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Paul Howells (CEO, Eteach Group), Julian Drinkall (CEO, AET) and Rupert Barclay (Managing Partner, Cairneagle)


International opportunities benefit Tribal

publication date: Sep 2, 2012
Print
Tribal Group, the education technology and services company, has reported an adjusted operating profit of £4.0m (2011: £3.9m) for the six months ended 30 June 2012 on revenue down marginally at £57.0m (2011: £57.5m). Revenue growth in international markets was offset by a fall in Tribal’s UK services market following the company’s withdrawal from a number of low margin and loss making contracts. After finance costs of £0.4m (2011: £1.3m) the company reported an adjusted pre-tax profit of £3.6m (2011: £2.8m). The company generated strong operating cash flow of £4.0m (2011: outflow of £0.9m) arising from improved working capital management and net debt at 30 June 2012 was £13.2m (2011: £17.3m).

Tribal’s business is divided into two divisions – technology and services. The technology division provides proprietary software products to support the needs of education, learning and training providers including student management systems for HE (SITS:Vision), FE colleges (ebs4) and training providers (Maytas) and children’s services systems for local authorities (Synergy). Half-year revenue grew 9.6% to £25.1m (2011: £22.9m) of which £5.5m (2011: £3.7m) was generated from international customers.

Tribal Group

Technology Division

Six months ended 30 June

2012

£m

2011

£m

%

Change

Revenue

 

 

 

Licence

3.3

3.5

-5.7

Implementation

9.9

8.0

+23.7

Maintenance

8.4

7.3

+15.1

Other

3.5

4.1

-14.6

Total Revenue

25.1

22.9

+9.6

Adjusted Operating Profit

4.7

4.4

+6.8

Operating Margin

19%

19%

 

The company reports that in the first half of FY12, its Technology Division secured five new FE colleges for its ebs4 student management system. Internationally, Tribal reports that its A$40m contract for the New South Wales Student Administration and Learning Management System (SALM) is progressing to plan although no revenue or profit on software licence sales was recognised by the company in the first half year.

To strengthen its position in the HE student management systems market Tribal signed two partnership contracts in the first seven months of 2012 to broaden the company’s offer to UK and international clients. In June 2012, Tribal entered into a collaborative relationship with Consilience International to offer the New York-based company’s research support software, Ideate, to UK universities and this was followed in July 2012 with a collaborative partnership with Azorus Inc to provide the Nova Scotia-based company’s Customer Relationship Management system to Tribal’s customer base in the UK and internationally.

Tribal’s focus in the technology market is to deliver high value software products in markets with high competitive barriers to entry. The division’s revenue model for its software products is based on licence fees (perpetual licences), implementation services and maintenance and support (annual renewable contracts). At 30 June 2012, the division’s order book was £80.8m (31 December 2011: £55.9m) including around £24.6m relating to the New South Wales SALM contract.

The company’s services division covers compliance services including Tribal’s OfSTED inspections contracts and international inspection services, delivery services, including managing the National Centre for Excellence in the Teaching of Mathematics (NCETM) and a specialist e-content and vocational learning business and measurement services which encompass primarily benchmarking and school improvement services. The division’s first half year revenue fell 11.0% to £32.5m (2011: £36.5m) principally due to the company’s exit from low margin / loss making activities. As a result of these withdrawals and prior year cost reductions, adjusted operating margins improved slightly to 5% (2011: 4%). £3.9m (2011: £2.9m) or 12% (2011: 8%) of the division’s first half year revenue was generated outside the UK.

Tribal Group

Services Division

Six months ended 30 June

2012

£m

2011

£m

%

Change

Revenue

 

 

 

Measurement

2.4

3.6

-33.3

Compliance

16.0

18.2

-12.1

Delivery

14.1

14.7

-4.1

Total Revenue

32.5

36.5

-11.0

Adjusted Operating Profit

1.6

1.6

 

Operating Margin

5%

4%

 

Tribal is the leading provider of Ofsted inspections and the company has been providing inspection services to Ofsted continuously since 2005. The company’s six year contract for inspecting schools and colleges in the south of England which began in September 2009 is worth around £75m and the five-year Early Years contract, also for the south of England, which began in September 2010, is worth around £64m. In February 2012 Tribal announced that the company had been awarded a £6m contract by the Abu Dhabi Education Council (ADEC) to inspect Government funded and private schools in the Emirate.

Tribal’s measurement service includes benchmarking support for UK universities and FE colleges and internationally with New Zealand’s Tertiary Education Commission. The company’s delivery business provides specialist content and manages online services for government and education and training providers. In March 2012, a consortium headed by Tribal to deliver the NCETM contract was awarded a three year extension until 2015 to provide professional development support to teachers. And in May 2012, Tribal announced a partnership with OCR to provide bespoke support resources, including trainers’ guides and practice assessments to support the awarding body’s new “Proficiency” qualifications in English and Maths for first teaching from September 2012.

Although compliance services accounted for almost half of the Services division’s revenue in FY11, Tribal recognises that the growth potential of this segment is low. The company is therefore looking to grow service revenues through the development of new technology-based tools and solutions for school improvement and benchmarking activities and to establish market leadership in measurement-based education performance improvement services internationally. At 30 June 2012, the division’s order book was £99.7m (31 December 2011: £121.6m).

www.tribalgroup.com

 


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