofsted Early
Years contract, which successfully concluded in March 2017, and
GBP1.7m (2017: GBPnil) of combined revenue from Synergy (disposed
of in March 2016), and the SLS business (closed in 2015). Excluding
these amounts, revenue grew 6.5% to GBP81.9m in 2017 from GBP76.9m
in 2016.
Across our university and college customer base, retention rates
remained high, and as a result, our Support & Maintenance
revenue is 3.9% to GBP33.5m (2016: GBP32.2m, excluding Synergy),
representing 53% of the total revenue from our Student Management
Systems business (2016: 55%).
Adjusted Operating Profit (EBITA)
The adjusted operating profit was GBP8.5m (2016: GBP4.7m).
Higher margin recurring revenues and improved operational
efficiencies drove an increase in Gross Profit Margin to 50% (2016:
43%). The ongoing cost reduction programme initiated in early 2016
has achieved cumulative annualised savings of GBP12.0m, of which
GBP5.2m were in-year savings (GBP3.2m from 2016, and a further
GBP2.0m in 2017), with an additional GBP1.0m of savings which will
be realised in 2018. The impact of foreign exchange movement was
GBP0.3m (2016: GBP0.7m).
There was a negative impact of GBP1.9m on earnings in 2017
compared to 2016, as a combined result of the expiry of the Ofsted
Early Years contract, which contributed GBP1.0m less in 2017 (2017:
GBP1.0m; 2016: GBP2.0m), and the disposal in March 2016 of the
Synergy/SLS business (GBP0.9m in 2016).
The adjusted operating profit is after capitalised development
costs of GBP2.1m (2016: GBP1.1m), reflecting the Group's revised
product strategy focusing on development of the new Tribal Edge
platform and continued development of the SchoolEdge product.
Amortisation charges relating to capitalised development were
GBP1.4m (2016: GBP1.4m).
Key Performance Indicators (KPIs)
Revenue GBP84.9m (2016: GBP90.3m)
Adjusted Operating margin 10.1% (2016: 5.2%)
Backlog GBP120.4m (2016: GBP113.8m)
Staff Retention 87% (2016: 84%)
Adjusted Operating profit GBP8.5m (2016: GBP4.7m)
Annually Recurring Revenue GBP37.5m (2016: GBP35.5m)
Cash Conversion 130% (2016: 115%)
Revenue per Employee GBP104k (2016: GBP87k)
Alternative Performance Measures
The Group uses alternative performance measures, detailed below,
to provide greater understanding of the underlying performance of
the business. There have been no changes to the Group's Alternative
Performance Measures since 2016, although the Annually Recurring
Revenue now includes Cloud services as they are considered
recurring revenues. The 2016 comparative has been restated
accordingly.
Adjusted Operating Profit / Adjusted Operating Margin / Adjusted
Earnings per Share
These measures are in respect of Operating Profit/(Loss)
excluding certain items not directly related to the trading
business or regarded as exceptional in nature. These items have
been removed from the adjusted profit figure and disclosed as
"Other Items" on the income statement. The main adjustments are as
follows:
Share-based payments
In 2017, Share-based payment charges of GBP1.7m (2016: GBP1.0m)
are excluded from the Adjusted Operating profit. The charges in the
current year relate to the matching shares granted as part of the
rights issue and share subscriptions in April 2016 (GBP0.5m) and
the Long Term Incentive Plan options (LTIPs) which were granted to
the Executive Directors in June 2016 and 2017 (GBP0.6m), and to the
senior management team in June 2017 (GBP0.3m).
Amortisation of IFRS3 Intangibles
The amortisation charge in relation to IFRS3 intangible assets
of GBP2.0m (2016: GBP1.9m) 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.
Restructuring and associated costs
Costs of GBP1.0m (2016: GBP1.9m) were incurred, which relate to
redundancy costs for the restructuring of the Group's operations,
initiated in 2016 and continued through 2017.
Sales order backlog
The sales order backlog relates to the total value of orders
which have been signed on or before, but not fully delivered by, 31
December 2017. This represents the best estimate of business
expected to be delivered and recognised in future periods, and is
based on the Total Contract Value (TCV) signed between Tribal and
the customer, even though customer contracts may contain clauses
which, under certain circumstances, may permit customers to reduce
their commitment at a future date. Software Support &
Maintenance (S&M) revenues are typically subject to annual
renewal; due to the high renewal rates, two years of S&M
revenues are included in the backlog calculation.
The total sales order backlog of the Group as at 31 December
2017 was up 5.8% at GBP120.4m (2016: GBP113.8m).
Annually Recurring Revenue (ARR)
The annually recurring revenue relates to the amount of revenue
in the year in respect of ongoing services, charged on a recurring
basis, usually annually, and which the Group considers is likely to
continue into the future. This includes the total annual Support
& Maintenance (S&M) fees relating to Tribal's software
products, and from 2017, includes Cloud revenues, which relate to
the provision of ongoing, annually recurring hosting services
provided to customers in either a public or a private cloud
environment.
The total annually recurring revenue for 2017 is GBP37.5m
(S&M GBP33.5m; Cloud services GBP4.0m), which increased by 5.5%
from GBP35.5m in 2016 (S&M GBP32.2m; Cloud services
GBP3.3m).
Operating Cash Conversion
Operating cash conversion is calculated as net cash from
operating activities before tax as a proportion of adjusted
operating profit. In 2017, operating cash conversation was 130%
(2016: 115%).
Free Cash Flow
Free cash flow is included as a key indicator of the cash that
is generated by the Group and available for further investment or
distribution. It is calculated as net cash from operating
activities less capital expenditure and less capitalised
development costs (excluding acquired intellectual property). In
2017, free cash flow was GBP8.0m (2016: GBP6.0m).
Development Costs
2017 (GBPm) 2016 (GBPm)
============================ ============== ==============
SchoolEdge 1.0 1.1
Tribal Edge 1.1 -
---------------------------- -------------- --------------
Capitalised Development
costs 2.1 1.1
---------------------------- -------------- --------------
Amortisation of Development
costs (1.4) (1.4)
============================ ============== ==============
Net Finance Costs
Overall financing costs were GBP0.3m (2016: GBP1.0m). Financing
costs on the Group's loan facility decreased to GBP0.2m (2016:
GBP0.6m). Tribal streamlined its credit facilities with Lloyds
Banking Group and Clydesdale Bank, committed until June 2018, to
better match the Group's ongoing requirements, reducing its
revolving credit facility from GBP25m at the beginning of 2017 to
GBP15m from August 2017. From January 2018, the Group reduced the
facilities further, to GBP11m including overdraft facilities and
bank guarantee lines. Discussions are ongoing to renew facilities.
Other financing costs reduced to GBP0.1m (2016: GBP0.4m) following
reductions in the unwinding of discounts on deferred
consideration.
Deferred Contingent Consideration
In March 2017, Tribal signed a variation to the Share Purchase
Agreement with the vendors of Sky Software Pty ("Campus"), which
amended the terms of the deferred contingent consideration
payments. Under the variation, it was agreed that a combination of
cash (AUD$980,325), 670,882 ordinary shares and 1,339,286 share
options would be paid/issued in full and final settlement of all
contingent obligations under the Agreement.
Going concern
Tribal had net cash of GBP14.1m at end of 2017, and a revolving
credit facility of GBP15m, committed until June 2018, of which
GBP6.5m was allocated to trading guarantees with customers at 31
December 2017.
The Group's software products benefit from a significant
installed customer base, whilst its other activities are typically
delivered under the framework of long-term contracts. Collectively,
the Group has a range of customers across different geographic
areas, good levels of committed income and a pipeline of new
opportunities. While the Group has a net current liability
position, the Group's forecasts and projections, which allow for
reasonable possible changes in trading performance, show that the
Group will be cash generative across the forecast period.
The Directors have a reasonable expectation that the Group has
sufficient financial resources to continue in operational existence
for the foreseeable future. Accordingly, the Directors continue to
adopt the going concern basis in preparing the financial
statements.
Taxation
The corporation tax on continuing operations was GBP1.8m (2016:
GBP0.9m) and the adjusted effective tax rate was 21% (2016: 21%).
This includes the impact of higher rates of taxation arising in
overseas jurisdictions.
As the Group continues to operate in international jurisdictions
with a higher rate of corporation tax, it is anticipated that the
tax charges on profits in the near- to medium-term future is likely
to be higher than the standard rate of UK corporation tax.
Share Capital
On 24 April 2017, the Company issued 670,882 shares as part of
the settlement of the deferred contingent consideration related to
the acquisition of Sky Software Pty ("Campus").
As at 31 December 2017, there were 196,051,181 shares
issued.
Related parties
Transactions with related parties during the period are set out
in note 32.
Earnings per share
Adjusted diluted earnings per share from continuing operations
before other costs, the results of businesses disposed of, and
intangible asset impairment charges and amortisation, which
reflects the Group's underlying trading performance, increased to
3.2p (2016: 1.9p).
Statutory earnings per share (diluted) increased to 1.3p (2016:
loss of 0.7p).
Shareholder returns & dividends
The Board has proposed a full year dividend of 1p per share,
pending approval at the AGM on 24 April 2018. This will be paid in
May 2018, with an associated record date of 4 May 2018, an
ex-dividend date of 3 May 2018 and an anticipated payment date of
25 May 2018. The Board of Directors intend to continue to pursue a
progressive dividend policy with a single dividend payment each
year following the annual results.
Impact of IFRS15
IFRS 15 'Revenue from Contracts with Customers' is effective for
periods beginning on or after 1 January 2018 and introduces an
amended framework for revenue recognition. The standard provides
revised guidance on revenue accounting, matching the recognition of
revenue to the delivery of performance obligations in contractual
arrangements for the provision of products and services.
The Group has assessed the impact of adopting IFRS 15, and has
concluded that software license revenue will be recognised over the
duration of the project implementation period on a percentage
complete basis. This will spread the recognition of license review
over an extended period, rather than immediate, upfront recognition
of license revenue.
In 2017, this is expected to increase the revenue by GBP0.4m to
GBP85.3m and operating profit by GBP0.4m to GBP8.9m, a decrease of
GBP0.2m to accrued income and a decrease of GBP0.6m to deferred
income.
Net Cash generated from operating activities
Operating cash inflow for the period was GBP11.1m (2016:
GBP8.3m).
Free Cash Flow is GBP8.0m (2016: GBP6.0m)
Capital Expenditure
Capital expenditure totaled GBP4.4m (2016: GBP2.4m), comprising
GBP2.1 (2016: GBP1.1m) on software product development, GBP1.5m
(2016: GBPnil) on the acquisition of intellectual property from
Wambiz and GBP0.8m (2016: GBP1.3m) on replacement of IT equipment
and office premises.
Acquisitions & Deferred Considerations
The Group made a total net payments GBP1.1m (2016: GBP3.0m)
during the year in relation to the deferred consideration
obligations of previous acquisitions being Campus GBP0.8m and
Callista GBP0.3m.
Pension obligations
As a consequence of certain contract awards, some employees
participated in defined benefit pension schemes, the largest of
which relates to the Ofsted Early Years inspection contract we
entered during the year ended December 2010. Across these pensions
schemes, the combined deficit calculated under IAS19 at the end of
the year totaled GBP1.7m (2016: deficit of GBP1.7m), with gross
assets of GBP11.0m and gross liabilities of GBP12.7m. Total
actuarial gains recognised in the consolidated statement of
comprehensive income are GBP0.1m (2016: loss of GBP1.7m). The
Ofsted Early Years contract expired in March 2017, and those
individuals working directly on the contract were transferred to
Ofsted, under the Transfer of Undertakings (Protection of
Employment) act (TUPE). Under the terms of the contract, they may
elect to transfer their pension plan from Tribal to Ofsted. The
Group is working with the Pension Ombudsman to finalise the scheme
valuation and transitional arrangements which we hope to conclude
in 2018.
Financial risks
The main financial risks the Group faces relate to the continued
sales of our software, where a trading downturn puts a strain on
the operating cash flow, credit risk arising from contractual
delays or scope changes, fluctuations in interest rates, and
foreign exchange risk.
Funding arrangements
The Group finances its operations by a combination of cash
reserves from equity capital, retained profits and bank borrowings.
The Group Finance team leads treasury management and operates
within policies reviewed and approved by the Board.
On 30 June 2016, the Group agreed amendments to the terms of its
banking facilities which remain committed until June 2018. During
2017 the size of the overall credit facility has been voluntarily
reduced from GBP25m to GBP15m, and reduced further in January 2018
to GBP11m. The maximum permissible leverage ratio (measured as the
ratio of net debt to EBITDA) must not exceed 2x. The definition of
EBITDA has also been defined to exclude certain non-cash and
one-off trading impacts that have unfavorable impacts on the
calculation. For the foreseeable future, the Group is forecast to
operate within the bank covenant requirements set out in the
facility agreements.
Credit risk
The Group seeks to reduce the risk of bad debts arising from
non-payment by our customers. This risk is closely monitored by the
Credit & Collections team, which form part of Group Finance.
Tribal incurred no material bad debts during 2017.
Interest rate risk
At the end of 2017, Tribal had no bank loan indebtedness.
However, the Group is exposed to interest rate risk because
entities in the Group borrow funds at floating interest rates.
Hedging activities are evaluated regularly to align with interest
rate views and defined risk appetite, and forward rate agreements
and interest swaps may be used, where appropriate, to achieve the
desired mix of fixed and floating rate debt. There are no open
derivative financial instruments at the year end.
Foreign exchange risk
Tribal's reporting currency is Sterling. A number of its
subsidiaries have different functional currencies, so increases and
decreases in the value of Sterling versus the currency used by the
Group's international operations will affect its reported results,
and the value of assets and liabilities on the consolidated balance
sheet.
Tribal's principal currency exchange exposure is to the
Australian dollar although as at 31 December 2017, the Group was
also exposed to movements in the rates between Sterling and the US
dollar, United Arab Emirates Dirhams, South African Rand, and New
Zealand dollar. See note 32 for further details.
The Group Finance team oversees management of foreign exchange
risk, and policies and procedures approved by the Board.
Mark Pickett
Chief Financial Officer
Consolidated Income Statement
For the year ended 31 December 2017
Year ended Year ended
================
31 December 31 December
Other items 2017 Other items 2016
(see note Total (see note Total
Adjusted 6) Adjusted 6)
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================== ============= ================ ================== =============== ================ =================
Continuing
operations
============
Revenue 84,918 - 84,918 90,255 - 90,255
Cost of sales 3 (42,401) - (42,401) (51,408) - (51,408)
================ ============ ============= ================ ================== =============== ================ =================
Gross profit 42,517 - 42,517 38,847 - 38,847
============================== ============= ================ ================== =============== ================ =================
Total
administrative
expenses (33,975) (4,815) (38,790) (34,159) (4,625) (38,784)
================ ============ ============= ================ ================== =============== ================ =================
Operating
profit/(loss) 2 8,542 (4,815) 3,727 4,688 (4,625) 63
Investment
income 4 20 - 20 66 - 66
Finance costs 3,5 (179) (128) (307) (595) (398) (993)
================ ============ ============= ================ ================== =============== ================ =================
Profit/(loss)
before
tax 8,383 (4,943) 3,440 4,159 (5,023) (864)
Tax
(charge)/credit 6 (1,757) 936 (821) (889) 596 (293)
================ ============ ============= ================ ================== =============== ================ =================
Profit/(loss) for the
year
Earnings per share 6,626 (4,007) 2,619 3,270 (4,427) (1,157)
============================== ============= ================ ================== =============== ================ =================
Basic 7 3.4p 1.3p 1.9p (0.7)p
================ ============ ============= ================ ================== =============== ================ =================
Diluted 7 3.2p 1.3p 1.9p (0.7)p
================ ============ ============= ================ ================== =============== ================ =================
All activities are from continuing operations
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2017
Year ended Year ended
31 December 31 December
2017 2016
GBP'000 GBP'000
====================================================== ======================= =======================
Profit/(loss) for the year 2,619 (1,157)
Other comprehensive (expense)/income:
Items that will not be reclassified subsequently
to profit or loss:
Remeasurement of defined benefit pension schemes 55 (1,706)
Deferred tax on measurement of defined benefit
pension schemes (9) 290
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation of foreign
operations (436) 3,070
====================================================== ======================= =======================
Other comprehensive (expense)/income for the year
net of tax (390) 1,654
====================================================== ======================= =======================
Total comprehensive income for the year attributable
to equity holders of the parent 2,229 497
====================================================== ======================= =======================
Consolidated Balance Sheet
As at 31 December 2017
2017 2016
Note GBP'000 GBP'000
===================================================== =================== ===================
Non-current assets
Goodwill 9 21,113 21,316
Other intangible assets 10 13,863 14,214
Property, plant and equipment 1,577 1,981
Deferred tax assets 4,275 3,881
Accrued income 150 169
================================================= =================== ===================
40,978 41,561
===================================================== =================== ===================
Current assets
Inventories - 83
Trade and other receivables 11 13,625 15,810
Accrued income 4,851 3,605
Current tax assets 106 84
Cash and cash equivalents (excluding
bank overdrafts) 14,082 10,260
================================================= =================== ===================
32,664 29,842
===================================================== =================== ===================
Total assets 73,642 71,403
===================================================== =================== ===================
Current liabilities
Trade and other payables 12 (6,888) (7,066)
Accruals (8,593) (8,204)
Deferred income (17,934) (19,352)
Current tax liabilities (2,573) (1,266)
Borrowings - (1,427)
Provisions (1,250) (941)
================================================= =================== ===================
(37,238) (38,256)
===================================================== =================== ===================
Net current liabilities (4,574) (8,414)
===================================================== =================== ===================
Non-current liabilities
Other payables (551) (1,026)
Deferred tax liabilities 12 (1,276) (1,877)
Deferred income (113) (818)
Retirement benefit obligations (1,718) (1,725)
Provisions (194) (211)
================================================= =================== ===================
(3,852) (5,657)
===================================================== =================== ===================
Total liabilities (41,090) (43,913)
===================================================== =================== ===================
Net assets 32,552 27,490
===================================================== =================== ===================
Equity
Share capital 9,803 9,769
Share premium 15,539 14,989
Other reserves 22,783 20,879
Accumulated losses (15,573) (18,147)
================================================= =================== ===================
Total equity attributable to equity holders of the
parent 32,552 27,490
===================================================== =================== ===================
Consolidated Statement of Changes in Equity
For the year ended 31 December 2017
Share Share premium Other Accumulated Total
capital GBP'000 reserves losses equity
GBP'000 GBP'000 GBP'000 GBP'000
=========================== ============ =================== ============== ===================== ============
At 1 January 2016 4,743 21 20,503 (19,107) 6,160
Loss for the year - - - (1,157) (1,157)
Other comprehensive income
for
the year - - - 1,654 1,654
Acquisition of own shares - - (91) - (91)
Issue of equity share
capital 5,026 17,091 - - 22,117
Costs associated with issue
of share capital - (2,123) - - (2,123)
Charge to equity for
share-based
payments - - 876 - 876
Tax credit on charge to
equity
for share-based payments - - - 54 54
Transfer from merger reserve - - (409) 409 -
============================ ============ =================== ============== ===================== ============
At 31 December 2016 and 1
January
2017 9,769 14,989 20,879 (18,147) 27,490
Profit for the year - - - 2,619 2,619
Other comprehensive expense
for the year - - - (390) (390)
Issue of equity share
capital 34 550 - - 584
Charge to equity for
share-based
payments - - 1,393 - 1,393
Tax credit on charge to
equity
for share-based payments - - - 345 345
Transfer from other payables
for share-based payments - - 511 - 511
============================ ============ =================== ============== ===================== ============
At 31 December 2017 9,803 15,539 22,783 (15,573) 32,552
============================ ============ =================== ============== ===================== ============
Consolidated Cash Flow Statement
For the year ended 31 December 2017
Year ended Year ended
31 December 31 December
2017 2016
GBP'000 GBP'000
Note
====================================================== ======================= =======================
Net cash from operating activities 13 11,117 8,274
================================================== ======================= =======================
Investing activities
Interest received 20 66
Gross proceeds from disposal of Synergy - 19,421
Costs associated with disposal of Synergy - (872)
Purchases of property, plant and equipment (803) (443)
Expenditure on intangible assets (3,559) (1,932)
Payment of deferred consideration for
acquisitions (1,157) (3,374)
Repayment of Escrow (in respect of Human
Edge) - 357
================================================== ======================= =======================
Net cash (outflow)/inflow from investing activities (5,499) 13,223
====================================================== ======================= =======================
Financing activities
Interest paid (101) (460)
Purchase of own shares - (91)
Gross proceeds on issue of shares - 22,117
Costs associated with issue of shares - (2,123)
Repayment of borrowings and loan arrangement
fees (25) (34,500)
====================================================== ======================= =======================
Net cash used in financing activities (126) (15,057)
====================================================== ======================= =======================
Net increase in cash and cash equivalents 5,492 6,440
Cash and cash equivalents at beginning of year 8,833 1,736
Effect of foreign exchange rate changes (243) 657
====================================================== ======================= =======================
Cash and cash equivalents at end of
year 14,082 8,833
================================================== ======================= =======================
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 2017
or 2016,but is derived from those accounts. Statutory accounts for
2016 have been delivered to the Registrar of Companies and those
for 2017 will be delivered following the Company's annual general
meeting.
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
posted to shareholders on or around 29 March 2018 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. 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 Management Systems ("SMS") 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;
i-graduate, represents a portfolio of performance improvement
tools and services, including analytics, software solutions,
facilities and asset management; and
Quality Assurance Solutions ("QAS"), representing inspection and
review services which support the assessment of educational
delivery.
In accordance with IFRS 8 'Operating Segments', information on
segment assets is not shown, as this is not provided to the chief
operating decision-maker. Inter-segment sales are charged at
prevailing market prices.
Revenue (GBP'000) Adjusted Segment Operating
Profit (GBP'000)
=========== ========================================== ==============================================================
As previously
Restated Restated reported Year
Year Year Year Year ended 31
ended ended 31 ended ended 31 December
31 December 31 December 2016
December 2016 December 2016 GBP'000
2017 GBP'000 2017 GBP'000
GBP'000 GBP'000
=========== ==================== ==================== ==================== ==================== ==================
Student
Management
Systems 60,026 59,005 17,613 12,021 4,724
i-graduate 7,101 8,705 1,064 1,007 901
Quality
Assurance
Solutions 17,791 22,545 4,408 6,537 2,532
=========== ==================== ==================== ==================== ==================== ==================
Total 84,918 90,255 23,085 19,565 8,157
=========== ==================== ==================== ==================== ==================== ==================
Unallocated corporate expenses (14,543) (14,877) (3,469)
======================================================= ==================== ==================== ==================
Adjusted operating profit 8,542 4,688 4,688
Amortisation of IFRS 3 intangibles (2,034) (1,912) (1,912)
Other items (2,781) (2,713) (2,713)
======================================================= ==================== ==================== ==================
Operating profit 3,727 63 63
Investment income 20 66 66
Finance costs (307) (993) (993)
======================================================= ==================== ==================== ==================
Profit/(loss) before tax 3,440 (864) (864)
Tax charge (821) (293) (293)
Profit/(loss) after tax 2,619 (1,157) (1,157)
====================
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.
From the beginning of 2017, the basis of cost allocation for
each of the Lines of Business has changed. It was determined that
the previous methodology allocated central costs (which include
Finance, HR, Legal, IT, Corporate services., Marketing and Office
costs) in a way that did not represent the level of resource
utilised by that business, and accordingly did not provide
sufficient insight into the underlying profitability of the Line of
Business. The segmental analysis of Adjusted Operating profit now
allocates all directly attributable and controllable direct and
overhead costs to its business segment. The central and group costs
now represent the aggregate of all costs which support the Lines of
Business, and which are not directly and specifically attributable
to each Line of Business.
Within QAS revenues of approximately 4% (2016: 13%) have arisen
from the Segments largest customer; within SMS revenues of
approximately 8% (2016: 7%) have arisen from the Segments largest
customer.
Geographical information
Revenue from external customers, based on location of the
customer, are shown below:
2017 2016
GBP'000 GBP'000
==================================== =================== ===================
UK 39,252 46,469
Asia Pacific 33,713 31,819
North America and rest of the world 11,953 11,967
==================================== =================== ===================
84,918 90,255
==================================== =================== ===================
Non-current assets
2017 2016
GBP'000 GBP'000
==================================== =================== ===================
UK 19,636 19,171
Asia Pacific 21,336 22,376
North America and rest of the world 6 14
==================================== =================== ===================
40,978 41,561
==================================== =================== ===================
The Group's revenues from its major products and services were
as follows:
Continuing operations
Restated
==================================================
2017 2016
==================================================
GBP'000 GBP'000
================================================== ================== ==================
Licence and development fees 9,989 11,284
Implementation services 14,840 13,342
Support & Maintenance 33,474 32,422
Cloud services 4,004 3,357
Other services 2,441 4,159
School inspections & other related services (QAS) 17,139 22,545
i-graduate survey & data analytics 3,031 3,147
================================================== ================== ==================
84,918 90,255
================================================== ================== ==================
2016 is restated to identify Cloud services separately and
reallocate Performance Benchmarking to "School inspections &
other related services (QAS)" from "i-graduate survey & data
analytics".
3 Other items
2017 2016
=========================================================
GBP'000 GBP'000
========================================================= ================== ==================
Profit on sale of Synergy - (301)
========================================================= ================== ==================
- Repayment of Escrow (in respect of the acquisition
of Human Edge) - 357
- Movement in deferred contingent consideration (29) (607)
========================================================= ================== ==================
Acquisition related costs (29) (250)
========================================================= ================== ==================
Share based payments (including employer related
taxes) (1,732) (1,036)
========================================================= ================== ==================
- Onerous contracts - 115
- Costs on closure of SLS business - (33)
- Property related - 136
- Restructuring and associated costs (1,020) (1,946)
========================================================= ================== ==================
Other exceptional items (1,020) (1,728)
========================================================= ================== ==================
Other Administrative costs (2,781) (2,713)
========================================================= ================== ==================
- Amortisation of IFRS 3 intangibles (2,034) (1,912)
========================================================= ================== ==================
Total administrative expenses (4,815) (4,625)
========================================================= ================== ==================
- Unwinding of discount on deferred consideration (128) (205)
- Bank arrangement fees written off - (244)
- Fees associated with waiver of loan covenant - 51
========================================================= ================== ==================
Other financing items (128) (398)
========================================================= ================== ==================
(4,943) (5,023)
========================================================= ================== ==================
Tax on other items 936 596
========================================================= ================== ==================
(4,007) (4,427)
========================================================= ================== ==================
IAS 1, paragraph 97 requires separate disclosure of such items
that are considered material by nature or value, that they require
separate disclosure in the financial statements. As such, 'other
items' are not part of the Group's underlying trading activities
and include the following:
Acquisition costs: during the period, a final payment was made
in respect of deferred consideration payable on acquisition of
Callista, which resulted in a true up of the amounts provided
(2017: GBP29,000: 2016 GBP250,000).
Other exceptional items: amounts principally reflect the costs
arising in respect of the restructuring of the Group's operations.
The restructuring program was executed in the first half of 2017
and associated costs provided for. Amounts relate mainly to
provision for redundancy costs. (2017: GBP1,020,000: 2016:
GBP1,946,000).
Share based payments (see note 23): The numbers above include
the movement in associated employers taxes accrual (2017:
GBP339,000: 2016: GBP160,000).
Amortisation of IFRS3 intangibles: amortisation arising on the
fair value of intangible assets acquired is separately disclosed as
other items. (2017: GBP2,034,000: 2016: GBP1,912,000).
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 (2017: GBP128,000: 2016: GBP398,000).
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.
4. Investment income
2017 2016
GBP'000 GBP'000
========================================================== =================== ===================
Net interest receivable on retirement benefit obligations - 12
Other interest receivable 20 54
========================================================== =================== ===================
20 66
========================================================== =================== ===================
5. Finance costs
2017 2016
GBP'000 GBP'000
======================================================= =================== ===================
Interest on bank overdrafts and loans 51 310
Amortisation and write off of loan arrangement fees 36 60
Net interest payable on retirement benefit obligations 42 -
Other interest payable 50 225
======================================================= =================== ===================
Adjusted Finance costs 179 595
======================================================= =================== ===================
Unwinding of discounts 128 205
Bank arrangement fees written off - 244
Fees associated with waiver of loan covenants - (51)
======================================================= =================== ===================
Other finance costs 128 398
======================================================= =================== ===================
Total finance costs 307 993
======================================================= =================== ===================
6. Tax
2017 2016
GBP'000 GBP'000
========================================== ================= =================
Current tax
UK corporation tax 100 116
Overseas tax 1,529 690
Adjustments in respect of prior years (165) 309
========================================== ================= =================
1,464 1,115
Deferred tax
Current year (641) (816)
Adjustments in respect of prior years (2) (6)
========================================== ================= =================
(643) (822)
========================================== ================= =================
Tax charge on profits 821 293
========================================== ================= =================
The continuing tax charge can be reconciled to the profit from
continuing operations per the income statement as follows:
2017 2016
GBP'000 GBP'000
================================================== =================== ===================
Profit/(loss) before tax on continuing operations 3,440 (864)
================================================== =================== ===================
Tax credit at standard rate of 19.25% (2016: 20%) 662 (173)
Effects of:
Overseas tax rates 180 140
Expenses not deductible for tax purposes 64 180
Adjustments in respect of prior years (167) 272
Additional deduction for R&D expenditure (7) (87)
Movement in tax provision - 116
Utilisation of unrecognised tax losses (125) (358)
Effect of changes in tax rates 214 203
================================================== =================== ===================
Tax expense for the year 821 293
================================================== =================== ===================
In addition to the amount charged to the income statement a
current tax credit of GBPnil (2016: GBPnil) and a deferred tax
credit of GBP345,000 (2016: credit of GBP54,000) has been
recognised directly in equity during the year in relation to share
schemes. A deferred tax charge of GBP9,000 (2016: credit of
GBP290,000) 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.
The income tax expense for the year is based on the UK statutory
rate of corporation tax for the period of 19.25% (2016: 20%). This
rate reflects the reduction of the UK corporation tax rate from 20%
to 19% from 1 April 2017. Tax for other jurisdictions is calculated
at the prevailing rates prevailing in the respective
jurisdictions.
A further reduction in the UK corporation tax rate from 19% to
17% ( effective from 1 April 2020) was substantively enacted on 6
September 2016. This will reduce the Group's future tax charge
accordingly. The deferred tax balances at 31 December 2017 have
been calculated based on these rates.
7. Dividends
2017 2016
GBP'000 GBP'000
====================================================== =================== ===================
Proposed final dividend for the year ended 31 December
2017 of 1.0 pence (year ended 31 December 2016: 1,961 -
nil pence) per share
====================================================== =================== ===================
8. Earnings per share
Earnings per share and diluted earnings per share are calculated
by reference to a weighted average number of ordinary shares
calculated as follows:
2017 2016
thousands thousands
=================================================== ================== ================
Weighted average number of shares outstanding:
Basic weighted average number of shares in issue
Weighted average number of employee share options 195,011 168,755
10,729 -
=================================================== ================== ================
Weighted average number of shares outstanding for
dilution calculations 205,740 168,755
=================================================== ================== ================
Diluted earnings per share only reflects the dilutive effect of
share options for which performance criteria have been met.
Previous share incentive schemes vest based on cumulative EPS for a
three year period with the earliest vesting based on the Group's
results for the three years to 31 December 2017. None of the
552,928 remaining share options that were issued in 2015 met the
performance criteria.
In regards the diluted loss per share in 2016, all potentially
dilutive ordinary shares, including options and deferred shares,
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 10,084,612 (2016: 5,367,189). In addition there are a
further 3,405,996 (2016: 3,405,996) potentially dilutive matching
share options that have been granted but have not yet met vesting
criteria as at 31 December 2017.
The adjusted basic and diluted earnings per share figures shown
on the consolidated income statement are included as the Directors
believe that they provide a better understanding of the underlying
trading performance of the Group. A reconciliation of how these
figures are calculated is set out below:
2017 2016
GBP'000 GBP'000
============================ =================== ===================
Net Profit/(loss) 2,619 (1,157)
============================ =================== ===================
Earnings per share
Basic 1.3p (0.7)p
============================ =================== ===================
Diluted 1.3p (0.7)p
============================ =================== ===================
Adjusted earnings per share
Basic 3.4p 1.9p
============================ =================== ===================
Diluted 3.2p 1.9p
============================ =================== ===================
Profit/(loss) for Earnings per share
the year
================================== ======================================== ========================================
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
================================== =================== =================== =================== ===================
Profit/(loss) for the year
attributable
to equity shareholders 2,619 (1,157) 1.3p (0.7)p
================================== =================== =================== =================== ===================
Add back:
=================== ===================
Amortisation of IFRS intangibles
(net of tax) 1,444 1,354
=================== ===================
Disposal of Synergy - (301)
Repayment of Escrow - (357)
Bank arrangement fees written off - 244
Share based payments 1,393 876
Unwinding of discounts 128 205
Other items (net of tax) 1,013 1,799
Movement in deferred contingent
consideration 29 607
================================== =================== =================== =================== ===================
Total adjusting items (net of tax) 4,007 4,427 2.1p 2.6p
================================== =================== =================== =================== ===================
Adjusted earnings 6,626 3,270 3.4p 1.9p
================================== =================== =================== =================== ===================
9. Goodwill
2017 2016
GBP'000 GBP'000
======================================================= =================== ===================
Cost
At beginning of year 102,547 119,542
Disposals (10) -
Allocation of goodwill to disposal of Synergy business - (19,107)
Exchange differences (193) 2,112
======================================================= =================== ===================
At end of year 102,344 102,547
======================================================= =================== ===================
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 21,113 21,316
======================================================= =================== ===================
At beginning of year 21,316 38,311
======================================================= =================== ===================
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:
2017 2016
GBP'000 GBP'000
=========================== =================== ===================
Student Management Systems 17,579 17,782
i-graduate 3,534 3,534
=========================== =================== ===================
21,113 21,316
=========================== =================== ===================
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 2018. 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 an
eight-year period with a growth assumption of 2% per annum. Cash
flows beyond the budget and extrapolation period were calculated
into perpetuity using a growth rate of 2%. This growth rate is in
line with the expected average UK economy long-term growth
rate.
The cash flows projections are discounted at a post-tax discount
rate of 11.27% (2016: 12%). The single discount rate, which is
consistently applied for all 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 judgmental
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:
SMS is the largest segment and has significant impairment
headroom as such no reasonable sensitivities would cause an
impairment.
i-graduate is the smallest segment and the impairment headroom
is the most sensitive. The discount rate for 2017 would need to
increase to 11.8% for an impairment to occur or the growth rate
reduce to 1.4% per annum. For example, if the growth rate decreased
to 1.0% and the discount rate was 11.0% it would result in an
impairment of approximately GBP54,000. One of the significant
assumptions in i-graduate is the increase of profits in the budget
for the period to 31 December 2018. It should be noted that the
i-graduate budget was prepared on a bottom-up basis which the
Directors consider to be a prudent, low case position with known
potential upside, albeit with some risk attached. The Directors do
not feel these sensitivity scenarios or a combination of the two
are likely to occur. Additionally, the annually recurring nature of
the surveys and data analytics i-graduate undertakes give further
comfort. The Directors will however continue to closely monitor the
position given the sensitivity of the segment.
Further to the impairment review, the Directors concluded that
no impairment has arisen during the year.
10. Other intangible assets
Customer Acquired
contracts Intellectual Development Business Software
& Property costs systems licences
Software relationships GBP'000 GBP'000 GBP'000 GBP'000 Total
GBP'000 GBP'000 GBP'000
============= =================== ================== ================ ======================= ============== ================= ============
Cost
At 31 January
2016 6,634 6,613 - 30,015 5,688 - 48,950
Transfers - - - - - 1,369 1,369
Additions - - - 1,098 764 70 1,932
Disposals - - - (6,994) - (35) (7,029)
Exchange
differences 1,242 529 - 360 18 - 2,149
============= =================== ================== ================ ======================= ============== ================= ============
At 31
December
2016
and 1
January
2017 7,876 7,142 - 24,479 6,470 1,404 47,371
Additions - - 1,873 2,135 97 77 4,182
Disposals - - - - (191) (12) (203)
Exchange
differences (109) (46) - (79) (2) - (236)
============= =================== ================== ================ ======================= ============== ================= ============
At 31
December
2017 7,767 7,096 1,873 26,535 6,374 1,469 51,114
============= =================== ================== ================ ======================= ============== ================= ============
Amortisation
At 1 January
2016 2,128 3,800 - 23,831 4,407 - 34,166
Transfers - - - - - 1,084 1,084
Charge for
the
year 1,422 490 - 1,411 162 166 3,651
Disposals - - - (6,504) - (25) (6,529)
Exchange
differences 489 168 - 122 6 - 785
============= =================== ================== ================ ======================= ============== ================= ============
At 31
December
2016
and 1
January
2017 4,039 4,458 - 18,860 4,575 1,225 33,157
Charge for
the
year 1,529 505 187 1,445 642 134 4,442
Disposals - - - - (191) (12) (203)
Exchange
differences (93) (27) - (24) (1) - (145)
============= =================== ================== ================ ======================= ============== ================= ============
At 31
December
2017 5,475 4,936 187 20,281 5,025 1,347 37,251
============= =================== ================== ================ ======================= ============== ================= ============
Carrying
amount
At 31
December
2017 2,292 2,160 1,686 6,254 1,349 122 13,863
============= =================== ================== ================ ======================= ============== ================= ============
At 31
December
2016 3,837 2,684 - 5,619 1,895 179 14,214
============= =================== ================== ================ ======================= ============== ================= ============
Software and customer contracts and relationships have arisen
from acquisitions and are amortised over their estimated useful
lives, which are 3-6 years and 3-12 years respectively. The
amortisation period for development costs incurred on the Group's
product development is 3 to 7 years, based on the expected
life-cycle of the product. Amortisation of development costs is
included within cost of sales; the amortisation for software,
customer contracts and relationships, business systems and software
licences is included within administrative expenses.
Included within Business Systems are finance systems with a
carrying value of GBP1.3m (2016: GBP1.6m). Each system is being
amortised over a period of three to five years and have an average
of three years left.
On 5 June 2017, the Group acquired Intellectual property from
Wambiz Limited. The initial cash consideration was GBP1,250,000,
with further consideration of GBP289,000 and GBP485,000 payable at
the end of years 1 and 2 respectively. An intangible asset of
GBP1,873,000 has been recorded under Acquired intellectual
property, discounted for deferred payments which have been recorded
as a deferred consideration liability in Trade and other payables.
This asset is being amortised over a period of 5 years.
11. Trade and other receivables
2017 2016
GBP'000 GBP'000
============================================ =================== ===================
Amounts receivable for the sale of services 12,202 14,373
Allowance for doubtful debts (1,713) (1,578)
============================================ =================== ===================
10,489 12,795
516 209
Other receivables Prepayments 2,620 2,806
============================================ =================== ===================
13,625 15,810
============================================ =================== ===================
12. Trade and other payables
2017 2016
GBP'000 GBP'000
=================================== =================== ===================
Current
Trade payables 429 677
Other taxation and social security 2,596 3,309
Other payables 3,038 1,453
Deferred consideration 825 1,627
=================================== =================== ===================
6,888 7,066
Non-current
=================================== =================== ===================
Other payables 153 -
Deferred consideration 398 1,026
551 1,026
=================================== =================== ===================
Total 7,439 8,092
=================================== =================== ===================
Other payables are split as follows:
2017 2016
GBP'000 GBP'000
============================ =================== ===================
Goods received not invoiced 1,650 246
Funds restricted in use 39 212
Other creditors 1,349 995
============================ =================== ===================
3,038 1,453
============================ =================== ===================
13. Notes to the cash flow statement
2017 2016
GBP'000 GBP'000
================================================= =================== ===================
Operating profit from continuing operations 3,727 63
Gain on disposal of Synergy - (301)
Depreciation of property, plant and equipment 1,190 1,506
Amortisation and impairment of other intangible
assets 4,442 3,651
Share based payments 1,393 876
Movement in deferred consideration 29 566
Other non-cash items 69 (486)
================================================= =================== ===================
Operating cash flows before movements in working
capital 10,850 5,875
Decrease in inventories 83 50
Decrease in receivables 1,044 4,139
Decreases in payables (931) (2,295)
================================================= =================== ===================
Net cash from operating activities before tax 11,047 7,769
Tax received 70 505
================================================= =================== ===================
Net cash from operating activities 11,117 8,274
================================================= =================== ===================
Net cash from operating activities before tax can be analysed as
follows:
2017 2016
GBP'000 GBP'000
================================================== =================== ===================
Continuing operations (excluding restricted cash) 11,220 7,819
Decrease in restricted cash (173) (50)
================================================== =================== ===================
11,047 7,769
================================================== =================== ===================
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAEDFASSPEAF
(END) Dow Jones Newswires
March 22, 2018 03:01 ET (07:01 GMT)
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