Final Results
17 March 2009
Tribal Group plc ('Tribal' or the 'Group')
Preliminary results for the year ended 31 December 2008
Highlights
-
Revenue1 increased by 12% to £234m, supported by acquisitions made during the year
-
Adjusted profit before tax2 up by 21% to £18.6m, aided by a significant fall in interest charges
-
Committed income up by 12% to £139m
-
Significant growth in sales pipeline to £297m
-
Strong balance sheet with net debt at £19.7m against facilities of £40m
-
Senior management team strengthened
-
Acquisitions successfully integrated
-
International development progressed
-
Award of new Ofsted contract
Financial summary
|
|
Year ended 31 December 2008 |
Year ended 31 December 20071 |
Change |
Nine months ended 31 December 20073 |
|
|
|
|
|
|
|
Revenue |
£234.0m |
£209.2m |
+12% |
£153.3m |
|
Adjusted profit before tax2 |
£18.6m |
£15.4m |
+21% |
£10.6m |
|
Profit before tax |
£18.0m |
£6.0m |
|
£1.2m |
|
Adjusted earnings per share2 |
14.7p |
12.2p |
+20% |
8.4p |
|
Earnings/(loss) per share |
14.1p |
1.3p |
|
(2.6)p |
|
Dividend per share |
4.35p |
3.93p |
+11% |
|
|
Operating cash flow4 |
£21.4m |
£22.4m |
|
|
|
Operating profit to cash conversion |
136% |
137% |
|
|
Commentary
Peter Martin, Chief Executive of Tribal, commented: 'The Group made further good progress during 2008. Profits and earnings increased significantly and we successfully implemented a number of key initiatives that will provide us with a stronger platform from which to grow and develop.
'Despite the challenges in the wider economy, our clients remain committed to transforming public services and working with partners to improve performance, reduce costs and effect change. Whilst the pressures on public sector spending are likely to increase, we are encouraged by our current levels of committed income and the strength of the sales pipeline and we believe that Tribal is well-positioned to make further progress in 2009.'
Notes:
-
Following the change of year end in 2007, and in order to assist with analysis and comparison, we have included like-for-like comparisons based on the unaudited pro forma results for the year ended 31 December 2007.
-
The adjusted profit before tax and adjusted earnings per share exclude goodwill impairment of £nil (2007: £9.0m), intangible asset amortisation of £0.6m (2007: £0.3m) and the financial instrument charge of £0.1m (2007: £0.1m) and, in the case of earnings per share, the related taxation of £0.2m (2007: £0.1m) and discontinued operations.
-
Statutory results for the nine months ended 31 December 2007.
-
Operating cash flow is defined as net cash from operating activities less interest.
Further information
A presentation of these results will be made to analysts and investors at 9.30am today at RBS Hoare Govett Ltd, 250 Bishopsgate, London, EC2M 4AA. A copy of the presentation will be made available later this morning on the Tribal Group website: www.tribalgroup.co.uk
|
Tribal Group plc |
Tel: 020 7323 7100 |
|
Peter Martin, Chief Executive |
|
|
Simon Lawton, Group Finance Director |
|
|
|
|
|
Maitland |
Tel: 020 7379 5151 |
|
Colin Browne |
|
|
Anthony Silverman |
|
Editors' note:
Tribal provides a range of consultancy, support and delivery services focused on improving the delivery of public services in the UK and internationally. Our core markets are in education, health, housing and regeneration, central government and local government. Tribal employs approximately 2,300 staff and its shares are quoted on the London Stock Exchange (TRB).
Links: Tribal Group plc website: www.tribalgroup.co.uk
This announcement has been prepared for and is addressed only to our shareholders as a whole and should not be relied on by any other party or for any other purpose. Tribal, its directors, employees, agents or advisers do not accept or assume responsibility to any other person to whom this announcement is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed.
This announcement may contain forward-looking statements. Any forward-looking statement has been made by the directors in good faith based on the information available to them up to the time of approval of this announcement and should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information. To the extent that this announcement contains any statement dealing with any time after the date of its preparation, such statement is merely predictive and speculative as it relates to events and circumstances which are yet to occur and therefore the facts stated and views expressed may change. Tribal undertakes no obligation to update these forward-looking statements.
Operating review
We are pleased to report a strong financial performance for the year ended 31 December 2008*. The Group's revenue was up 12% at £234.0m (2007: £209.2m). Adjusted operating profit increased by 14% to £19.8m (2007: £17.3m) and the adjusted operating margin increased from 8.3% to 8.5%. Adjusted profit before tax was up 21% at £18.6m (2007: £15.4m) and the adjusted earnings per share increased by 20% to 14.7p (2007: 12.2p). The Board is proposing a final dividend of 2.65p per share, making a total of 4.35p per share for the year.
During 2008, the Group generated operating cash flows of £21.4m (2007: £22.4m), representing an operating cash conversion of 136% (2007: 137%). The strong cash generation supported the financing of acquisitions made during the period. Net debt at the year end was £19.7m against committed bank facilities of £40m that run until June 2012. Tribal recently increased its annual working capital facility to £6m, providing the Group with further headroom and financial flexibility.
The improvement in financial performance was achieved during a period of organisational development. The Group strengthened its senior management team, with the appointment of Andy Field as chief operating officer, Jonathan Garnett as chief executive of the education business and Matthew Swindells to lead the health business. We made a number of strategic acquisitions, restructured our education business to better align our operations with market opportunities and integrated our housing, regeneration and local government consulting practices. These changes will support our growth plans and enhance the strategic positioning of the Group in the UK and internationally.
General economic conditions remain very challenging and the Group anticipates further tightening in overall public sector spending in the UK, particularly following the next general election. However, key areas such as education and health will remain priorities for government and we believe that we are well-positioned to support reform and changes in the implementation and delivery of public policy. Our business is driven primarily by change and each of the three main political parties has emphasised the need for further reform and improvement in public services. Whilst we will not be immune to a more difficult environment for public sector finances, we expect to see continued demand from clients who are required to improve performance, enhance service quality, allocate resources more efficiently and achieve better value for money. Our market position is now well-established in our core areas of activity and our presence on key public sector procurement frameworks provides a steady stream of new business opportunities, while remaining a barrier to new market entrants.
In 2008, 92% of our revenue was generated from the UK public sector. Our principal markets were: education 38%, central government 20%, health 16%, housing and regeneration 9% and local government 9%. Our international business has developed during the year, particularly following the acquisition of HELM Corporation in June 2008, and we expect the percentage of revenue from overseas activities to increase significantly in 2009.
Our sales pipeline has strengthened over the past year and currently stands at close to £300m. Of the top 30 contract opportunities across the Group, nearly 75% by value relate to health or education projects, approximately 20% is represented by international tenders and less than 4% are capital related.
Note:
* Following the change of year end, and in order to assist with analysis and comparison, comparative data is based on the unaudited pro forma results for the year ended 31 December 2007, unless otherwise stated.
Education
|
|
|
Year ended 31 December 2008 £'000 |
Unaudited pro forma year ended 31 December 2007 £'000 |
|
Revenue |
|
96,408 |
91,581 |
|
Operating profit |
|
14,303 |
14,928 |
|
Operating profit margin |
|
14.8% |
16.3% |
Our education business saw an increase in revenue of 5% to £96.4m (2007: £91.6m) during the year ended 31 December 2008. Operating profit was £14.3m (2007: £14.9m) and the operating margin was 14.8% (2007: 16.3%). The anticipated fall in operating margin during the year was a result of three principal factors: reduced contribution from higher margin activities, planned investment in new products and services and increased business development activity. These factors will continue to apply during 2009 and we therefore anticipate operating margins remaining at a broadly similar level to those achieved in 2008.
The education business provides a wide range of consulting, support and delivery services across the education, skills and training markets. Our services support key government policy initiatives to improve educational standards, increase quality and deliver better outcomes for learners. We deliver these services to education and learning providers through performance improvement programmes, high quality management systems and innovative learning content. Our offerings encompass early years, schools, further education (FE), higher education (HE), workplace and prison settings.
Government investment in education and learning remains strong, with school improvement, workforce training and skills development becoming increasingly important in the current economic and political climate. Our business is built on strong relationships with our client base and excellent customer service delivery. It is underpinned by recurring annual support and maintenance revenue for our software products and a range of long-term contracts.
We have seen good demand for our services during the period and have secured significant new contracts across the business. Our application of innovative technology to organisational efficiency, workforce development and improved learner engagement continues to provide us with a key differentiator both at home and, increasingly, overseas. We are also drawing on the Group's broad range of expertise in related areas to offer our clients an enhanced and coherent set of solutions to address major social problems.
At the end of 2008, we appointed Jonathan Garnett as chief executive of our education business stream and implemented a restructuring of our operations into six areas in order to reduce costs, improve performance and maximise our opportunities for growth. The six new business groupings are as follows:
Science, technology, engineering and mathematics (STEM)
In order to support the competitiveness of the UK economy, the Government has recognised the importance of increasing the availability and capability of STEM-literate individuals. We have been working closely with government to support the STEM agenda. During the year, our contract for the National Centre for Excellence in the Teaching of Mathematics was extended for an additional two years. We won an initial £3.4m contract to support the development of quality and expertise in the teaching of STEM subjects. We also provided expert consultancy on the development of a programme to tackle numeracy needs among adults.
Employability and skills
We support the work of major employers such as McDonald's, Royal Mail and Ford Motor Company in developing the skills of their workforce. We have continued to expand our client base with the award of a number of contracts to provide web-based learning services for organisations such as Sainsbury's. We grew our business in employability, where we secured contracts with the Learning and Skills Council (LSC) worth up to £5.8m. Our work to deliver family literacy, language and numeracy programmes for the Learning and Skills Improvement Service (LSIS) was extended with contracts worth a further £1.4m. We continued to support the rehabilitation of offenders and we have been shortlisted by the LSC to extend our information, advice and guidance services to offenders and ex-offenders across three UK regions.
Education and training solutions
Our student and institution administration software products continue to perform well. We lead the market in the UK in FE, HE and work-based learning. The strength of our market position provides good opportunities to secure further contracts for our software and services, both in the UK and internationally. We are currently pursuing a number of opportunities in the Middle East and Australasia, where there are growth opportunities for selling an integrated solution of services and software. In FE, our Improvement Adviser Service contract with LSIS was awarded a two-year extension worth £3.6m per annum. Our FE and HE benchmarking products continue to develop market share in the UK and our long-term contract in New Zealand is providing a platform for expansion into other markets in Australasia.
Children's services
We have continued to build our capacity in children's services and to strengthen our market position. Around 70% of local authorities now use our software and we won over 40 new local authority clients during the year for our family and management information services software.
We were awarded several contracts to support the National Challenge programme, which aims to raise standards and educational outcomes in secondary schools. To date, these include a £1.4m core contract in Greater Manchester, and additional contracts in Sheffield and Hull. Tribal succeeded in winning a number of the first contracts under the new church school improvement framework and our Building Schools for the Future (BSF) team won contracts with five local authorities, as well as a place on the new Partnerships for Schools education framework.
Information and technology solutions
We have seen strong demand for Tribal's expertise in creating bespoke portals that enable our clients in education to improve operational efficiency and support key policy initiatives. We are currently exploring a number of opportunities to apply our innovative, technology-based solutions in the wider public sector. We built on our work supporting parenting initiatives for the Department for Children, Schools and Families (DCSF) and secured a £3.1m contract to provide an information system that will give parents online access to data on childcare and family service provision. We also successfully secured a £2.1m extension to our contract with the workforce development agency Skills for Care to develop a placement matching system for social care students.
Inspections
Tribal is the largest provider of school inspections in the UK and we continued to perform well in the final year of our existing contracts with Ofsted. In February 2009, we announced that we had been appointed for a new six-year contract to run inspections of schools and other educational establishments. The new contract is worth approximately £75m and will operate from September 2009. The growing overseas school improvement market also provides us with significant new opportunities and, during the year, we won a contract in Abu Dhabi to establish an inspections framework for private schools.
Consulting
|
|
|
Year ended 31 December 2008 £'000 |
Unaudited pro forma year ended 31 December 2007 £'000 |
|
Revenue |
|
85,191 |
68,666 |
|
Operating profit |
|
8,250 |
4,911 |
|
Operating profit margin |
|
9.7% |
7.2% |
We have seen a significantly improved financial performance from our consulting business, with revenue increasing by 24% to £85.2m (2007: £68.7m) and operating profit up by 68% to £8.3m (2007: £4.9m). Operating margins rose to 9.7% (2007: 7.2%). The improvement in overall performance was supported by the acquisitions made during the year that contributed some £2.4m to operating profit.
The year was one of considerable change for the consulting business. We made a number of strategic acquisitions, which has enabled us to provide an enhanced offering in many areas of the business, and the acquisition of HELM Corporation in June 2008 has provided us with both a new service line and a significant international presence.
Much of our consulting work is focused on supporting and delivering change through programmes to improve performance, reduce costs and allocate resources better. While we can expect overall government spending to become tighter, the drive for reform and improved quality continues and we are increasingly working with our clients at a strategic level to address their key organisational challenges. The national significance of our work was recognised at the end of 2008 by the Management Consultancies Association, when one of our senior consultants won the Strategic Consultant of the Year Award.
Health
Our health business remains at the forefront of supporting change in the health service. It delivered a strong performance during the year and has continued to grow its core consulting activities, as well as successfully developing new service lines.
The Government has identified world class commissioning as crucial to driving productivity improvements in the public sector. During the period, we secured our first major contract under the Department of Health's Framework for procuring External Support for Commissioners. The £4.8m contract was awarded by Ashton, Leigh and Wigan Primary Care Trust (PCT) with whom we have entered into an innovative, three-year partnership. We have a strong pipeline of other commissioning opportunities.
We are delivering national projects to ensure the provision of improved information for the planning and management of the NHS and health research. We have further expanded our role supporting the health service's National Programme for IT, securing new and extended contracts worth more than £2m.
During the period, we acquired Westhill Consulting, a specialist provider of consultancy and clinical coding services, and in January 2009 we purchased Newchurch, a leading health strategy and change management consultancy. As a result of these acquisitions, Tribal is now able to offer comprehensive support to healthcare organisations in the UK and, increasingly, overseas.
Housing, regeneration and local government
During the period, we transferred our local government consulting activity into an expanded housing, regeneration and local government practice. We also strengthened the business by making two strategic acquisitions. In February 2008, we acquired a master planning and urban design team in order to increase our capability in regeneration in the UK and internationally. In July, we purchased a specialist local government strategy consultancy, which has enhanced both our service offering and our presence in the market.
We are the market leader in social housing consultancy and we continue to play a prominent role in shaping the future funding and development of new social housing stock. While the limited availability of funding for new social housing has had some impact on the demand for our housing development support and treasury services, it has also created new opportunities for our governance, financial advisory and business planning teams.
The breadth and capability of our regeneration activity continued to develop during the year. However, the business is now facing more difficult trading conditions in certain areas and we have therefore initiated a programme to reduce costs and reshape a number of our services.
Our consultancy capability in local government has been transformed during the period and we now have one of the largest practices in the UK. Our ability to offer end-to-end solutions, from strategy through to implementation, has enabled us to address larger opportunities as local authorities increasingly focus on improving efficiency and delivering better value for money.
Central government
Tribal's central government consulting practice continued to show significant growth in both revenue and operating profit during the year. Much of the growth was achieved through securing contracts to provide strategic support to major government programmes and improving our key account management. We have also seen the pipeline of new business opportunities grow significantly.
The practice has developed new service lines tailored specifically to address major central government issues, for example, support in prioritising programme portfolios. We have also focused on developing strategic relationships with key government departments such as the Home Office, Foreign and Commonwealth Office and the Ministry of Justice.
We secured contracts with the UK Border Agency to produce large, complex business cases and with the National Policing Improvement Agency to deliver efficiency programmes that enable officers to spend more time on frontline duties. We won a substantial three-year contract with the DCSF to deliver a national programme to schools across England and Wales supporting the more effective use of resources.
Tribal HELM
In June 2008, Tribal acquired HELM Corporation, a leading consultancy business that provides financial and management consultancy services to the public sector in the UK and internationally. The acquisition represented a significant development in our strategy to expand our consulting service offering, increase our committed income and grow our international business. Around 60% of Tribal HELM's revenue is generated outside the UK, typically from long-term projects that provide high levels of revenue visibility.
Post-acquisition, Tribal HELM has delivered a strong financial performance in line with our expectations. The practice was awarded new contracts to support international finance and public sector governance reform in Macedonia, Kosovo, Cambodia, the Philippines, Rwanda and Peru. These projects, which aim to improve the management of public funds, are supported by the World Bank, the European Commission, the UK Department for International Development and the Australian Government.
Tribal HELM's pipeline includes major projects in Europe, Asia, Africa and South America, and its global footprint and strong relationships with major international donor organisations are opening up new opportunities for our education offering and other Tribal services.
Support services
|
|
|
Year ended 31 December 2008 £'000 |
Unaudited pro forma year ended 31 December 2007 £'000 |
|
Revenue |
|
54,277 |
51,997 |
|
Operating profit |
|
4,861 |
4,041 |
|
Operating profit margin |
|
9.0% |
7.8% |
Our support services businesses delivered a good performance for the year ended 31 December 2008, with revenue 4% higher at £54.3m (2007: £52.0m) and operating profit increasing by 20% to £4.9m (2007: £4.0m). Operating margins increased to 9.0% (2007: 7.8%).
Architectural design
The Group's architectural design business performed well in the period and the order book and sales pipeline have continued to strengthen. We have the leading health architectural practice in Europe and have been appointed on three of the major UK health procurement frameworks: ProCure21 in England, Designed for Life in Wales and Frameworks Scotland.
In April, we were awarded the contract for the £300m HealthVision Swansea scheme, the largest hospital project to be procured through the Designed for Life framework. In January 2009, we won the first Frameworks Scotland hospital project, a £120m redevelopment of Dumfries and Galloway Royal Infirmary, where we will provide both architectural design and health planning consultancy for the scheme.
In education, we were confirmed as preferred bidder for the London Borough of Tower Hamlets BSF programme. We also won contracts with the Oxford Molecular Pathology Institute and a number of FE colleges. Notwithstanding these successes, the continuing uncertainty around the funding of capital projects in the FE sector has led to a decision to reduce our cost base in this area of the business.
We expanded our operation based in Cape Town, South Africa, which is now able to provide architectural design services to the public sector market in Africa as well as supporting our UK business. We are progressing a number of opportunities in southern Africa.
Communications
We are the leading public sector communications consultancy in the UK. We are on all of the key Central Office of Information frameworks, enabling us to bid for marketing communications and related consultancy contracts across government.
During the year, we have enhanced our service offering to existing and potential clients through the acquisition of a leading advertising agency and a new strategic partnership with a digital agency. These initiatives now enable us to provide our clients with a comprehensive communications offering.
We have had some early successes for our new integrated proposition, including a PR and advertising campaign in the food and drink sector and a major contract with the Department for Innovation, University and Skills to promote the importance of science. The campaign, Science: So What? - So Everything, was launched in January 2009 at an event hosted by the Prime Minister. We have also continued to grow our work in the education sector and we have leveraged Tribal's wider health sector expertise to secure social marketing work on behalf of a range of primary care trusts.
Resourcing
Our resourcing business performed well and increased its market share, in spite of a challenging market overall for public sector recruitment.
Many of our public sector clients are continuing to keep tight control of their recruitment budgets and to make increasing use of online processes. We have supported this transition to digital media and have also diversified successfully into new service lines and markets. Our new business performance has been strong during the period.
Despite the challenging conditions, we have continued to make progress in our core local government market. In the health market, the level of NHS recruitment has increased and we have benefited from the Group's strong presence in this sector. We have also increased our market share in central government.
Our major wins in the period included contracts with the Association of Greater Manchester Authorities, the University of Oxford and the Highways Agency. Our recruitment process outsourcing offering won us work with the Department for Environment, Food and Rural Affairs, DVLA and two major London boroughs. In executive resourcing, we won several new contracts including the Royal College of Midwives, the Legal Services Board, the Big Lottery Fund and the Ministries of Justice and Defence.
People
The year saw considerable organisational change and business challenges for Tribal's 2,300 staff and over 1,000 associates. The Group's delivery of improved performance during 2008 is a testimony to the hard work and commitment from everyone across the Group. I would like to thank all of our staff and associates for their dedication to serving our clients and their loyalty to Tribal and our values.
We have continued to invest in the development of our organisation through a number of key initiatives. We have realigned our structures so that we have the right balance of skills and increased efficiency to enable us to better manage business challenges. We have provided more development activities including leadership programmes, business development skills workshops and professional development courses. These initiatives have supported both internal collaboration and a more customer focused approach.
We have continued to develop the senior leadership team with the appointment of a chief operating officer and overall leads for our education business and our health activities. We have also appointed an international development director to lead our overseas strategy and development.
Prospects
During the past year, we have reorganised our business, made a number of strategic acquisitions and strengthened our management in order to support our growth plans. Despite the challenging economic conditions generally, we continue to see opportunities to grow and develop our business. We started the new financial period with approximately 38% of planned revenue for the year already committed and total committed income of £139m. Our identified and qualified sales pipeline stood at £297m at the start of 2009, compared with £168m at the beginning of 2008.
In 2009, we are continuing to focus on improving our operational performance and increasing the level of committed income. We are making a significant investment in raising the quality and effectiveness of our business development processes and increasing the resources available to our international activities. In certain parts of the business, we are reducing our cost base and we anticipate that this programme will realise annualised cost savings of at least £4m. We expect that the costs of £0.7m associated with our new business initiatives and the £1m costs of our restructuring programme will be borne primarily in the first half of the year.
Since the start of 2009, we have made good progress in winning places on several key framework agreements and our committed income levels will increase significantly following the award of our new Ofsted contract. Despite a tighter environment in certain of our markets, our new business pipeline remains strong and the Board remains confident about the Group's ability to make further progress in 2009 and beyond.
Peter J Martin
Chief Executive
17 March 2009
Statement of directors' responsibilities
We confirm that to the best of our knowledge:
-
the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole
-
the management report, which is incorporated into the operating review, includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
By order of the Board
|
Peter J Martin |
Simon M Lawton |
|
Chief Executive |
Group Finance Director |
17 March 2009
Part I
Consolidated income statement
for the year ended 31 December 2008
|
|
Note |
Before other administrative expenses and financial instruments costs |
|
Other administrative expenses and financial instruments costs |
|
Year ended 31 December 2008 Total |
|
Before other administrative expenses and financial instruments costs |
|
Other administrative expenses and financial instruments costs |
|
Nine months ended 31 December 2007 Total |
|
Continuing operations |
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
Turnover |
|
294,192 |
|
- |
|
294,192 |
|
188,654 |
|
- |
|
188,654 |
|
Direct agency costs |
|
(60,202) |
|
- |
|
(60,202) |
|
(35,355) |
|
- |
|
(35,355) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
2 |
233,990 |
|
- |
|
233,990 |
|
153,299 |
|
- |
|
153,299 |
|
Cost of sales |
|
(140,320) |
|
- |
|
(140,320) |
|
(92,266) |
|
- |
|
(92,266) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
93,670 |
|
- |
|
93,670 |
|
61,033 |
|
- |
|
61,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net administrative expenses |
|
(73,847) |
|
- |
|
(73,847) |
|
(49,860) |
|
- |
|
(49,860) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation of IFRS 3 intangibles |
|
- |
|
(556) |
|
(556) |
|
- |
|
(240) |
|
(240) |
|
Goodwill impairment |
9 |
- |
|
- |
|
- |
|
- |
|
(9,000) |
|
(9,000) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total administrative expenses |
|
(73,847) |
|
(556) |
|
(74,403) |
|
(49,860) |
|
(9,240) |
|
(59,100) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
19,823 |
|
(556) |
|
19,267 |
|
11,173 |
|
(9,240) |
|
1,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment revenues |
3 |
586 |
|
- |
|
586 |
|
1,119 |
|
- |
|
1,119 |
|
Other gains and losses |
4 |
- |
|
(66) |
|
(66) |
|
- |
|
(126) |
|
(126) |
|
Finance costs |
5 |
(1,763) |
|
(72) |
|
(1,835) |
|
(1,699) |
|
(43) |
|
(1,742) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
18,646 |
|
(694) |
|
17,952 |
|
10,593 |
|
(9,409) |
|
1,184 |
|
Tax |
|
(5,005) |
|
195 |
|
(4,810) |
|
(3,105) |
|
103 |
|
(3,002) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period from continuing operations |
|
13,641 |
|
(499) |
|
13,142 |
|
7,488 |
|
(9,306) |
|
(1,818) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from discontinued operations |
7 |
- |
|
1,211 |
|
1,211 |
|
37 |
|
27,217 |
|
27,254 |
|
Profit for the period |
|
13,641 |
|
712 |
|
14,353 |
|
7,525 |
|
17,911 |
|
25,436 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity holders of the parent |
|
|
|
|
|
13,443 |
|
|
|
|
|
25,034 |
|
Minority interest |
|
|
|
|
|
910 |
|
|
|
|
|
402 |
|
|
|
|
|
|
|
14,353 |
|
|
|
|
|
25,436 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
8 |
14.7p |
|
(0.6)p |
|
14.1p |
|
8.4p |
|
(11.0)p |
|
(2.6)p |
|
Diluted |
8 |
14.7p |
|
(0.6)p |
|
14.1p |
|
8.4p |
|
(11.0)p |
|
(2.6)p |
|
From continuing and discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
8 |
14.7p |
|
0.8p |
|
15.5p |
|
8.4p |
|
21.1p |
|
29.5p |
|
Diluted |
8 |
14.7p |
|
0.8p |
|
15.5p |
|
8.4p |
|
21.1p |
|
29.5p |
Consolidated balance sheet
at 31 December 2008
|
|
Note |
|
|
31 December 2008 |
|
31 December 2007 |
|
|
|
|
|
£'000 |
|
£'000 |
|
Non-current assets |
|
|
|
|
|
|
|
Goodwill |
9 |
|
|
209,765 |
|
186,991 |
|
Other intangible assets |
|
|
|
7,740 |
|
4,254 |
|
Property, plant and equipment |
|
|
|
9,103 |
|
7,363 |
|
Investments |
|
|
|
7 |
|
157 |
|
Deferred tax assets |
|
|
|
2,149 |
|
1,389 |
|
Derivative financial instruments |
|
|
|
- |
|
178 |
|
|
|
|
|
228,764 |
|
200,332 |
|
Current assets |
|
|
|
|
|
|
|
Inventories |
|
|
|
801 |
|
1,055 |
|
Trade and other receivables |
10 |
|
|
66,190 |
|
62,326 |
|
Amounts recoverable on contracts |
|
|
|
6 |
|
63 |
|
Cash and cash equivalents |
|
|
|
13,892 |
|
15,982 |
|
Collateralised cash |
|
|
|
- |
|
192 |
|
|
|
|
|
80,889 |
|
79,618 |
|
Total assets |
|
|
|
309,653 |
|
279,950 |
|
Current liabilities |
|
|
|
|
|
|
|
Trade and other payables |
11 |
|
|
(68,456) |
|
(67,418) |
|
Tax liabilities |
|
|
|
(7,234) |
|
(5,400) |
|
Obligations under finance leases |
|
|
|
- |
|
(3) |
|
Bank loans and loan notes |
|
|
|
(662) |
|
(876) |
|
Provisions |
|
|
|
(655) |
|
(577) |
|
Derivative financial instruments |
|
|
|
(188) |
|
- |
|
|
|
|
|
(77,195) |
|
(74,274) |
|
Net current assets |
|
|
|
3,694 |
|
5,344 |
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
Bank loans |
|
|
|
(32,894) |
|
(22,098) |
|
Pension liabilities |
|
|
|
(1,425) |
|
(1,228) |
|
Deferred tax liabilities |
|
|
|
(1,927) |
|
(1,108) |
|
Derivative financial instruments |
|
|
|
(809) |
|
- |
|
|
|
|
|
(37,055) |
|
(24,434) |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
(114,250) |
|
(98,708) |
|
Net assets |
|
|
|
195,403 |
|
181,242 |
|
Equity |
|
|
|
|
|
|
|
Share capital |
|
|
|
4,394 |
|
4,239 |
|
Share premium account |
|
|
|
78,749 |
|
74,750 |
|
Other reserves |
12 |
|
|
64,486 |
|
64,582 |
|
Retained earnings |
12 |
|
|
45,945 |
|
36,606 |
|
|
|
|
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
|
|
193,574 |
|
180,177 |
|
Minority interest |
|
|
|
1,829 |
|
1,065 |
|
Total equity |
|
|
|
195,403 |
|
181,242 |
Consolidated cash flow statement
for the year ended 31 December 2008
|
|
Note |
|
Year ended 31 December 2008 |
|
Nine months ended 31 December 2007 |
|
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
Net cash from operating activities |
13 |
|
22,303 |
|
8,808 |
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
Interest received |
|
|
586 |
|
992 |
|
Proceeds on disposal to minorities |
|
|
- |
|
159 |
|
Disposal of subsidiary |
|
|
225 |
|
36,251 |
|
Proceeds on disposal of property, plant and equipment |
|
|
53 |
|
113 |
|
Disposal/(purchase) of investments |
|
|
320 |
|
(8) |
|
Purchases of property, plant and equipment |
|
|
(3,632) |
|
(2,579) |
|
Expenditure on product development |
|
|
(1,851) |
|
(1,657) |
|
Acquisitions and deferred consideration |
|
|
(24,855) |
|
(1,840) |
|
|
|
|
|
|
|
|
Net cash (outflow)/inflow from investing activities |
|
|
(29,154) |
|
31,431 |
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
Interest paid |
|
|
(1,514) |
|
(2,219) |
|
Equity dividend paid |
|
|
(3,957) |
|
(2,031) |
|
Dividends to minorities |
|
|
(439) |
|
(390) |
|
Issue of shares |
|
|
(9) |
|
122 |
|
Repayment of borrowings |
|
|
- |
|
(53,974) |
|
Repayments of obligations under finance lease |
|
|
(3) |
|
(5) |
|
New bank loans |
|
|
10,491 |
|
- |
|
Movements in collateralised cash |
|
|
192 |
|
757 |
|
|
|
|
|
|
|
|
Net cash from/(used in) financing activities |
|
|
4,761 |
|
(57,740) |
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
(2,090) |
|
(17,501) |
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
15,982 |
|
33,483 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
|
13,892 |
|
15,982 |
Consolidated statement of recognised income and expense
for the year ended 31 December 2008
|
|
|
|
Year ended 31 December |
|
Nine months ended 31 December |
|
|
|
|
2008 |
|
2007 |
|
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial loss on defined benefit plans |
|
|
(408) |
|
(7) |
|
Transfer to cash flow hedge reserve |
|
|
(1,109) |
|
(241) |
|
Deferred tax |
|
|
423 |
|
67 |
|
|
|
|
|
|
|
|
Net expense recognised directly to equity |
|
|
(1,094) |
|
(181) |
|
Profit for the period |
|
|
14,353 |
|
25,436 |
|
|
|
|
|
|
|
|
Total recognised income and expense for the period |
|
|
13,259 |
|
25,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
Equity holders of the parent |
|
|
12,349 |
|
24,853 |
|
Minority interest |
|
|
910 |
|
402 |
|
|
|
|
|
|
|
|
|
|
|
13,259 |
|
25,255 |
|
|
|
|
|
|
|
Notes to the preliminary announcement
1. General information
The basis of preparation of this preliminary announcement is set out below.
The financial information in this announcement, which was approved by the Board of Directors on 17 March 2009, does not constitute the Company's statutory accounts for the year ended 31 December 2008 or the nine months ended 31 December 2007, but is derived from these accounts.
Statutory accounts for the nine months ended 31 December 2007 have been delivered to the Registrar of Companies and those for the year ended 31 December 2008 will be delivered following the Company's Annual General Meeting. The auditors have reported on these accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under S237 (2) or (3) of the Companies Act 1985.
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, modified to include the revaluation of certain fixed assets and financial instruments.
Copies of the announcement can be obtained from the Company's registered office at 87-91 Newman Street, London, W1T 3EY.
It is intended that the full financial statements which comply with IFRSs will be posted to shareholders on or around 9 April 2009 and will be available to members of the public at the registered office of the Company from that date and available on the Company's website: www.tribalgroup.co.uk
Going concern
The Group has considerable financial resources in that it maintains sizeable cash balances, has a credit facility of £40m (of which £33.2m was drawn down at 31 December 2008), which is not due for renewal until June 2012, and has an overdraft facility of £6m, which is renewable annually in February. Net debt was £19.7m at 31 December 2008. Although the current economic conditions create some uncertainty in terms of the maintenance of current public sector spending levels, it also has a number of long-term contracts with a number of customers across different geographic areas, significant levels of committed income and a strong pipeline of new opportunities. The Group's forecasts and projections, which allow for reasonably possible changes in trading performance, show that the Group will be cash generative across the forecast period. As a consequence, the directors believe that the Group is well-placed to manage its business risks successfully despite the current uncertain economic outlook.
After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.
2. Business segments
The Group is currently organised into three business segments - Consulting, Education and Support services.
Principal activities are as follows:
|
Consulting |
|
|
Education |
|
|
Support services . |
|
From 1 January 2008, the Group transferred certain business units between its business segments to realign with its revised reporting structure. Accordingly, the business segment information for the nine months ended 31 December 2007 has been restated to reflect the transfers. As a result, there has been an adjustment to inter-segment sales. The impact of these transfers is not material.
|
Year ended 31 December 2008 |
|
Consulting 31 December 2008 |
|
Education 31 December 2008 |
|
Support services 31 December 2008 |
|
Eliminations 31 December 2008 |
|
Consolidated 31 December 2008 |
|
Revenue |
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
External sales |
|
84,805 |
|
95,798 |
|
53,387 |
|
- |
|
233,990 |
|
Inter-segment sales |
|
386 |
|
610 |
|
890 |
|
(1,886) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
85,191 |
|
96,408 |
|
54,277 |
|
(1,886) |
|
233,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating profit |
|
8,250 |
|
14,303 |
|
4,861 |
|
- |
|
27,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated corporate expenses |
|
|
|
|
|
|
|
|
|
(7,591) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit |
|
|
|
|
|
|
|
|
|
19,823 |
|
Amortisation of IFRS 3 intangibles |
|
|
|
|
|
|
|
|
|
(556) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
|
|
|
|
|
|
|
19,267 |
|
Investment revenues |
|
|
|
|
|
|
|
|
|
586 |
|
Other gains and losses |
|
|
|
|
|
|
|
|
|
(66) |
|
Finance costs |
|
|
|
|
|
|
|
|
|
(1,835) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
|
|
|
|
|
|
17,952 |
|
Tax |
|
|
|
|
|
|
|
|
|
(4,810) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year from discontinued operations |
|
|
|
|
|
|
|
1,211 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after tax and discontinued operations |
|
|
|
|
|
|
|
14,353 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Nine months ended 31 December 2007 |
Consulting 31 December 2007 |
|
Education 31 December 2007 |
|
Support services 31 December 2007 |
|
Eliminations 31 December 2007 |
|
Consolidated 31 December 2007 |
|
|
Revenue |
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
External sales |
|
48,865 |
|
66,608 |
|
37,826 |
|
- |
|
153,299 |
|
Inter-segment sales |
|
178 |
|
904 |
|
792 |
|
(1,874) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
49,043 |
|
67,512 |
|
38,618 |
|
(1,874) |
|
153,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating profit |
|
3,854 |
|
8,899 |
|
2,877 |
|
- |
|
15,630 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated corporate expenses |
|
|
|
|
|
|
|
|
|
(4,457) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit |
|
|
|
|
|
|
|
|
|
11,173 |
|
Amortisation of IFRS 3 intangibles |
|
|
|
|
|
|
|
|
|
(240) |
|
Goodwill impairment |
|
|
|
|
|
|
|
|
|
(9,000) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
|
|
|
|
|
|
|
1,933 |
|
Investment revenues |
|
|
|
|
|
|
|
|
|
1,119 |
|
Other gains and losses |
|
|
|
|
|
|
|
|
|
(126) |
|
Finance costs |
|
|
|
|
|
|
|
|
|
(1,742) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
|
|
|
|
|
|
1,184 |
|
Tax |
|
|
|
|
|
|
|
|
|
(3,002) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period from discontinued operations |
|
|
|
|
|
|
|
27,254 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after tax and discontinued operations |
|
|
|
|
|
|
|
25,436 |
||
|
|
|
|
|
|
|
|
|
|
|
|
3. Investment revenues
|
|
|
Continuing operations |
||
|
|
|
Year ended 31 December 2008 |
|
Nine months ended 31 December 2007 |
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Interest on bank deposits |
|
373 |
|
448 |
|
Other interest receivable |
|
213 |
|
671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
586 |
|
1,119 |
|
|
|
|
|
|
4. Other gains and losses
|
|
|
Continuing operations |
||
|
|
|
Year ended 31 December 2008 |
|
Nine months ended 31 December 2007 |
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Change in the fair value of derivatives which are classified as held for trading |
|
109 |
|
62 |
|
Hedge ineffectiveness in the cash flow hedges |
|
(175) |
|
(188) |
|
|
|
|
|
|
|
|
|
(66) |
|
(126) |
|
|
|
|
|
|
5. Finance costs
|
|
|
Continuing operations |
||
|
|
|
Year ended 31 December 2008 |
|
Nine months ended 31 December 2007 |
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Finance charges |
|
|
|
|
|
Interest on bank overdrafts and loans |
|
1,717 |
|
1,666 |
|
Interest on loan notes |
|
29 |
|
30 |
|
Interest on obligation under finance leases |
|
- |
|
1 |
|
Net interest payable on retirement benefit obligations |
|
17 |
|
2 |
|
|
|
|
|
|
|
Total borrowing costs |
|
1,763 |
|
1,699 |
|
|
|
|
|
|
|
Financial instruments |
|
|
|
|
|
Discounting charge for deferred consideration |
|
72 |
|
43 |
|
|
|
|
|
|
|
|
|
1,835 |
|
1,742 |
6. Dividends
|
|
|
Year ended 31 December 2008 |
|
Nine months ended 31 December 2007 |
|
|
|
£'000 |
|
£'000 |
|
Amounts recognised as distributions to equity holders in the period: |
|
|
|
|
|
Interim dividend for the nine months ended 31 December 2007 of 1.15 pence per share |
|
966 |
|
- |
|
Final dividend for the nine months ended 31 December 2007 of 1.8 pence (year ended 31 March 2007: 2.42 pence) per share |
|
1,511 |
|
2,031 |
|
Interim dividend for the year ended 31 December 2008 of 1.7 pence per share |
|
1,480 |
|
- |
|
|
|
|
|
|
|
|
|
3,957 |
|
2,031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposed final dividend for the year ended 31 December 2008 of 2.65 pence (nine months ended 31 December 2007: 1.8 pence) per share |
|
2,425 |
|
1,530 |
|
|
|
|
|
|
The interim dividend for 2008 was approved by the Board on 19 August 2008 and was paid on 24 October 2008 to ordinary shareholders who were on the register on 26 September 2008.
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.
7. Discontinued operations
The Group disposed of its healthcare delivery business, Mercury Health, to Care UK on 20 April 2007 at a profit of £27m; its results are presented in the consolidated income statement as discontinued operations.
There are a number of tax issues which remain open in respect of the sale of the Group's healthcare business. In the year ended 31 December 2008, we report a profit of £1.2m in the consolidated income statement, which relates to the release of tax provisions arising from the closure of the March 2006 computations by HMRC, a proportion of our claim for additional group relief surrendered by Mercury Health at no cost to Tribal, and the release of other related provisions which are no longer required.
In March 2009, we received a notification from Care UK that it may challenge the basis on which the corporation tax group relief claim for the year ended 31 March 2007 was made. The directors have made adequate provision for this when determining the reported result from the discontinued operations.
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:
|
|
Year ended 31 December 2008 |
|
Nine months ended 31 December 2007 |
|
|
thousands |
|
thousands |
|
Weighted average number of shares outstanding: |
|
|
|
|
Basic weighted average number of shares in issue |
86,358 |
|
84,741 |
|
Employee share options |
101 |
|
73 |
|
|
|
|
|
|
Weighted average number of shares outstanding for dilution calculations |
86,459 |
|
84,814 |
|
|
|
|
|
The adjusted basic and adjusted 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:
|
|
Year ended 31 December 2008 |
|
Nine months ended 31 December 2007 |
||||
|
From continuing operations |
Earnings £'000 |
|
Earnings per share pence |
|
Earnings £'000 |
|
(Loss)/ earnings per share pence |
|
Basic and adjusted basic earnings/(loss) per share: |
|
|
|
|
|
|
|
|
Profit/(loss) and basic earnings/(loss) per share |
12,232 |
|
14.1p |
|
(2,220) |
|
(2.6)p |
|
Adjustments: |
|
|
|
|
|
|
|
|
Goodwill impairment |
- |
|
- |
|
9,000 |
|
10.6p |
|
Amortisation of IFRS 3 intangibles (net of tax) |
400 |
|
0.5p |
|
173 |
|
0.2p |
|
Financial instruments net charge (net of tax) |
99 |
|
0.1p |
|
133 |
|
0.2p |
|
|
|
|
|
|
|
|
|
|
Adjusted earnings and adjusted basic earnings per share |
12,731 |
|
14.7p |
|
7,086 |
|
8.4p |
|
|
|
|
|
|
|
|
|
|
Diluted and adjusted diluted earnings/(loss) per share: |
|
|
|
|
|
|
|
|
Profit/(loss) and diluted earnings/(loss) per share |
12,232 |
|
14.1p |
|
(2,220) |
|
(2.6p) |
|
Adjustments: |
|
|
|
|
|
|
|
|
Goodwill impairment |
- |
|
- |
|
9,000 |
|
10.6p |
|
Amortisation of IFRS 3 intangibles (net of tax) |
400 |
|
0.5p |
|
173 |
|
0.2p |
|
Financial instruments net charge (net of tax) |
99 |
|
0.1p |
|
133 |
|
0.2p |
|
|
|
|
|
|
|
|
|
|
Adjusted earnings and adjusted diluted earnings per share |
12,731 |
|
14.7p |
|
7,086 |
|
8.4p |
|
|
|
|
|
|
|
|
|
The profit of £12,232,000 (nine months ended 31 December 2007: loss £2,220,000) is arrived after deducting the minority interest charge of £910,000 (nine months ended 31 December 2007: £402,000) from the profit for the period from continuing operations of £13,142,000 (nine months ended 31 December 2007: loss £1,818,000).
|
|
Year ended 31 December 2008 |
|
Nine months ended 31 December 2007 |
||||
|
For continuing and discontinued operations |
Earnings £'000 |
|
Earnings per share pence |
|
Earnings £'000 |
|
(Loss)/ earnings per share pence |
|
Basic and adjusted basic earnings per share: |
|
|
|
|
|
|
|
|
Profit and basic earnings per share |
13,443 |
|
15.5p |
|
25,034 |
|
29.5p |
|
Adjustments: |
|
|
|
|
|
|
|
|
Goodwill impairment |
- |
|
- |
|
9,000 |
|
10.6p |
|
Amortisation of IFRS 3 intangibles (net of tax) |
400 |
|
0.5p |
|
173 |
|
0.2p |
|
Profit from discontinued operations |
(1,211) |
|
(1.4)p |
|
(27,217) |
|
(32.1)p |
|
Financial instrument net charge (net of tax) |
99 |
|
0.1p |
|
133 |
|
0.2p |
|
|
|
|
|
|
|
|
|
|
Adjusted earnings and adjusted basic earnings per share |
12,731 |
|
14.7p |
|
7,123 |
|
8.4p |
|
|
|
|
|
|
|
|
|
|
Diluted and adjusted diluted earnings per share: |
|
|
|
|
|
|
|
|
Profit and diluted earnings per share |
13,443 |
|
15.5p |
|
25,034 |
|
29.5p |
|
Adjustments: |
|
|
|
|
|
|
|
|
Goodwill impairment |
- |
|
- |
|
9,000 |
|
10.6p |
|
Amortisation of IFRS 3 intangibles (net of tax) |
400 |
|
0.5p |
|
173 |
|
0.2p |
|
Profit from discontinued operations |
(1,211) |
|
(1.4)p |
|
(27,217) |
|
(32.1)p |
|
Financial instrument net charge (net of tax) |
99 |
|
0.1p |
|
133 |
|
0.2p |
|
|
|
|
|
|
|
|
|
|
Adjusted earnings and adjusted diluted earnings per share |
12,731 |
|
14.7p |
|
7,123 |
|
8.4p |
|
|
|
|
|
|
|
|
|
9. Goodwill
|
|
31 December 2008 |
|
31 December 2007 |
|
|
£'000 |
|
£'000 |
|
Cost At beginning of period |
238,122 |
|
234,230 |
|
Additions - including minority interests |
22,079 |
|
4,183 |
|
Disposal of subsidiary |
(225) |
|
(168) |
|
Revisions to prior periods |
920 |
|
(123) |
|
|
|
|
|
|
At end of period |
260,896 |
|
238,122 |
|
|
|
|
|
|
Accumulated impairment losses At beginning of period |
51,131 |
|
42,131 |
|
Impairment charge |
- |
|
9,000 |
|
|
|
|
|
|
At end of period |
51,131 |
|
51,131 |
|
|
|
|
|
|
Net book value At end of period |
209,765 |
|
186,991 |
|
|
|
|
|
|
At beginning of period |
186,991 |
|
192,099 |
|
|
|
|
|
Additions to goodwill during the period relates to the acquisitions of HELM Corporation, the master planning and urban design team from Llewelyn Davies Yeang, RSe Consulting, Mustoes and Westhill Consulting and the purchase of minority interests.
Revisions to prior periods relates to a change in estimate of the deferred consideration paid on the acquisition of the remainder of the share capital in Sportsvine Holdings Limited.
Goodwill acquired in a business combination 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:
|
|
31 December 2008 |
|
31 December 2007 |
|
|
£'000 |
|
£'000 |
|
Support services - |
|
|
|
|
Communications |
19,168 |
|
17,677 |
|
Architectural design |
17,636 |
|
17,606 |
|
Resourcing |
12,614 |
|
12,614 |
|
|
|
|
|
|
|
49,418 |
|
47,897 |
|
Consulting |
88,665 |
|
68,835 |
|
Education |
71,682 |
|
70,259 |
|
|
|
|
|
|
|
209,765 |
|
186,991 |
The carrying amount of goodwill by business stream as at 31 December 2007 has been restated due to the Group transferring certain business units between its business segments.
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.
The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. The assumptions made reflect a more cautious view in the current economic climate. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. The growth rates are based on internal budgets in the short-term and general market rates thereafter. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.
The Group has conducted a sensitivity analyses on the impairment of each CGU's value. As noted below, current forecasts assume growth in all CGUs. The directors do not consider negative growth to be 'reasonably possible'. However, if there were to be low levels of negative growth, this may have an impact on the carrying value of goodwill for certain CGUs.
The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next two years and extrapolates cash flows for two further years at 4% and into perpetuity based on an estimated growth rate of 2.5%. This rate does not exceed the average long-term growth rate for the relevant markets.
The rate used to discount the forecast cash flow is 7.62%.
10. Trade and other receivables
|
|
31 December 2008 |
|
31 December 2007 |
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
Amount receivable from sale of services |
50,924 |
|
46,424 |
|
Allowance for doubtful debts |
(1,196) |
|
(766) |
|
|
|
|
|
|
|
49,728 |
|
45,658 |
|
Other receivables |
954 |
|
400 |
|
Prepayments and accrued income |
15,508 |
|
16,268 |
|
|
|
|
|
|
|
66,190 |
|
62,326 |
11. Trade and other payables
|
|
31 December 2008 |
|
31 December 2007 |
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
Trade payables |
19,832 |
|
18,441 |
|
Other taxation and social security |
6,183 |
|
8,603 |
|
Other payables |
3,947 |
|
6,306 |
|
Accruals and deferred income |
37,368 |
|
31,114 |
|
Deferred cash consideration |
1,126 |
|
2,954 |
|
|
|
|
|
|
|
68,456 |
|
67,418 |
12. Reserves
|
|
Other reserves |
|
Retained earnings |
|
Total |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
At 1 January 2008 |
64,582 |
|
36,606 |
|
101,188 |
|
Profit for the year |
- |
|
13,443 |
|
13,443 |
|
Dividends paid |
- |
|
(3,957) |
|
(3,957) |
|
Net expense recognised directly in equity |
(799) |
|
(295) |
|
(1,094) |
|
Credit in relation to share-based payments |
851 |
|
- |
|
851 |
|
Transfers |
(148) |
|
148 |
|
- |
|
|
_______ |
|
_______ |
|
_______ |
|
At 31 December 2008 |
64,486 |
|
45,945 |
|
110,431 |
|
|
|
|
|
|
|
13. Notes to the cash flow statement
|
|
Year ended 31 December 2008 |
|
Nine months ended 31 December 2007 |
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
Operating profit from continuing operations |
19,267 |
|
1,933 |
|
Depreciation of property, plant and equipment |
3,149 |
|
2,296 |
|
Amortisation of other intangible assets |
1,944 |
|
1,275 |
|
Impairment of goodwill |
- |
|
9,000 |
|
Net pension charge |
(212) |
|
(215) |
|
Loss/(gain) on disposal of property, plant and equipment |
96 |
|
(92) |
|
Gain on sale of investments |
(304) |
|
(68) |
|
Share-based payments |
851 |
|
489 |
|
|
|
|
|
|
Operating cash flows before movements in working capital |
24,791 |
|
14,618 |
|
|
|
|
|
|
Decrease in amounts recoverable on contracts |
57 |
|
256 |
|
Decrease/(increase) in inventories |
426 |
|
(26) |
|
Decrease/(increase) in receivables |
684 |
|
(5,519) |
|
Decrease in payables |
(387) |
|
(437) |
|
Increase in provisions |
78 |
|
127 |
|
|
|
|
|
|
Net cash from operating activities before tax |
25,649 |
|
9,019 |
|
|
|
|
|
|
Tax paid |
(3,346) |
|
(211) |
|
|
|
|
|
|
Net cash from operating activities |
22,303 |
|
8,808 |
|
|
|
|
|
|
Net cash from operating activities before tax can be analysed as follows: |
|
|
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
Continuing operations (excluding restricted cash) |
26,936 |
|
11,016 |
|
(Decrease)/increase in restricted cash |
(1,287) |
|
135 |
|
|
25,649 |
|
11,151 |
|
Discontinued operations |
- |
|
(2,132) |
|
|
|
|
|
|
|
25,649 |
|
9,019 |
Tax paid of £3.3m (nine months ended 31 December 2007: £0.2m) is net of a repayment of £1.5m (nine months ended 31 December 2007: £nil) in respect of discontinued operations.
Restricted cash represents funds restricted in use by the relevant commercial terms of certain trading contracts.
Part II
Unaudited pro forma financial information
The comparative 2007 statutory accounts included in these financial statements cover a period shorter than a full year due to the change in year end. Therefore we have included below pro forma information to provide greater comparability.
Basis of preparation
The pro forma accounts are unaudited and do not constitute full statutory accounts within the meaning of section 240 of the Companies Act 1985.
The unaudited pro forma information set out below comprises a consolidated income statement and consolidated cash flow for the year ended 31 December 2007. It is based on the consolidated management accounts of the Group after making adjustments consistent with year end procedures.
The key issues and judgements are set out below:
1. Goodwill impairment
In the audited accounts for the year ended 31 March 2007, a goodwill impairment charge of £14.4m was made in respect of certain business streams that were being closed and other underperforming business units.
In addition, a further goodwill impairment charge of £9m was made in respect of the resourcing business stream in the nine months ended 31 December 2007.
2. Tax charge
Over the two years to 31 March 2007, Tribal has had the benefit of a low effective tax rate due to HMRC agreement of various tax reliefs relating to prior periods.
The tax credits taken in the financial statements for the year ended 31 March 2007 have been reflected in the three month period to 31 March 2007 as they related to certain 2005 tax computations which were cleared without enquiry on 31 March 2007. The credit has therefore been included in the unaudited pro forma year ended 31 December 2007.
3. Employee benefits
Share option costs and holiday pay accruals were not calculated on a monthly basis when preparing the management accounts. However an adjustment has been made for these items when preparing the unaudited pro forma accounts.
Pension liabilities have not been formally calculated as at 1 January 2007; the pro forma accounts therefore reflect the opening pension liability as disclosed in the audited accounts to 31 March 2006. The effect of this on the income statement for the periods is not considered to be material since all actuarial gains or losses are recorded in the statement of recognised income and expense.
Unaudited pro forma financial information (continued)
Unaudited pro forma consolidated income statement
for the year ended 31 December 2007
|
|
Note |
Before other administrative expenses and exceptional costs |
|
Other administrative expenses and financial instruments |
|
Year ended 31 December 2007 Total |
|
|
Continuing operations |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
Turnover |
|
256,509 |
|
- |
|
256,509 |
|
|
Direct agency costs |
|
(47,334) |
|
- |
|
(47,334) |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
(i) |
209,175 |
|
- |
|
209,175 |
|
|
Cost of sales |
|
(122,769) |
|
- |
|
(122,769) |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
86,406 |
|
- |
|
86,406 |
|
|
|
|
|
|
|
|
|
|
|
Net administrative expenses |
|
(69,119) |
|
- |
|
(69,119) |
|
|
|
|
|
|
|
|
|
|
|
Other administrative expenses: |
|
|
|
|
|
|
|
|
Amortisation of IFRS 3 intangibles |
|
- |
|
(322) |
|
(322) |
|
|
Goodwill impairment |
|
- |
|
(9,000) |
|
(9,000) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total administrative expenses |
|
(69,119) |
|
(9,322) |
|
(78,441) |
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
(i) |
17,287 |
|
(9,322) |
|
7,965 |
|
|
|
|
|
|
|
|
|
|
|
Investment revenues |
|
1,431 |
|
- |
|
1,431 |
|
|
Other gains and losses |
|
- |
|
(30) |
|
(30) |
|
|
Finance costs |
|
(3,336) |
|
(58) |
|
(3,394) |
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
15,382 |
|
(9,410) |
|
5,972 |
|
|
Tax |
|
(4,358) |
|
100 |
|
(4,258) |
|
|
|
|
|
|
|
|
|
|
|
Profit for the year from continuing operations |
|
11,024 |
|
(9,310) |
|
1,714 |
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
|
|
Profit for the year from discontinued operations |
|
571 |
|
23,917 |
|
24,488 |
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
11,595 |
|
14,607 |
|
26,202 |
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
Equity holders of the parent |
|
|
|
|
|
25,541 |
|
|
Minority interest |
|
|
|
|
|
661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,202 |
|
|
From continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
(ii) |
12.2p |
|
(10.9)p |
|
1.3p |
|
|
|
|
|
|
|
|
|
|
|
Diluted |
(ii) |
12.2p |
|
(10.9)p |
|
1.3p |
|
|
|
|
|
|
|
|
|
|
|
From continuing and discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
(ii) |
12.9p |
|
17.3p |
|
30.2p |
|
|
|
|
|
|
|
|
|
|
|
Diluted |
(ii) |
12.9p |
|
17.3p |
|
30.2p |
|
Unaudited pro forma consolidated cash flow statement
for the year ended 31 December 2007
|
|
Note |
|
2007 |
|
|
|
|
£'000 |
|
|
|
|
|
|
Net cash from operating activities |
(iii) |
|
27,063 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Interest received |
|
|
2,423 |
|
Proceeds on disposal to minorities |
|
|
160 |
|
Disposal of subsidiary |
|
|
36,251 |
|
Proceeds on disposal of property, plant and equipment |
|
|
298 |
|
Purchase of investments |
|
|
(8) |
|
Purchases of property, plant and equipment |
|
|
(4,620) |
|
Expenditure on product development |
|
|
(2,336) |
|
Acquisitions |
|
|
(2,178) |
|
|
|
|
|
|
Net cash inflow from investing activities |
|
|
29,990 |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Interest paid |
|
|
(4,543) |
|
Equity dividend paid |
|
|
(2,911) |
|
Dividends to minorities |
|
|
(485) |
|
Issue of shares |
|
|
116 |
|
Repayment of borrowings |
|
|
(54,756) |
|
Repayments of obligations under finance lease |
|
|
(28) |
|
New bank loans |
|
|
684 |
|
Movements in collateralised cash |
|
|
790 |
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(61,133) |
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
(4,080) |
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
|
|
20,062 |
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
|
15,982 |
(i) Business segments
Segment information about the businesses is presented below:
Year ended 31 December 2007
|
|
Consulting |
|
Education |
|
Support services |
|
Eliminations |
|
Consolidated |
|
|
31 December |
|
31 December |
|
31 December |
|
31 December |
|
31 December |
|
|
2007 |
|
2007 |
|
2007 |
|
2007 |
|
2007 |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
External sales |
68,447 |
|
90,394 |
|
50,334 |
|
- |
|
209,175 |
|
Inter-segment sales |
219 |
|
1,187 |
|
1,663 |
|
(3,069) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
68,666 |
|
91,581 |
|
51,997 |
|
(3,069) |
|
209,175 |
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating profit |
4,911 |
|
14,928 |
|
4,041 |
|
- |
|
23,880 |
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated corporate expenses |
|
|
|
|
|
|
|
|
(6,593) |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit |
|
|
|
|
|
|
|
|
17,287 |
|
Amortisation of IFRS 3 intangibles |
|
|
|
|
|
|
|
|
(322) |
|
Goodwill impairment |
|
|
|
|
|
|
|
|
(9,000) |
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
|
|
|
|
|
|
7,965 |
|
Investment revenues |
|
|
|
|
|
|
|
|
1,431 |
|
Other gains and losses |
|
|
|
|
|
|
|
|
(30) |
|
Finance costs |
|
|
|
|
|
|
|
|
(3,394) |
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
|
|
|
|
|
5,972 |
|
Tax |
|
|
|
|
|
|
|
|
(4,258) |
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year from continuing operations |
|
|
|
|
|
|
|
|
1,714 |
|
|
|
|
|
|
|
|
|
|
|
(ii) 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:
|
|
|
Year ended 31 December 2007 thousands |
|
Weighted average number of shares outstanding: |
|
|
|
Basic weighted average number of shares in issue |
|
84,727 |
|
Employee share options |
|
68 |
|
|
|
|
|
Weighted average number of shares outstanding for dilution calculations |
|
84,795 |
|
|
|
|
The adjusted basic and adjusted diluted earnings per share figures shown on the unaudited pro forma 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:
|
|
Year ended |
||
|
|
31 December 2007 |
||
|
|
|
|
|
|
From continuing operations |
Earnings £'000 |
|
Earnings per share pence |
|
Basic and adjusted basic earnings per share: |
|
|
|
|
Profit and basic earnings per share |
1,053 |
|
1.3p |
|
Adjustments: |
|
|
|
|
0Goodwill impairment |
9,000 |
|
10.6p |
|
Amortisation of IFRS 3 intangibles (net of tax) |
255 |
|
0.3p |
|
Financial instruments charge (net of tax) |
55 |
|
- |
|
|
|
|
|
|
Adjusted earnings and adjusted basic earnings per share |
10,363 |
|
12.2p |
|
|
|
|
|
|
Diluted and adjusted diluted earnings per share: |
|
|
|
|
Profit and diluted earnings per share |
1,053 |
|
1.3p |
|
Adjustments: |
|
|
|
|
Goodwill impairment |
9,000 |
|
10.6p |
|
Amortisation of IFRS 3 intangibles (net of tax) |
255 |
|
0.3p |
|
Financial instruments charge (net of tax) |
55 |
|
- |
|
|
|
|
|
|
Adjusted earnings and adjusted diluted earnings per share |
10,363 |
|
12.2p |
|
|
Year ended |
||
|
|
31 December 2007 |
||
|
For continuing and discontinued operations |
Earnings £'000 |
|
Earnings per share pence |
|
Basic and adjusted basic earnings per share: |
|
|
|
|
Profit and basic earnings per share |
25,541 |
|
30.2p |
|
Adjustments: |
|
|
|
|
Goodwill impairment |
9,000 |
|
10.6p |
|
Amortisation of IFRS 3 intangibles (net of tax) |
255 |
|
0.3p |
|
Profit on disposal of Mercury Health |
(23,917) |
|
(28.2)p |
|
Financial instrument charge (net of tax) |
55 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings and adjusted basic earnings per share |
10,934 |
|
12.9p |
|
|
|
|
|
|
Diluted and adjusted diluted earnings per share: |
|
|
|
|
Profit and diluted earnings per share |
25,541 |
|
30.2p |
|
Adjustments: |
|
|
|
|
Goodwill impairment |
9,000 |
|
10.6p |
|
Amortisation of IFRS 3 intangibles (net of tax) |
255 |
|
0.3p |
|
Profit on disposal of Mercury Health |
(23,917) |
|
(28.2)p |
|
Financial instrument charge (net of tax) |
55 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings and adjusted diluted earnings per share |
10,934 |
|
12.9p |
|
|
|
|
|
(iii) Notes to the pro forma cash flow statement
|
|
|
2007 |
|
|
|
£'000 |
|
|
|
|
|
Operating profit from continuing operations |
|
7,965 |
|
Depreciation of property, plant and equipment |
|
3,607 |
|
Amortisation of other intangible assets |
|
1,751 |
|
Impairment of goodwill |
|
9,000 |
|
Net pension charge |
|
(327) |
|
Gain on disposal of property, plant and equipment |
|
(201) |
|
Increase in fair value of investment property |
|
- |
|
Gain on sale of investments |
|
(68) |
|
Share-based payments |
|
437 |
|
|
|
|
|
Operating cash flows before movements in working capital |
|
22,164 |
|
|
|
|
|
Increase in receivables |
|
(14,399) |
|
Increase in payables |
|
20,993 |
|
Decrease in inventories |
|
469 |
|
Increase in amounts recoverable on contracts |
|
(1,875) |
|
Increase in provisions |
|
427 |
|
|
|
|
|
Net cash from operating activities before tax |
|
27,779 |
|
|
|
|
|
Tax paid |
|
(716) |
|
|
|
|
|
Net cash from operating activities |
|
27,063 |
|
|
|
|
|
Net cash from operating activities before tax can be analysed as follows: |
|
|
|
|
|
£'000 |
|
|
|
|
|
Continuing operations (excluding restricted cash) |
|
23,651 |
|
Increase in restricted cash |
|
1,589 |
|
|
|
25,240 |
|
Discontinued operations |
|
2,539 |
|
|
|
|
|
|
|
27,779 |
This information is provided by RNS
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